Logistics

Major ports now have a new tariff setting authority

TE Raja Simhan Chennai | Updated on July 26, 2021

Board of Port Authority takes over from TAMP; PPP operators free to fix tariffs based on market conditions, says the shipping ministry

It’s official. After 24 years of fixing tariffs at the 12 major ports under Central government control, the Tariff Authority for Major Ports (TAMP) will no longer have that role. The Board of Port Authority, formed under the Major Ports Authority Bill 2020, will now fix tariffs, which will act as a reference during bidding for public-private-partnership (PPP) projects. PPP operators are free to fix tariffs based on market conditions, according to the Ministry of Shipping’s 2020-21 annual report.

The validity of the Reference Tariff Guidelines of TAMP was extended upto March 8, 2021, or until further orders, whichever was earlier. It’s now official that TAMP has been dispensed with, going by the ministry’s annual report, said an official.

Taming rising freight rates

However, the transition went unnoticed and surprised the trade, as many in the shipping industry said they were not aware of the development. “We are yet to hear about the transition,” one of them said.

G Raghu Shankar, Executive Director of International Clearing and Shipping Agency, said that TAMP had created a consultative process that gave the port/terminals industry a platform to interact on any proposal including tariff revisions. Over time, the landscape of ports and port terminals changed drastically with the addition of multiple facilities, both in the private and public sector, offering users options not necessarily based on tariff. This indirectly minimised the relevance of TAMP. However, the ministry could open a consultative process, he said.

Need for balance

On one hand, the major ports have done away with industry representation in the Board, while on the other there is need for user participation in fixation of tariff and other port-related development activities to help balance the demand-supply situation, said AV Vijayakumar, CEO of Paramount Shipping.

TAMP was created in 1997 through an amendment to the Major Port Trusts Act, 1963, and constituted by the government through a gazette notification on April 10, 1997. It was mandated to frame the ‘scale of rates and statement of conditions’ for services rendered by the major port trusts and private terminals, as well as the charges for use of port properties.

Port tariff guidelines to stay for one more year

An adjudicatory board has been proposed to carry out the residual function of the erstwhile TAMP, to look into disputes between ports and PPP concessionaires, to review stressed PPP projects and suggest measures to revive such projects, and to look into complaints over services rendered by ports and the private operators operating within them, the annual report said.

The Board of Port Authority has been empowered to enter into contracts, planning and development, fixing of tariff except in the matter of national interest, security and emergency. Under the current MPT Act, 1963, prior approval of the Central Government was required in 22 instances.

The Board of each major port shall be entitled to create specific master plan for the development of infrastructure established or proposed within the port limits, and such a master plan shall be independent of any local or State government regulations of any authority whatsoever, the annual report said.

Published on July 26, 2021

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