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P. Manoj

The rates approved by the Tariff Authority for Major Ports are only the ceiling rates, the discounts representing mere floor levels. The port trusts are free to charge lower rates and offer higher rebates. As such, a separate tariff incentive scheme need not be imposed on the port, felt the Authority, justifying the withdrawal of the volume discount scheme at Kochi port.

OVERRULING the objections raised by the users, the Cochin Port Trust (COPT) has decided to withdraw the existing volume discount scheme/incentive scheme with retrospective effect from April 1, 2003.

The Tariff Authority for Major Ports (TAMP), through a gazette notification issued on November 4, has approved the proposal submitted by COPT to discontinue the volume discount and concession arrangements introduced by the port from January 2001.

COPT has, however, indicated that it will formulate some other incentive scheme at a later stage as and when the need arises.

TAMP has already passed a common adoption order for all the 11 major port trusts on August 28, declaring that the rates prescribed in the Scale of Rates approved by the Authority will act only as ceiling rates while the rebates and discounts would be mere floor levels.

The major port trusts will have the flexibility to charge reduced rates and offer higher rebates and discounts than the one approved by the tariff regulator. "Because of this flexibility available, the COPT can reduce the notified rates, wherever necessary, based on its commercial judgment.

Viewed from this perspective, a separate tariff incentive scheme, which has reportedly not yielded any desired result, need not be imposed on the port,"

TAMP has said in its order approving the withdrawal of the volume discount scheme at the Kochi port. The existing volume discount scheme of COPT offered a rebate of Rs 500 per twenty-foot equivalent units (TEUs) on additional throughput handled over and above the highest throughput handled during the previous two financial years.

The scheme also offered a rebate of 25 per cent in wharfage on any cargo, other than containerised cargo and petroleum crude, which was not handled in the port during the last two financial years, when it is imported/exported through the Kochi port.

Port-users and their representatives such as Cochin Steamer Agents' Association, Cochin Custom House Agents' Association, Indian National Shipowners Association (INSA) and Cochin Chamber of Commerce and Industry have strongly opposed the Port's proposal to withdraw the volume discount scheme.

"The decision of the port to discontinue the volume discount scheme is unfair since the scheme was introduced to attract more exporters/importers and cargo to the Kochi port. The continuance of such a scheme gains more significance when other ports are introducing incentive schemes to attract more export/import cargo", the Cochin Custom House Agents' Association has said.

INSA is of the view that the withdrawal of concessions/discounts will lead to diversion of cargo to other ports. This view has been echoed by the Cochin Chamber of Commerce and Industry.

"COPT wants to increase rates and withdraw concessions. The cargo traffic will divert to other ports," it warned.

The Shipping Coporation of India (SCI) has urged the port trust to modify the scheme to make it attractive and extend rebates to shipping lines.

COPT had introduced the scheme in 2001 on a ad hoc basis as an interim measure with the approval of TAMP. "A review of the scheme revealed that it is not desirable anymore", COPT had said while defending its proposal to discontinue the scheme.

In fact, the port trust has stated that the volume discount scheme had not resulted in any increase in the volume of containers handled at the port.

Besides, the port trust has argued that the cargo traffic may not witness any further growth in volumes due to the continuation of the scheme on account of capacity constraints faced by shippers.

COPT had refunded Rs 7.50 lakhs in 2000-01, Rs 6.55 lakhs in 2001-02 and Rs 7.75 lakhs in 2002-03 during the three years the scheme was operational.

The scheme was meant to be a one-time scheme unlike other discount schemes where a closing date is specified.

In the case of rebate given in the wharfage rate for bulk cargo, there is a risk that the same cargo would become eligible for incentive every third year, thus causing undue outflow of funds to the port without any actual increase in cargo volume.

There is also the risk of various grades or categories of the same cargo being interpreted as new cargo.

The customers, particularly the big volume contributors, have applied for discount under the scheme for a maximum of two years since they are not able to increase the throughput beyond a particular point.

"The scheme is withdrawn due to the disadvantages it can cause to the port if it is continued beyond three years at a stretch. No tariff incentive scheme can run indefinitely", COPT has said.

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