India plans tariff migration for major ports

28 Sep 2023 CW Team

The government is preparing a tariff migration system to grant pricing flexibility to existing private terminal operators at major ports. To safeguard the government's revenue, officials are considering implementing a minimum revenue commitment linked to the Wholesale Price Index. This measure aims to mitigate risks associated with private concessionaires offering lower tariffs to secure more cargo.

Private terminals at major ports have been operating under various fiscal regimes based on the year they received their concessions. These terminals collectively handle nearly half of the traffic at major ports across the country.

Sanjay Sethi, Chairman of the Jawaharlal Nehru Port Authority, leads the committee responsible for proposing a migration mechanism from the old tariff regimes to the new one for private terminals at major ports under the administrative control of the Central Government.

Previously, major ports charged different tariffs for consumers even within the same port due to varying contract terms with port authorities, regulated by the Tariff Authority for Major Ports (TAMP). With the Major Port Authorities Act, 2021 in place, TAMP was abolished, granting autonomy to each major port board to approve terminal rates on their premises. Disputes in this regard have been addressed under the Major Ports Adjudicatory Board Rules, 2023.

The new tariff regime, implemented in 2021, aimed to establish parity between private-sector ports and government port terminals. Under this regime, newly leased terminals through public-private partnerships (PPPs) were allowed to set their rates, subject to an agreed payment to the port authority. This flexibility was extended to all future PPP concessionaires, along with reduced royalties for trans-shipment and coastal cargo in new contracts.

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