Centre releases draft guidelines on deregulating PPP port tariffs
PORTS & SHIPPING

Centre releases draft guidelines on deregulating PPP port tariffs

In response to longstanding demands from private port operators for parity between recent winners of public-private partnership (PPP) projects at major ports and those with older contracts, the Centre has issued draft guidelines for tariff migration. These guidelines will enable concessionaires to transition to a market-based tariff regime.

The shipping ministry noted that while tariffs were previously regulated due to a limited competitive landscape, the evolving market conditions now necessitate deregulation. The initial aim of introducing tariff regulations in 2005 was to protect user interests while ensuring fair returns for ports and promoting competition and efficiency. However, significant shifts in the market and competitive landscape in the Indian port sector have occurred since then.

Under the new draft guidelines, PPP operators will have the authority to set their own scale of rates (SOR), subject to signing a supplementary agreement. Historically, major port authorities served both as service providers to end users and as the concessioning authority, making tariff regulations crucial for protecting the interests of both port users and PPP operators.

With the transition to a landlord port model and increased private sector participation, the relevance of fixed tariff regulations has diminished. Several PPP operators have expressed concerns to the ministry, indicating that they face disadvantages compared to fully private ports due to the lack of parity in tariff fixation, making PPP projects less attractive.

While the new regulations will allow greater pricing flexibility, they will not affect government revenues generated from these PPP projects, as there will be no changes to the royalty structure. The draft guidelines state that the royalty as a revenue share for major ports will not fall below the amount it would have received under the previous tariff fixation regime. This will be accomplished by converting the revenue share to royalty based on the project's previously determined Annual Revenue Requirement. (Business Standard)

In response to longstanding demands from private port operators for parity between recent winners of public-private partnership (PPP) projects at major ports and those with older contracts, the Centre has issued draft guidelines for tariff migration. These guidelines will enable concessionaires to transition to a market-based tariff regime. The shipping ministry noted that while tariffs were previously regulated due to a limited competitive landscape, the evolving market conditions now necessitate deregulation. The initial aim of introducing tariff regulations in 2005 was to protect user interests while ensuring fair returns for ports and promoting competition and efficiency. However, significant shifts in the market and competitive landscape in the Indian port sector have occurred since then. Under the new draft guidelines, PPP operators will have the authority to set their own scale of rates (SOR), subject to signing a supplementary agreement. Historically, major port authorities served both as service providers to end users and as the concessioning authority, making tariff regulations crucial for protecting the interests of both port users and PPP operators. With the transition to a landlord port model and increased private sector participation, the relevance of fixed tariff regulations has diminished. Several PPP operators have expressed concerns to the ministry, indicating that they face disadvantages compared to fully private ports due to the lack of parity in tariff fixation, making PPP projects less attractive. While the new regulations will allow greater pricing flexibility, they will not affect government revenues generated from these PPP projects, as there will be no changes to the royalty structure. The draft guidelines state that the royalty as a revenue share for major ports will not fall below the amount it would have received under the previous tariff fixation regime. This will be accomplished by converting the revenue share to royalty based on the project's previously determined Annual Revenue Requirement. (Business Standard)

Next Story
Infrastructure Transport

Bengaluru-Chennai Expressway: 71-Km Stretch Opens for Toll-Free Travel

A 71-kilometer section of the Bengaluru-Chennai Expressway in Karnataka has been opened to the public, offering toll-free travel and significantly reducing travel time for commuters. Part of the larger 260-kilometer expressway connecting Bengaluru in Karnataka to Chennai in Tamil Nadu, this stretch has become a popular choice for recreational long drives. Once fully operational by August 2025, the expressway will cut travel time between Bengaluru and Chennai from six hours to just three, with a designed speed limit of 120 km/h. The project spans Karnataka, Andhra Pradesh, and Tamil Nadu, promi..

Next Story
Infrastructure Transport

DME Development Ltd Raises Rs 7.75 Billion via Green Bonds

DME Development Ltd (DMEDL), a wholly owned subsidiary of the National Highways Authority of India (NHAI), has raised Rs 7.75 billion through the first-ever issuance of Green Bonds in the roads and highways sector. The bonds aim to promote infrastructure development while ensuring environmental sustainability. NHAI Chairman Santosh Kumar Yadav expressed satisfaction with the response, stating, "This unique initiative sets a benchmark in the sector and encourages participation from diverse investors." Similarly, NHAI Member (Finance) and DMEDL Chairman NRVVMK Rajendra Kumar highlighted the str..

Next Story
Infrastructure Transport

Indore Assigns Rs 4.5 Billion for Road Development, Green Initiatives

The Indore Municipal Corporation (IMC) has approved Rs 4.5 billion for 23 road development projects aimed at improving urban infrastructure and promoting sustainable practices. The decision was taken during the mayor-in-council (MiC) meeting chaired by Mayor Pushyamitra Bhargava, alongside IMC Commissioner Shivam Verma and senior officials. The approved projects include the construction and widening of 23 major roads across the city, connecting key areas such as Bhagirathpura, Kila Maidan, and the airport. Additionally, 14 new roads aligned with Indore’s master plan were sanctioned, with de..

Hi There!

"Now get regular updates from CW Magazine on WhatsApp!

Join the CW WhatsApp channel for the latest news, industry events, expert insights, and project updates from the construction and infrastructure industry.

Click the link below to join"

+91 81086 03000