The Hindu Business Line : PSA Sical pares operations in Tuticorin Port

Chennai, July 8 In a move that could affect imports and exports activities at the Tuticorin port, PSA Sical Ltd, the company that operates the Tuticorin Container Terminal, has decided to cut down its level of operations.

Because of this, container ships may have to stay longer at the port.

The company has told the trade that from July 15, it would stick to the contracted minimum guaranteed throughput of 3,00,000 TEU.

Last year, it handled 3,77,000 TEUs and it was expected that with the cross border trade booming, there would be more to do.

Industry Norm

Sources said that PSA Sical has found the operations unviable at the tariffs fixed by the regulator, Tariff Authority for Major Ports (TAMP).

In September 2006, TAMP fixed a tariff of Rs 980 per TEU against the industry norm of around Rs 2,500, they said.

PSA Sical approached the High Court of Madras and obtained an interim order, which allowed the pre-September 2006 tariff of Rs 2,100 a TEU.

However, since July 15 the contracted escalation in royalty would apply, the company would not be able to function profitably.

At that level of tariff, the company would not be able to cover cash operating expenses, it is learnt.

Revised Norms

The company, a joint venture of Port of Singapore Authority and Sical of Chennai, has represented to the Government and the Planning Commission to bring its contract under the revised norms for fixing tariffs—norms that would apply to future contracts.

When PSA Sical won the bid for operating the terminal in 1998, the terminal concession agreement had said that the tariff would be the one fixed by the regulator, TAMP.

‘Not viable’

The company believes that the tariff fixed by the regulator is not viable.

This is because of many reasons, such as disallowance of royalty payable to the port and the norm of 15 per cent return on net fixed assets because of which tariff keeps going down with depreciation of plant and machinery.

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