The Hindu Business Line : Move to drop competitive pricing of port services criticised

The Water Transport Workers Federation of India has criticised the decision of the Union Finance Ministry and the Planning Commission to drop its initiative to bring about competitive bidding for tariff structure in major ports.

The federation, in a statement issued here, said that the Finance Ministry and the Planning Commission had earlier requested the Shipping Ministry to change the norms in the port sector as the existing cost plus tariff mechanism does not have incentives for private players to cut costs, thereby, leading to shifting of business to ports in Singapore, Colombo and Dubai.

Flexible tax regime

Mr K.V.A. Iyer, Vice-President of the federation, said that shipping cartels being one of the significant users of port's services, it is often likely that the benefit of competitive pricing of ports' services would not get passed on to the shippers. Therefore, depending upon how excessively or otherwise the shipowners levy freight for carriage of goods, the Government should optimise tax revenue from port services by bringing flexibility to tax regime through periodic review. The service tax on port's services should be increased or lowered depending upon the level of freight levied by the shipowners, he said.

Unduly expensive

Mr Iyer pointed out that currently, the bidder who offers highest revenue share to port authority wins the licence to operate a container terminal. This norm makes the port's service unduly expensive. The bidder is also not required to guarantee quality of service based on verifiable norms for efficient operation of the container terminal. The port authority and the licensee are, thus, allowed to jointly exploit waterfront assets that optimise profit to the licensee and revenue to the port authority, he said.

Efficiency yardstick

According to the federation, fast turnaround of ships and lowest waiting time for berth are some of the parameters of efficiency in a container terminal.

The most important yardstick of efficiency is the maximum number of moves per hour.

Whoever gives credible guarantee that meet these criteria for best performance should be qualified to offer price bids.

The lowest price bid should be accepted in accordance with the terms of tender one of which must be that the licensee should absorb required labour from amongst port's employees, Mr Iyer said.

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