The Hindu Business Line : ‘TAMP move based on agreed formula’

Access charges
PSA-Sical has decided to operate at lower capacity
TAMP followed Ministry order to calculate costs
Port cannot enter into talks with the company

Mamuni Das

New Delhi, July 17

The decision of the Tariff Authority for Major Ports (TAMP) to reduce tariff for the container terminal operated by PSA-Sical was based on an earlier compromise formula that the operator had entered into with the Shipping Ministry and the regulator, official sources told Business Line.

While refusing to accept the lower tariffs, the company is not going by its own compromise agreement, they added.

PSA-Sical has decided to operate at a lower level of capacity – three lakh twenty foot equivalent unit (TEU) containers per annum against the 2006-07 level of 3.77 lakh TEUs.

To lower the capacity, PSA-Sical will be operating with only two quayside cranes against the existing three.

It said that the TAMP September 2006 order to reduce the per TEU charges by 50 per cent at the terminal would affect the revenue flow of the firm and not cover the cash operating expenses and royalty payment per TEU.

RATIONALE OF TAMP

However, the TAMP decision to halve the terminal access charges was based on a “compromise memorandum” agreement between PSA-Sical, TAMP and the Department of Shipping in 2005.

Based on this compromise, PSA-Sical withdrew its case from Madras High Court on August 17, 2005.

The case was going on because even in October 2002, when the TAMP issued an order to reduce tariff by 15 per cent, PSA-Sical had moved court and obtained a stay.

According to the memorandum, the company’s revised tariff proposal was to take into account the gains enjoyed by the firm for not implementing the 2002 order and the benefits were to be set off over a three-year period.

Now, while issuing the 2006 order to slash tariffs by 50 per cent, the TAMP had calculated the benefits to the terminal operator as Rs 72.63 crore between October 2002 and September 2006.

For calculating costs, the TAMP had followed the Shipping Ministry’s 2003 order of not considering the royalty payment charges as a ‘pass through’ cost.

Incidentally, PSA-Sical has filed a writ petition in the Madras High Court against the port trust on this issue as well.

Last month, Tuticorin Port authorities had told PSA-Sical that the port cannot enter into any negotiations with the company on these issues (what costs should be included while calculating tariff), since it had filed three writ petitions on these issues.

PSA-SICAL Terminals, a joint venture between PSA Corporation of Singapore and SICAL Logistics, has been operating the terminal since 1999.