The Hindu Business Line : Tariff fixation at major ports — Normative approach to replace cost-plus method

THE Shipping Ministry has announced that the cost-plus approach for fixing tariffs at major ports will be replaced by the normative approach besides strengthening the powers of the Tariff Authority for Major Ports (TAMP).

"The cost-plus approach for laying down tariff by TAMP will be studied and improved upon to adopt reasonable methods of making profit for private investments. Gradually, the cost-plus approach will be replaced by the normative approach, starting at first in container handling facilities," says the new policy for maritime sector drafted by the Shipping Ministry.

The Ministry has also sought to allay the fears of private investors that increase in efficiency and productivity may result in reduction in tariff by TAMP. "Increase in efficiency and productivity would be rewarded," the policy paper has assured.

But it is necessary to ensure that efficiency and competition arising out of private sector investment would lead to tangible benefits to the users in terms of lower costs, it says.

The functioning of TAMP would be strengthened so that uniform and transparent norms prevail in matters of tariff fixation and in prescription of quality of service for applicability to port authorities/terminal operators to ensure that the needs of the users of the facility and profitability to the facility provider are met.

Trade would be consulted before any charges affecting them are implemented at the ports. "The policy would ensure that regular meetings with the exporters/importers at different levels are held besides making the consultations with the user and trade interests as mandatory before proposing any increase in tariff," it stated.

The Ministry has categorically said that there will be no control or regulation on shipping freight. But, where shipping lines do business which extends beyond the sea, that is, on land in India, they will also be subjected to control like any other agent of any other mode of transport.

The policy also outlines measures to help Indian ports capture the transhipment of Indian cargo taking placing outside the country. "These would include increasing the draft available at Indian ports, rationalisation of port dues, providing differential levels of tariff for different sizes of vessels or for different cargoes to attract mother ships to berth at Indian ports," it says.

The policy also seeks to evolve a suitable mechanism so that decisions relating to alteration in war risk premium and other marine insurance, increase in terminal handling charges, increase in fees pertaining to documentation on transport to or from ports, freight forwarding, consolidation and de-consolidation are taken in consultation with the Shipping Ministry.

Further, concession agreements with private operators at major ports, in future, would include a clause on scope to handle operations outside the terminal in certain emergencies such as strikes (as witnessed recently in the case of Chennai Container Terminal run by P&O Ports) and breakdowns so that the trade is not put to inconvenience.