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Mamuni Das

The Government has firmed up the new tariff fixation methodology for port terminal operators. The Finance Ministry, Shipping Ministry and the Planning Commission together worked out and finalised the new tariff setting methodology, which would form a part of the annexure of the model concession agreement (MCA) for ports which is under finalisation.

So now the tariffs charged at major ports would be linked to the efficiency of services provided by the terminal operators or port authorities. The tariffs ceilings would be fixed upfront and then competitive bids invited from companies wanting to operate terminals.

For arriving at a tariff ceiling, initially each of the major port authorities would prepare a normative project report specifying the desired key performance indicators for port services and the costs normally associated with such parameters.

Based on these cost norms, the port regulator Tariff Authority for Major Ports (TAMP) would decide the tariff ceilings for terminals of a port. These tariffs would be linked to wholesale price index and reworked periodically. “The tariffs would be automatically upgraded by about 70 per cent of whole price index,” they said.

However, the earlier proposed migration formula that allowed existing terminal operators of a port with lower tariff ceilings to migrate towards higher tariff ceilings (of those enjoyed by newer operators) by offering better performance parameters has been dropped from the policy, said official sources in the know. “It was felt that the migration formulae could be decided later since newer terminals at the same ports would come up after a gap of three-four years,” said sources.

The Finance Ministry, Shipping Ministry and Planning Commission were earlier contemplating a migration formulae. According to the proposed formulae, in case the Government decided to build another similar goods-handling terminal in a port (a second container terminal for instance), then bids could be invited with higher tariff ceilings, which in turn are linked to relatively higher performance indicators. In such a scenario, if the existing container terminal operator in the same port wants a higher level of tariff ceiling for its services, then it would also be required to achieve the improved level of performance parameters as fixed for the second terminal.

On whether these tariffs would be applicable to the present operators, the official replied in the negative. “The contracts of the earlier operators had different methodology for fixing tariffs,” the official said.

TAMP now decides the tariff ceiling for each terminal by allowing for 15 per cent return on capital employed. Port tariff-setting methodology has become a contentious issue, with terminal operators saying that the present norms do not reward those operators who bring in efficiency.

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