The Telegraph
Friday , January 17 , 2014
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Land rule to help ports earn more

Calcutta, Jan. 16: Companies seeking land on lease in the Calcutta Port Trust area will have to participate in a tender-cum-auction process.

Following the controversy over the allocation of coal mines and Adarsh land scam, the Centre wants to ensure a transparent procedure while allocating land or other natural resources.

The new regulation, which is expected to increase income from the assets of ports such as Calcutta, Mumbai and Kandla, came into effect today. The cabinet had approved the land policy earlier this month.

R.P.S. Kahlon, chairman of CPT, said transparency would be the cornerstone of the new policy. “This (tender-cum-auction) is expected to boost our income,” he said.

CPT has around 4,500 acres in Calcutta and 6,300 acres in Haldia. Revenue from land is around Rs 220 crore in Calcutta and Rs 110 crore in Haldia. In Calcutta, around 2,000 acres have been rented out compared with around 4,000 acres in Haldia.

The policy has been in the making for some time, with the shipping ministry holding consultations with various stakeholders, including industry. During this period, industry opposed many new clauses, especially those relating to the expiry of lease without renewal.

According to CPT officials, there would be two-stage bidding. First, sealed tenders will be invited; the highest bid will then be taken up as the floor price for auction. Earlier, only a tender would be called.

Existing leases without the renewal clause will be put through the tender-cum-auction process, and the lessee will have the first right of refusal. Earlier, the lease was just renewed at a higher rate; now auction is mandatory.

Industry is concerned that once the tender-cum-auction starts and an old lease comes up for renewal, rival companies may bid higher just to jack up rents and make things difficult for the existing lessee.

Existing leases with renewal clause will now be renewed under updated rates of the schedule for rent, which is a market-linked rate. Previously, the rent used to be hiked by a pre-decided rate, which usually lagged the market rate.

The new policy has put a ceiling on the discount a port can offer. Now up to 50 per cent discount in annual rentals may be allowed to security agencies and government departments, while up to 75 per cent are allowed for government schools and colleges, and departments involved in core port-related activities.