Revamp Empowers Older Private Cargo Terminals at Major Ports

28 Aug 2023 CW Team

Long-established private cargo terminals at major ports are on the cusp of a monumental change, shifting towards market-driven rates. The Ministry of Ports, Shipping, and Waterways is orchestrating this transformation to modernise the port sector while upholding concession agreements. This transition aims to balance commercial interests with regulatory obligations.

Under the guidance of a three-member panel of port chairmen led by Sanjay Sethi, Chairman of Jawaharlal Nehru Port Authority, a move is underway to potentially migrate older regulated public-private-partnership (PPP) cargo terminal operators to a market-driven pricing system. This mirrors the autonomy granted to private cargo handlers since the enactment of the Major Port Authorities Act of 2021.

The transition will preserve fundamental terms in concession agreements while enabling older cargo terminals to levy market-determined rates. Revenue share will stem from these rates, calculated based on actual traffic or minimum guaranteed throughput (MGT) as per contracts. This innovative mechanism ensures contract volumes are met and allows port authorities to benefit from market pricing.

To ensure transparency, terminals will display market rates on their websites and provide a one-month notice for rate revisions. Rates will be indexed against the Wholesale Price Index, maintaining cost sensitivity. The shift aligns both older and new terminal operators under a unified market-driven approach.

This transformation enhances the port sector's GDP contribution and fosters a competitive landscape. Global port operators like D P World , PSA International Pte , and local firms such as J M Baxi Ports & Logistics stand to gain from this shift to a free-market pricing regime. The Ministry's efforts promise equitable benefits and bolster India's port sector for a dynamic future.

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