The Hindu Business Line : TAMP cuts vessel-related charges at JNPT by 10 pc

THE Tariff Authority for Major Ports (TAMP) has effected a suo motu reduction of 10 per cent in the ceiling rates of all vessel-related charges prescribed in the Scale of Rates (SoR) of the Jawaharlal Nehru Port Trust (JNPT).

In a Gazette notification issued on May 21, the tariff regulator hinted that a further cut in vessel-related charges at JNPT was in the offing.

"There appears to be a case for further reduction in the charges at JNPT. A decision on this aspect will be taken after analysis of the cost position at the time of the next general review of the Scale of Rates of JNPT that is due in September 2004. For this purpose, JNPT should submit its proposal by July 31," the notification issued by TAMP has stated.

If JNPT does not come up with its proposal for the next general review of SoR within the stipulated time, the authority will again take up this case in August 2004 suo motu to decide on further reduction in the vessel-related charges, the tariff regulator has warned.

This is one of the rare instances where the tariff regulator has taken up a tariff revision proposal on its own without the service provider/port submitting a proposal in this regard, which is the usual practice.

At the time of the last general revision of the SoR of JNPT in August, 2002, TAMP had observed that since the port as a whole depicts a surplus position for the years 2002-03 and 2003-04 (relevant years for the two-year tariff revision cycle), there was scope for reduction in vessel-related charges.

TAMP said that it was now constrained to carry out a suo motu review of the vessel-related charges on the basis of the cost position considered in the August 27, 2002 order after JNPT failed to submit a proposal in this regard as categorically stated during the joint hearing relating to the last general revision of SoR.

Based on the cost position considered earlier, TAMP had concluded that the existing vessel-related charges at JNPT was 15.56 per cent more than the level warranted by the usual cost plus approach.

According to TAMP, certain key developments that have taken place since the last general revision had significantly impacted the financial position of the port.

While fixing the existing SoR, an estimated throughput of 7.6 lakh TEUs was considered for 2003-04. Whereas, the container terminal operated by JNPT had handled over 1 million TEUs in 2003-04. Besides, royalty from P&O Ports-run Nava Sheva International Container Terminal (NSICT) was estimated at 1 million TEUs. But, NSICT had handled around 1.2 million TEUs during 2003-04.

The estimated income from marine activity for 2003-04 may have varied on the positive side due to steep rise in container traffic.

Besides, the cost analysis during the last general revision revealed that operations at the bulk terminals incurred huge losses and had to be cross-subsidised from the surplus available in the marine/estate activities.

"This position would undergo a change with the conversion of the bulk terminal into a container terminal with private investments under the BOT arrangement," the tariff regulator has noted.

Moreover, the shallow water berths at JNPT have already started commercial operations which would also have contributed to the revenue of the port.

In view of these developments, the financial position of JNPT would have undergone a favourable change since the last general revision of SoR, necessitating a suo motu reduction in vessel-related charges by 10 per cent, it said.

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