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Ports tariff authority cuts APM Terminals' charges at JN Port by 44% - 2012-02-13

The Tariff Authority for Major Ports has cut the port tariffs charged by APM Terminals at the Jawaharlal Nehru Port by 44 per cent from the existing level, a senior TAMP official told Business Line on Friday. Significantly, the terminal operator had sought an increase of 8.72 per cent over the existing rates. The revision in rates will be for a period of three years from the date of notification. The rates are revised on the basis of the TAMP 2005 guidelines. The cut in rates is steeper than expected even by port users. A general reduction of 20-25 per cent was expected but “this (44 per cent cut) was much higher than anyone expected,” said an official with the association of the private port terminals in India. APM Terminals (formerly Gateway Terminal India) had sought TAMP's permission to continue with the existing rates till the new guidelines are in place. The guidelines are expected to be issued by the Government later this year.
The request has been rejected by the authority which said that since tariff revision
is due and the existing guidelines are in force, it is not in a position to accede to the request. APM is likely to seek a stay on the revision in rates as the new rates will have a sharp impact on its revenues as the cost of handling containers has gone up steeply, said a source close to the terminal operator. APM officials could not be contacted immediately. APM Terminals is a joint venture between APM Group and Container corporation of India. Private terminal operators at the Government-owned major ports had approached the court in December for a stay on revision in port tariffs until the new guidelines are in place. But the Delhi High Court had rejected their appeal. 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 by the 2008 TAMP guidelines.) The validity of the 2005 guidelines expired in 2010 but was extended by a year. 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.

Source: Hindu Business Line