The Prime Minister of India: Stop Massive Port Scam of Rs.18,000 Crores Per Annum.Discontinue issuing licenses to the Private Handling Agents for shore handling of cargo at 12 Major Ports of India
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The Hon’ble Prime Minister of India,
One of the objectives of Economic Reforms initiated in 1991 by you was to do away with License Raj prevailing in the various sectors of the Economy. Port Sector was one such sector where reforms were envisaged. But, unfortunately, illegalities prevailing in the port sector before Economic Reforms continued even after 1991 and are continuing even today.
Even today, all manual shore handling of cargo (handling of cargos in the ports after the same have been unloaded from the ships) are carried by unauthorized cargo handling agents. These cargo handling agents have not been engaged as per Section 42 (the only statutory provision under which any other person can be engaged to carry out cargo handling in a port) of Major Port Trust Act,1963 and the Rates of Charges recovered by these cargo handling agents from exporters and importers have not been approved by either the Central Government or the Tariff Authority for Major Ports under Section 48 (the only statutory provision which proves for fixation of cargo handling rates for the ports and/or any other person authorized by the port) of MPT Act,1963 .
Private cargo handling handle around 200 million (20 crore) metric tonnes of cargo per annum at the 12 Major Ports of India and arbitrarily charge exporters and importers on an average Rs.300 Per Metric Ton(MT). Thus, they earn around Rs.6000 Crores per annum and pay only a few thousand rupees to the port trusts as License Fees for Licenses issued to them in flagrant violation of the existing Regulations and Statutory provisions. This practice has been continuing for the last 40 years or so entailing a direct Port Scam of Rs.2.4 Lakh Crores. The figures would be multiplied if we take into account interest earned on the income earned by these private handling agents.
These private handling agents handle cargo absolutely manually with the following consequences for the trade, ports, common man and the nation:
1) A ship which could have handled 20,000 MT per day handles only 4000-5000 MT per day resulting in overstay of ships inside the port by at least 4-5 days. Resulting demurrage on the ships is around $4-$5 per MT.
2) Because of berths/jetties remaining engaged for a longer period inside the port, the incoming ships have to wait for days at the anchorages of the ports (outside the ports).Demurrage paid for ships waiting outside the port is around $5 Per MT.
3) Since cargo is handled manually by the private handling agents, they can handle only geared ships ( ships fitted with onboard cranes).The ocean freight of geared ships is higher by $4-$5 per MT compared to the gearless ships. Because of the weight of the onboard cranes , ships can bring cargo lesser by at least 4000-5000 MT .
4) Rates charged by the private handling agents from exporters/importers should have been around Rs.50 Per MT if the rates had been fixed by TAMP/Central Government. But, these private handling agents charge around Rs.300 Per MT. There is thus an excess charge of around $4 per MT.
5) There is thus an indirect handling cost of at least $10-12 Per MT on account of illegal manual cargo handling by private handling agents at the 12 Major Ports of India. On 200 million tonnes of cargo, there is an indirect cost implication of at least $2000 million or Rs.12,000 Crores. For the last 40 years, there has been a scam of Rs.4,80,000 Crores. If take interest on the cost incurred during the last 40 years, the figures would multiply.
6) In addition, because of regular overstay of ships at manual berths/jetties inside the port, the traffic handled and revenue earned is almost 1/4th of the cargo and revenue which could have been earned by the ports, had the cargo been handled mechanically , say, with Mobile Harbour Cranes. This leads us to pure monopolistic solution where output is less and price (here cost of cargo handling) is exorbitantly high.
7) If the private handling agents had been appointed through TENDER/ACUTION, ports could have earned huge revenue in terms of revenue shared by these cargo handling agents.
8) Because all demurrages and ocean dead freights are paid in USD, there is regular outflow of valuable foreign exchange from the country leading to depreciation of Re with respect to $ , which in turn lead to Imported Inflation in the country.
9) There has been an annual scam of Rs.18,000 crores (Rs.6000 Crores+Rs.12,000 Crores) and a Port Scam of more than Rs.7.20 Lakh Crores(Rs.2.40 Lakh Crores+Rs.4.80 Lakh Crores) at the 12 Major Ports of India.
These private handling agents virtually own the Major Ports of India through their direct and indirect representation in the Board of Trustees of these ports. Board of Trustees is the highest decision making body of the respective port trusts. Many of the BOT members of a major port are the nominees of the Union Shipping Minister and most often these nominees of the Union Shipping Minister are none other than the people owing allegiance to the private handling agents illegally handling cargo at the Major Ports of India. The process of appointment of Board members is so nontransparent that Major Ports do not even publish the names of these Board Members on their official websites. Nor does the Ministry of Shipping publish such names of Board Members in their official website.
It is finally the common masses who have to bear the burden of higher costs of cargo handling at the ports in the form of higher prices of goods and services made from raw materials imported from other countries. Most of the steel mills use coking coal, lime stone, manganese ore, met coke at the imported raw material for steel. Consequently, the prices of steel (construction steel, steel utensils, bicycles, motorcycles, steel almirah, steel furniture etc) go up with higher costs of cargo handling. Cement Plants use imported cement clinker and imported thermal coal as their raw material. The price of cement goes up. The Power Plants use imported thermal coal resulting in increasing bill for electricity for the poor households. Thus, there is a total transfer of wealth of thousands of crores per annum from the common people to the pockets of a few private cargo handling monopolists at the 12 Major Ports of India. There is a Zero sum game in which the common people lose and the politically connected private handling agents become fatter with every passing day.
People may like to support this movement to bring down the huge cost of cargo handling at the ports which will finally lead to lower cost of housing, electricity, steel , cement, steel furniture and general fall in the index of Cost Push Inflation. By checking the outflow of valuable foreign exchange from the country, we can reduce the amount of imported inflation resulting from depreciation of Re with respect of $. We can check this massive corruption to bring about transparency and public accountability and with that can save the jobs and salaries of around 50,000 employees and more than 100,000 pensioners at 12 Major Ports of India.
We accordingly request your goodself for your urgent kind intervention in respect of the following:
a) It is accordingly requested to kindly do away with Licensing and go for total structural reforms in the ports sector through mechanization of cargo handling and award of contracts for cargo handling works through TENDER/AUCTION at the 12 Major Ports of India.
b) Boards of Trustees, where private handling agents have their men as members as nominees of the Union Shipping Minister, should be reconstituted with people not having any conflict of interest with the ports.
Haldia Dock Officers' Forum
Zonal Secretary (East), All India Major Ports & Docks Officers' Federation
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