The Hindu Business Line : Tariff fixation: PSA-Sical seeks parity with Chennai Container

Chennai, Sept 10 PSA-Sical, the private container terminal operator at Tuticorin, has urged the Shipping Ministry to treat the company at par with Chennai Container Terminal Ltd (CCTL), which operates the Chennai container terminal, when it comes to tariff fixation.

Denial by TAMP

The Tariff Authority for Major Ports (TAMP) did not allow PSA-Sical to include royalty payments as part of tariff charged to customers.

SICAL plea

In a communication to the Shipping Ministry, PSA-Sical said the yardsticks applied by the Ministry to the two operators are different on incorporating royalty/revenue share as part of the cost in tariff fixation.

PSA-Sical will make “likely losses” if it is not allowed to treat royalty as an element of its cost and pass it on to customers.

“The Ministry must rectify the inconsistency in its approach, and must issue a policy direction to the TAMP to treat PSA-Sical at par with CCTL,” the company said.

Ministry notification

The company said that in a communication sent by the Ministry to the TAMP in November 2003 pointed out that “TAMP may review and revise tariff in the case of CCTL to take into account royalty/revenue sharing as cost for tariff fixation in such a manner as to avoid likely loss to CCTL.”

In another communication to the TAMP in April 2006, the Ministry said “the pre-condition of incurring loss (and not ‘likely loss’ as mentioned in the CCTL case) for claiming at least a part of the royalty as pass through has not been seen satisfied in the case of PSA-Sical.”

Different criterion

“This clearly shows that the criterion applying for denying PSA-Sical to treat royalty as a cost is different from the criterion applied to CCTl,” the company said.

The Ministry in April 2006 observed that revenue share/royalty payment shall not be considered as part of the costs while fixing tariff.

PSA-Sical believes that the entrepreneur assuming the risk of investing into technology and inputs towards enhancing efficiency of existing and future assets must be rewarded adequately by internalising the efficiency gains in the tariff charged to customers, the company said.