New port regulator seen to enjoy wider scope, more ‘teeth’

The oversight body to be set up by the Centre under a new law to manage and administer 11 of the 12 major ports will have wide scope and “full teeth”, unlike the “toothless” rate regulator it will replace.

This has triggered a backlash from private cargo handlers, who term it a “draconian” step.

The Major Ports Adjudicatory Board, to be led by a presiding officer and two other members, will have the powers of a civil court under the Code of Civil Procedure, 1908, while trying a suit. It will also be deemed a civil court under Section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973.

While the existing Tariff Authority for Major Ports (TAMP) deals only with rate setting for port trusts and private firms operating at these ports, the adjudicatory board will have larger scope.

TAMP has been called a “toothless” regulator since it lacks powers to enforce its orders. Private operators, either individually or under the banner of the Indian Private Ports and Terminals Association (IPPTA), have often hauled TAMP to court over its rate cuts. Many such cases are yet to be decided on by the courts and till such time, private operators get to levy rates prevailing prior to the reductions ordered by TAMP.

Private operators have been lobbying for dismantling TAMP, arguing that there is “sufficient competition” in the sector for levying market determined rates.

The board of a port authority will have the freedom to set rates on its own for services run by it, but with prospective effect, according to the Major Ports Authorities Bill. The port authority will also have powers to fix tariff for prospective PPP projects, which will only act as a reference tariff for purposes of bidding. PPP operators will be free to set rates based on market conditions when they start operations.

Hence, existing private operators covered by the rate setting guidelines of 2005, 2008 and 2013 and tariff orders issued by TAMP under such guidelines will continue to be regulated by the new adjudicatory board.

“This provision just results in shifting the tariff fixation responsibility to the same authority under a new name,” IPPTA, an industry lobby, said while opposing the continuation of tariff regulation and fixation by the adjudicatory board. “It is self-defeating. Continuance of the function of tariff fixation by the adjudicatory board is also, to concessionaires in major ports, discriminatory, given that state ports which handle more than 50 per cent of the country’s EXIM trade have the freedom of market determined tariff.”

The provisions of this section appear not only to empower the adjudicatory board to perform the existing functions of TAMP but in fact enlarges the scope to include, for example, adjudication on disputes or differences concerning agreements between major ports and private operators.”

While the proposed law vests the adjudicatory board with judicial powers to decide on disputes, it does not mandate any PPP concessionaire to refer disputes to the board. It provides an option to PPP concessionaires to refer disputes arising out of concession contracts to the board.

“It is only when the concerned party refers the dispute to the adjudicatory board, the order passed by it would be final and binding on disputing parties,” the Shipping Ministry said while allaying the fears of private operators. “This clause is very draconian as it takes away the right of the concessionaires to approach the courts to seek relief. This clause must be deleted,” IPPTA said.

COMMENT NOW