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P. Manoj

New Delhi , Sept. 18

HENCEFORTH, revenue share or royalty payment made by private operators to the major port trusts will not be allowed as an element of cost while fixing and revising tariffs for the services provided by them.

"The Government has issued a policy guideline to all the major ports stating that the revenue share/royalty payment made by the private operators shall not be factored into as cost for fixation/revision of tariff," Shipping Ministry officials said.

Private operators such as P&O Ports, PSA-SICAL and even the new entrant Visakha Container Terminal Private Ltd (VCTPL) at Visakhapatnam had argued before the Tariff Authority for Major Ports (TAMP) for including royalty/revenue share as an element of cost for the purpose of calculating tariffs.

Following the Ministry guideline, TAMP has rejected a request from VCTPL to consider the royalty paid by them to Visakhapatnam Port Trust (VPT) at the rate of Rs 50 per twenty-foot equivalent units (TEUs) as an item of cost.

VCTPL had argued before TAMP that the net present value of the royalty payable to the VPT as per the terms of the concession and licence agreement will remain at Rs 50 per TEU throughout the concession period and that this item was allowed while fixing the tariffs of Nhava Sheva International Container Terminal (NSICT) run by P&O Ports, the first private terminal developed at a major port in the country.

TAMP had then allowed royalty paid by P&O Ports to JNPT as an item of cost while fixing the tariffs for the first private terminal at a major port. The issue of admitting the revenue share/royalty came up for close scrutiny only subsequently during the tariff fixation for Chennai Container Terminal (CCT) also run by P&O Ports.

It was decided not to allow revenue share as a cost element for fixation of tariffs in the CCT case. Applying the same principle, TAMP had also disallowed royalty payment made by PSA-SICAL combine to the Tuticorin Port Trust as a cost item while revising its tariffs in September 2002.

"In the case of VCTPL also, there is no extraordinary circumstances warranting an exceptional treatment by deviating from the guideline issued by the Shipping Ministry. This item (royalty) is therefore excluded from the cost," TAMP has said in its order approving rates for the private container terminal at Visakhapatnam run by United Liner Agencies and Dubai Ports Authority combine.

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