News Ports

Private port terminal operators may get pricing freedom

The government is readying a tariff migration regime to allow pricing freedom for existing private terminal operators at major ports. It is eyeing a minimum revenue commitment – linked to increments to the Wholesale Price Index – to ensure that the government’s income is not impacted if the existing concessionaires migrate to the new tariff regime, said officials.

“The minimum revenue commitment will insulate the Centre from any risks associated with lower tariffs being offered by private concessionaires to bag more cargo,” a senior shipping ministry official said on condition of anonymity.

Private terminals at ports operate under multiple fiscal regimes depending on the year they were awarded. Collectively they handle nearly half the traffic at ‘major ports’, a term used to denote the ports controlled by the Centre, across the country.Sanjay Sethi, chairman of the Jawaharlal Nehru Port Authority, said, “The committee formed to deliberate on a regime for rationalising tariffs across private terminals at major ports will soon be giving its recommendations to the Ministry of Ports Shipping, and Waterways.”

Sethi heads the committee tasked with proposing a migration mechanism from the old tariff regimes to the new one for private terminals operating at major ports, which are under the administrative control of the Centre.

The existing regimes allow the major ports to charge different tariffs from consumers despite being on the same port due to varying nature of contracts signed with port authorities. These rates were regulated by the Tariff Authority for Major Ports (TAMP).

But with the enforcement of the Major Port Authorities Act, 2021, TAMP was abolished and each board of the major ports was given autonomy to approve the rate charged by terminals on their premises.

Disputes in this regard were addressed as per the Major Ports Adjudicatory Board Rules, 2023.

While announcing the new tariff regime in 2021, the Centre had said it would allow parity between private sector ports and terminals in government ports. Under the new regime in place since, fresh concessions for terminals leased out under public-private partnership (PPP) were free to fix their rates subject to a fixed outgo to the port authority. This leeway was given to all future PPP concessionaires. Royalty payable for trans-shipment and coastal cargo was also lowered in the new contracts.

Source link