The Hindu Business Line : `Mormugao keeping close watch on impact of export duty on iron ore'

It is not clear yet if the export tax has disturbed the viability of iron ore exports from Goa. Till a clear picture emerges, we will be unable to decide on the tariff rationalisation issue...

MR PRAVEEN AGARWAL, CHAIRMAN, MORMUGAO PORT TRUST

"It is a little early to reach any conclusion about the effect of the duty on iron ore exports through Mormugao port, " Mr Praveen Agarwal, Chairman of Mormugao Port Trust (MPT), told Business Line recently. Mormugao port happens to be the country's leading iron ore handling facility. Seventy-eighty per cent of the port's earnings come from the iron ore traffic. "We are keeping a close watch on the situation and the impact of the cess is being assessed and we shall decide on augmentation of iron ore handling capacity of the port after the situation stabilises," Mr Agarwal said. He also dwelt upon various other issues covering, among other things, port performance and infrastructure development.

Excerpts of an interview:

What has been the impact of the export duty on iron ore on the port's performance? After all, iron ore is the single largest item of the port's traffic, accounting for the bulk of its earnings...

The levy of export cess on iron ore appears to have created some uncertainty in the mining industry as to whether the same level of exports would continue. The cess came into force from March 1. But Mormugao port did marginally better in March 2007 compared to March 2006.

Will you rationalise port tariff on iron ore now that the export tax has rendered its shipments costlier?

It is not clear yet if the export tax has eaten substantially into the profits of the exporters, or has disturbed the viability of iron ore exports from Goa. Till a clear picture emerges in this regard, we will be unable to decide on the tariff rationalisation issue

Are you taking initiatives to attract more general cargo?

We expect higher exports of steel slabs, HR coils, etc., through our port in 2007-08. There have been queries from bauxite exporters. However, due to limitations of berth space, stacking areas and other infrastructure constraints, we are unable to handle large quantities of general cargo. In the last two months, the occupancy levels of some of the berths exceeded 90 per cent compared to the international norm of 65 per cent.

How was the port's performance in 2006-07?

The port handled an all-time high cargo throughput of 34.24 million tonnes in 2006-07, up by 8 per cent over the 31.69 million tonnes handled in 2005-06.The provisional income for 2006-07 amounted to Rs 265 crore (Rs 229 crore). The operating income increased 16 per cent over the previous year. The net surplus for the year was Rs 78.84 crore (Rs 62 crore).

How much of it is due to tax planning?

Let me explain it a bit. Recently, Panaji Bench of the Income-Tax Appellate Tribunal upheld the plea of the port seeking exemption from tax payments and be treated as a charitable institution under Section 2 (15) of the Income-Tax Act. By obtaining registration under Section 12(A) as a charitable institution, the port thus saved around Rs 8-10 crore in 2006-07, likely to rise to around Rs 15 crore in 2007-08. The broader objective is that tax savings should help ports cut costs and improve competitiveness. In fact, Mormugao port could be a role model for the major ports in this matter; major ports together could save close to Rs 400 crore per year by way of tax exemptions. The income-tax authorities may challenge the order because of serious revenue implications, but the port authorities are hopeful that the Finance Ministry will take a broader view of the issue from port infrastructure development perspective.

What are you going to do about the alleged dust pollution in Vasco City and nearby areas caused by the coal traffic?

First, the port authorities and coal importers are working together on how to reduce the pollution level and our effort has not been without success. The ambient readings are well within the expected levels.

Also, there has been no increase in the volume of coal and coke we handled in 2006-07 vis-à-vis 2005-06. With the completion of the construction of the balance 5.2 km of the four-lane highway (NH-17B) connecting the port and the Verna Industrial Estate, the coal trucks will by-pass Vasco City.

Would you please throw some light on cruise tourism?

Mormugao port is fast emerging as an ideal port for cruise tourism.

In 2006-07, cruise vessels carrying 42,255 passengers made 84 calls compared to 61 calls totalling 29,279 passengers in 2005-06. Star Cruise Super Star Libra, engaged in coastal tourism, made 52 calls with 31,659 passengers.

There is a proposal for setting up a cruise-cum-container terminal at Baina but construction of such a terminal presupposes creation of necessary infrastructure such as breakwater, navigation channel as well as backup land area.

We are examining if a joint venture could be formed for providing the infrastructure. Once the infrastructure has been developed, I'm sure potential bidders will be interested in the terminal project.