Gujarat govt cautioned against ‘undue benefits’ to private firms in port constructions

Picking holes in the famed PPP model of port development in Gujarat, the Comptroller and Auditor General of India (CAG) cautioned the state government against providing “undue benefits” to private firms involved in construction of ports and jetties. “The GMB (Gujarat Maritime Board) has made progress in developing port projects with private sector participation since 1993. The state encouraged private participation in the port sector due to which cargo handling of the state had also improved. Nevertheless, deficiencies were observed in the projects undertaken through private participation,” the country’s topmost auditor stated in a report on “Economic Sector” that was tabled in the Assembly on Friday.

The CAG observed that between August 2012 and March 2015, the Gujarat government had “extended an undue benefit of approximately Rs 182 crore to seven captive jetty holders by reducing the wharfage rates (an amount that is recovered from captive, private and GMB jetty users by the state government as a charge for use of the water front which is a government property). The firms to which benefits were extended included Reliance Industries, (Sikka and Dahej), L&T Cement Ltd (Jafrabad), Essar Steel Ltd (Magdalla), Gujarat Ambuja Cement Ltd (Magdalla) and Digvijay Cement Co Ltd (Sikka).

The CAG also noted that “cost verification process” — which was important for safeguarding the interest of the state government in private ports — of various works undertaken was not completed at Pipavav and Mundra ports. “In respect of private ports, dual benefit had been extended to GAPL (Gujarat Adani Ports Ltd), by allowing both lower tariff rates and capital cost reimbursement in respect to Wandh Coal Terminal which resulted in a revenue loss of Rs 7.42 crore in 2015-16,” the report stated.

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