Concor to levy surcharge at Tughlakabad ICD as steep hike in land license fee bites

P Manoj Mumbai | Updated on November 09, 2020

The Container Corporation of India Ltd (Concor) will levy a land usage surcharge of ₹5,000 per twenty-foot equivalent unit (TEU) on loaded import containers at its flagship inland container depot (ICD) in Tughlakabad near Delhi, as the state-run rail hauler looks to recover the high land license fee (LLF) collected by the Indian Railways from April this year.

The new land usage surcharge will come into force from December 6, according to a public notice issued by Concor.

Around 25 of Concor’s 64 terminals, including the facility at Tughlakabad, are running on land leased from Indian Railways at concessional market rates. Till March 31, the LLF for the lease was paid by Concor at the rate of ₹1,175 per TEU.

From April 1, the Railway Ministry has decided to collect the land licence fee at the rate of 6 per cent per acre of the market value of land where the terminal is located. The license fee would rise by 7 per cent annually on previous year’s value.

The revised calculation has the potential to make the Tughlakabad ICD — India’s biggest dry port spread over 195 acres — unviable. In FY20, the ICD handled close to 4,00,000 TEUs, paying an LLF of about ₹40 crore at the rate of ₹1,175 per TEU.

During the April-June quarter, the Railway Ministry has demanded ₹776.89 crore as LLF for the Okhla and Tughlakabad terminals of Concor for FY21.

In the July-September quarter, the Ministry demanded ₹1,275.93 crore, including GST, as annual land license fee on 13 terminals of Concor for FY21, based on the revised method of calculating the fee.

“As per the company’s assessment, the above demand is not as per the Railways’ extant policy. The matter is being suitably represented to the Ministry of Railways. However, an amount of ₹233.31 crore has been estimated and provided by the company by the applying extant policy of the Railways as LLF for all terminals built on Railway land for the period ended September 30,” Concor said.

With the new calculation, the land license fee for Tughlakabad ICD is estimated to soar to about ₹400 crore, putting a question mark over its survival.

“The Tughlakabad ICD has come under intense stress because of the higher LLF collected by the Railways,” said an official. “We are bleeding, there is no other way but to recover the higher outgo from the customers,” he added.

To reduce the higher overall outgo, Concor has also surrendered its New Mulund ICD in Mumbai which had an operating expense of about ₹48 crore against an income of ₹28 crore a year.

The New Mulund ICD adds to the list of 15 terminals built on Railways land that were surrendered by Concor to the Ministry since April this year.

Concor has also handed over the empty container parks at its Tughlakabad terminal — New Mineral Siding Okhla, Power Cabin and the New Power Cabin near Tughlakabad Railway Station — to the Indian Railways.

The new land license fee calculation has put a spoke in the process of privatising Concor, which was approved by the Union Cabinet in November last year.

The Railway Ministry is drafting a new LLF policy for facilities built on Indian Railways land to bring clarity to the privatisation process.

Published on November 09, 2020

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