The Hindu Business Line : Port charge hike hits operators

HEFTY increase in port charges in almost all major ports for coastal shipping during the last few months, coupled with the sharp rise in bunkering costs, has delivered a blow to coastal operators.

According to industry sources, the increase in port charges had the approval of the Tariff Authority for Major Ports (TAMP), which in fact was reported to have recommended an even steeper hike for coastal shipping operators. TAMP's approval for a hike is based on its earlier directive that the rate for this segment of the industry should be 70 per cent of the charges applicable to foreign going vessels. And with the vessel-related charges for foreign going vessels having been increased by the ports due to various factors, including the depreciation of the rupee against the dollar during the last two months, the coastal operators are having to cough up significant increase in port charges. "What is worse is that we are having to bear this increase without any additional facilities created for us by the major ports," said an industry representative.

Earlier, TAMP had approved a nearly 300 per cent increase in the charges for coastal operators by Mumbai port. "But Mumbai port had increased the charges by an average of 100 per cent since February this year. While the port dues was increased by100 per cent, the composite pilotage and towage was increased by 250 per cent by Mumbai port," pointed out Mr S.K. Shahi, Chairman of SKS (Ship) Ltd, a major player in the coastal segment.

In the light of this increase, the coastal shipping operators met with the new Minister for Shipping, Mr T.R. Baalu, last month, reiterating their demand that coastal rates should be de-linked from the rates for foreign going vessels. "Why should the two rates be linked? And why should coastal operators pay more if the ports are not providing additional facilities? We have, in fact, suggested to the Minister that the coastal rates be kept frozen for five years, if the Government really wanted to encourage coastal shipping. Also, we have suggested that no cess should be levied for coastal cargo, except for coal and petroleum products," said Mr Shahi.

Indeed, such increases in port tariff and lack of adequate infrastructure for coastal operators have been stifling growth of this mode of transportation, which is claimed to be cheaper and cleaner means of movement of cargo.