Vasan to announce new tariff guidelines for ports on July 31
The Shipping Ministry is all set to announce the new tariff guidelines for Major Ports in the country, which would provide autonomy to the operators to fix market-driven tariffs.
According to official sources, Union Shipping Minister G. K.Vasan is expected to make the big announcement, which could create a level-playing field for both major and non-major ports in the country, on July 31 in Mumbai.
It may be noted here that the Shipping Ministry, for the past few months, has been contemplating to come up with new set of tariff guidelines in response to many feed-backs received from the stakeholders that the existing Tariff Authority for Major Ports (TAMP)s regulations are detrimental to the growth of the sector.
Besides, Inter-Ministerial Task Force on Draft Port Regulatory Authority Bill also suggested that the Ministry of Shipping should notify broad guidelines and rules in line with the international best practices.
The Task Force also concluded that in the medium term, the Ministry of Shipping should take steps for amending the Major Port Trust Act 1963 so that tariffs at Major Ports are determined by competitive market forces.
It is worth mentioning here that the traffic at non-major ports has grown faster than the traffic at Major Ports. Over the past five years, the traffic at Major Ports has grown by a CAGR of 4% while the traffic at non-major ports has grown at a CAGR of 14.6%. The low growth at Major Ports continued in 2011-12 and the traffic has decreased by 1.7% over the previous year.
This trend has resulted in the proportion of traffic at Major Ports falling from 90% in 1995 to 61% in 2012. Conversely, non-major ports have increased their proportion of traffic from 10% to 39% during the same period.
In a paradigm shift in its tariff policies, the Shipping Ministry had announced about two months ago that port projects set up after April 1, 2013 are allowed to set market-regulated tariff.
The sudden move by the Shipping Ministry came in the wake of recommendations from two panels – one headed by Mr. B. K. Chaturvedi, member (Transport), Planning Commission, and the second by banker Mr. Deepak Parekh, who strongly recommended deregulation of tariffs at ports controlled by the Union Government by leaving tariff-setting to market forces, and to bring them on par with those owned by coastal State Governments that already enjoy such freedom.
Senior officials in the Shipping Ministry time and again for the past several months have been hinting at introducing new tariff guidelines to create a level playing field.
According to the draft Port Regulatory Authority Bill, it seeks to regulate tariff rates at all major and non-major ports and to monitor performance standards of facilities and services offered at all ports in India.
As per the draft Bill, a Major Ports Regulatory Authority (MPRA) would subsume and replace the Tariff Authority for Major Ports (TAMP) while State Port Regulatory Authorities (SPRAs) would be created to regulate tariffs in non-major ports.
According to EXIM analysts, the new guidelines will definitely provide a level playing field across the port sector in the country (including non-major ports) by allowing the port terminals to fix market-driven tariffs. Besides, it will also help the customers, in a larger way, the trade felt.
TAMP was constituted in April, 1997 to provide for an independent authority – the Port Regulatory Authority – to regulate all tariffs, both vessel-related and cargo-related and the rates for the lease of properties in respect of major port trusts and the private operators located therein.
There are 12 Major Ports in the country ” Mumbai, Jawaharlal Nehru Port Trust, Kolkata (with Haldia), Chennai, Visakhapatnam, Cochin, Paradip, New Mangalore, Murmagao, Ennore, Tuticorin and Kandla.