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i-maritime news letter

Private terminal operators at major ports move court against revision of charges - 2012-01-02

Private terminal operators at government-owned Major Ports have moved court against revision of port charges by the Tariff Authority on the basis of its 2005 guidelines. The case may impact several private cargo terminals that are governed by the guidelines issued by the Tariff Authority for Major Ports (TAMP) in 2005 and their tariffs are due for revision. They include terminals operated by majors such as DP World Dubai and APM Terminals at Jawaharlal Nehru Port. A petition field by the Indian Private Ports and Terminals Association in the Delhi High court is expected to come up for hearing next week.
The tariff, fixed by TAMP on a cost-plus basis, is generally revised every three years or whenever a request is made. According to private terminal operators, the guidelines do not cover all recurring costs and place a cap on rate of return. If a terminal handles more than the projected cargo in a particular year, it could lead to a reduction in tariff in the next year. This policy, according to private terminals, penalises efficient terminals and rewards the inefficient ones. (There are also terminals governed 2008 TAMP guidelines.) The validity of the 2005 guidelines expired in 2010 but was extended by a year. Subsequently, the government set up a committee in September 2010 to recommend new guidelines, but no one knows what the panel did. Following representations by private operators, the government in June 2011 appointed an external agency with a mandate to prepare new guidelines in four months. The agency is still studying the issues. While the terminals have been seeking a hike in rates to offset the rising costs, TAMP, going by the guidelines, cut the rates, said an official at a private terminal. Several terminals have individually challenged such downward revision in rates in the past at various courts in the country. IPPTA had earlier requested the Shipping Ministry to advice TAMP to keep in abeyance revisions in rates till the new guidelines. But it did not heed the request and TAMP went ahead. Fearing that TAMP will slash the rates at terminals whose rates are due shortly for revision, IPPTA filed a petition in the Delhi High Court seeking its direction to maintain status quo in port charges until the new guidelines are issued by the government to replace the 2005 guidelines. The petitioner also sought a court directive to the government to expedite issue of new guidelines. “We are seeking a level playing field. Our tariffs are regulated but our competitors at private (non-major) ports are free to decide their own rates based on the market conditions, “said Mr R. Kishore, President, IPPTA. “We are now forced to seek legal recourse.”

Source: Hindu Business Line