The Hindu Business Line : Process begins to finalise tariffs for 5 port projects

Fresh norms
The new rules state that the tariff ceilings would be fixed upfront
Competitive bids will then be invited from companies wanting to develop and operate terminals

Mamuni Das

New Delhi, June 12

Major ports regulator Tariff Authority for Major Ports (TAMP) has started the process to finalise upfront tariffs for five upcoming terminal projects in four ports — Paradip (two projects), Visakhapatnam, New Mangalore and Goa.

Fixing the tariff is important to ensure faster implementation of the projects under the new rules decided for port projects to be taken up on a build, operate and transfer (BOT) basis through public-private partnerships (PPP).

NEW RULES

The new rules, which are specified in the model concession agreement (MCA), state that the tariff ceilings would be fixed upfront and competitive bids (on a revenue share basis) will then be invited from companies wanting to develop and operate port terminals.

Earlier, port tariffs were finalised by the TAMP after awarding the terminal development work to a company. This method was changed because the earlier methodology (which assured 15 per cent returns on capital employed) had become a contentious issue, with terminal operators saying that the norms did not reward those operators who brought in efficiency. Some terminal operators ( such as PSA-SICAL, DPW) had started approaching court following TAMP’s attempts to reduce port charges during the port operations phase.

Consultation process

According to official sources, the projects for which TAMP has started the consultation process with port users are the deep-draft iron ore and coal terminal in Paradip, one of the berth development projects at Visakhapatnam, mechanised iron ore handling at berth 14 in New Mangalore, development of berth 17 for handling bulk cargo in Goa. Tuticorin port has also just submitted its normative report for developing berth number 8 as container terminal, which TAMP would start processing.

NORMATIVE COST REPORTS

These port authorities have already sent normative cost reports to TAMP. In their reports, the major port authorities are required to specify the desired key performance indicators for port services and the costs normally associated with such parameters. Based on these cost norms, TAMP would decide the tariff ceilings for different terminals of a port. These tariffs would be linked to wholesale price index and reworked periodically.

In 2008-09, the Shipping Ministry aims to implement the bidding for 10 port projects cumulatively valued at Rs 5,500 crore. The list comprises mega container terminal at Chennai, international cruise terminal at Kochi, and development of 13-16 multipurpose cargo berths at Kandla, development of EQ 10 berth and WQ 6 quay in northern arm of inner harbour at Visakhapatnam.

In 2007-08, major ports in the country handled 518.63 million tonnes cargo registering almost 12 per cent growth over the previous fiscal.