ANALYSIS. JNPT: A rate wrangle that keeps getting bitter

An application filed by the Jawaharlal Nehru Port Trust (JNPT) for levying uniform rates for direct port delivery (DPD) from importers has laid bare the deep bitterness between the government-owned port trust and private terminal operators over rate cuts ordered by the rate regulator in 2012, the ensuing court cases and the wrangling over concession agreements.

DP World and APM Terminals, which run terminals two and one at JNPT, took the opportunity to hit out at the “double standards” of the JNPT/government in seeking uniform rates for a new activity to promote “national interest” and “competitiveness of the nation” while “ignoring the interests of the private terminals on earlier occasions”.

There are multiple issues involved here, says an executive with a private terminal. First, the court cases that some terminals are going through. Second, two terminals are on a revenue share model – one on royalty and the other is a port trust-owned terminal. “We are fine with the new charge provided there is equity among all players,” he said.

When a new tariff is tried it should be uniform and just and ensure that nobody gets disadvantaged, he said. “Those under revenue share will definitely have a lower retention of income compared to those who are not under revenue share. Besides, this should happen without prejudice to the court cases,” he added.

TAMP has cut the rates of DP World-run NSICT and APM Terminals-run GTI in 2012. The Mumbai High Court has stayed the rate cuts based on separate petitions filed by the two firms, and has allowed them to continue charging the existing rates, but the petitions are yet to be decided. NSICT is run on the royalty model (it has to pay royalty to JNPT on each container handled at rates specified in the contract), while GTI and NSIGT are operating on the revenue share model wherein they have to share annual revenue with JNPT finalised through a tender.

GTI wants JNPT to waive revenue share on DPD charges, while NSICT sought royalty payment to be set off on other containers as a condition to consent to the uniform DPD rate proposal.

“JNPT, NSICT, NSIGT and GTI’s scales of rates are currently subject to different tariff guidelines, which have been issued by TAMP from time to time. The proposal intends to fix a uniform scale of rates for DPD containers for all the container terminals, which is not permissible as per the current regulatory mechanism which differentiates between container terminals on the basis of the tariff guidelines under which their respective tariff is fixed. Without prejudice to the foregoing, you are requested to clarify that the fixation of charges for handling the DPD containers is being fixed under which guidelines,” said NSICT in a written submission during the rate-setting exercise.

“We have not come to JNPT for the implementation of DPD. Do not force the levy on us. The rates are to be levied by NSICT. We do not want to delink this levy from the other charges being levied based on the direction of the court. The levy of DPD charges by us will have an impact on the court direction. We do not want to jeopardise that,” NSICT wrote in its submission.

“NSIGT scale of rate has been set as per the TAMP guidelines of 2008. We would seek clarity as to under which part of the guideline TAMP seeks to introduce this scale of rate. We would like some more list of activities to be introduced in our scale of rates for which then we can approach TAMP separately,” NSIGT wrote in a tongue-in-cheek submission on the matter.

On the other hand, GTI said that since revenue share is not applicable to the terminal run by JNPT and NSICT, fixing a standard rate for all the terminals would be “discriminatory and unequitable” unless JNPT agrees to waive off payment of revenue share by GTI. JNPT has rejected this demand.

The issues on concession agreement and unrelated issues, according to JNPT, may not be clubbed with fixation of uniform charges for DPD containers. “Don’t attach strings to the levy of DPD charges,” JNPT retorted.

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