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Tariff cut at PSA’s Tuticorin terminal stayed

Tariff cut at PSA’s Tuticorin terminal stayed
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First Published: Wed, Feb 04 2009. 11 11 PM IST

Temporary relief: Shipping containers stacked up at the Singapore port of the world’s second biggest operator, PSA Corp. Jonathan Drake / Bloomberg
Temporary relief: Shipping containers stacked up at the Singapore port of the world’s second biggest operator, PSA Corp. Jonathan Drake / Bloomberg
Updated: Wed, Feb 04 2009. 11 11 PM IST
Bangalore: Port operator PSA-Sical Terminals Ltd, which runs India’s fourth biggest container terminal at Tuticorin port in Tamil Nadu, has secured a stay from the Madras high court against a 30 December order of the tariff regulator to cut rates by 34% for services provided at the facility.
The stay is effective for a four-week period that began on 27 January, said an executive at the port operating company, on condition of anonymity.
PSA International Pte. Ltd, the world’s second biggest container port operator, has a 57.5% stake in PSA-Sical Terminals with local partner Sical Logistics Ltd holding 37.5%.
Temporary relief: Shipping containers stacked up at the Singapore port of the world’s second biggest operator, PSA Corp. Jonathan Drake / Bloomberg
The operator has written to Union ministry of shipping and Tariff Authority for Major Ports (TAMP), the regulator for the centrally owned ports, saying it would be “commercially unviable” to run the facility at reduced rates.
Though the regulator has cut tariffs by 34%, effectively the reduction would be in the range of 42-43% range as two items have been axed, the operator said. Revenue earned would not be sufficient to cover cash operating expenses and royalty payments to the centrally owned port, the executive said.
Under the terms of the contract, the royalty per standard container rises by at least 30% every July. Currently, it pays Rs1,313 per container which will rise to Rs1,664 this year.
PSA-Sical charges Rs2,500 from customers for handling a container. If the TAMP order is implemented, the rates will fall to Rs 1,425, leaving the operator with Rs112 to run the terminal with a capacity to handle some 4.5 lakh standard containers.
Implementing the new rates also means losses incurred by the operator will rise to $ 40 million a month from about $ 12 million currently.
Shareholders in the joint venture, which was given rights to operate the terminal for 30 years beginning 15 July 1998, will have to take a call on what to do with the terminal, if the vexed issue is not sorted out soon, he added.
This is the third time since 2002 that the regulator has cut tariffs after PSA-Sical Terminals started operating the facility.
PSA could not be reached for comments, while Sical Logistcs declined to comment saying the matter was in courts.
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First Published: Wed, Feb 04 2009. 11 11 PM IST