Mumbai/ Bangalore: The Union shipping ministry has revived an almost decade-old proposal to bring all ports in India, both state-owned and private, under one tariff regulatory body.
This would mean that ports owned by state governments in Pipavav, Mundra, Krishnapatnam and Gangavaram, as well as new ones being developed by states with private investment will have their tariffs set by the Tariff Authority for Major Ports, or TAMP.
“TAMP now sets tariff for Union government-owned ports. We want TAMP to do this for ports owned by the state governments also,” said Rakesh Srivastava, joint secretary looking after ports in the shipping ministry.
All-pervasive body? There are at least 185 ports outside the Union government’s control, owned by state governments. These ports now account for some 25% of India’s port traffic, up from zero a few years ago. Ashesh Shah / Mint
The move is being opposed by private operators currently operating or developing these ports. Such port operators currently can set their own tariffs.
Only 11 of the dozen ports owned by the Union government are currently regulated by TAMP. These ports function as trusts under the Major Port Trusts Act, 1963. TAMP was created by amending this Act when the Union government in 1997 opened cargo capacity expansion projects at these ports to private investments. The only exception is the Ennore port in Tamil Nadu, which was set up by the Union government as a firm under the Companies Act, 1956, and is, therefore, outside TAMP’s purview.
There are at least 185 ports outside the Union government’s control, owned by state governments. These ports now account for some 25% of India’s port traffic from zero a few years ago. Some of these so-called non-major ports have been given to private firms for development and operations.
The Union government is planning to give deterrent powers to TAMP, including penal and enforcement rights by having a full-fledged TAMP Act, rather than just be a part of the Major Port Trusts Act.
“We want to have a powerful and all-pervasive TAMP,” Srivastava said. The idea is to have a transparent tariff structure across ports with TAMP acting as a dispute settlement mechanism with more powers, he said, adding that the government wants to bring all ports in India under a uniform tariff regulator by 2011.
But moving the tariff authority to TAMP will require the agreement of state governments. “No one has objected to the proposal so far,” claimed Srivastava. “We are trying to build a consensus because maritime states are also involved in this and all of them have to be taken on board. Hopefully, it will come through,” he told Mint during a visit to Mumbai last week.
However, he conceded that the plan has a few operational problems. “The first constraint is because of capacity and the second is because of the type of cargo,” he said. Unlike non-major ports, major ports have larger capacities where the tariffs are set on the basis of capacity as well as on the nature of cargo. “So, if capacities do not match, the biggest problem TAMP will face is how to make it uniformly applicable,” Srivastava said.
Not surprisingly, private firms that have developed and are operating the non-major ports were vocal in their opposition to the idea.
“It is a retrograde step,” said an executive at the Adani Group, which runs India’s biggest private port at Mundra in Gujarat, the western Indian state that has the most ports with private investments. He did not want to be named because he is not authorized to speak to the media.
“Ports in Gujarat do not require a regulator because there is perfect competition there,” said Prakash Tulsani, managing director, Gujarat Pipavav Port Ltd. Pipavav port is run by APM Terminals Management BV, the port operating unit of Danish shipping and oil conglomerate AP Moller-Maersk A/S. “In Gujarat, a customer has so many ports to chose from that there is no need for a tariff regulator. Market forces will decide tariffs.”
Apart from Mundra, Pipavav and Hazira, a dozen-odd ports are being developed by Gujarat with private investments. Similarly, the Andhra Pradesh government has developed Krishnapatnam and Gangavaram ports with private funds.
In 1999, a committee headed by C. Babu Rajeev, then chairman of government-owned Cochin port, had suggested legislation to combine the Indian Ports Act, 1908 and the Major Port Trusts Act, 1963 into a single one to enable corporatization of these ports.
The committee had also suggested converting TAMP into an appellate authority that would only address tariff disputes. “The recommendation was never implemented though it was discussed in the shipping ministry and by the parliamentary standing committee on transport,” Babu Rajeev, now the chief executive officer of ABG Infralogistics Ltd told Mint.
Instead, the government then floated the idea of bringing ports that are outside Union government control under a tariff regulator. The plan was shelved due to lack of support from the states.