Mumbai: India’s tariff regulator for the 12 major ports owned by the Centre has cut tariffs by 15% across the board for services provided by the private operator that handles the largest container freight station (CFS) at India’s busiest container port, Jawaharlal Nehru Port (JNP) in Navi Mumbai.
A CFS is an off-dock facility that decongests a port by shifting cargo and customs-related activities outside the port area.
Speedy Multimodes Pvt. Ltd, a private operator hired by the port, had filed a proposal with the Tariff Authority for Major Ports (TAMP) in November last year to hike rates between 88% and 151%. Speedy wanted to bring its rates on par with the tariffs that are currently charged by 17 other CFS operators, whose tariffs are not regulated by the tariff regulator.
After scrutinising the proposal, the regulator decided to slash the rates rather than grant a hike. “ The existing tariff if continued for the next three years would provide Speedy with a surplus of Rs28.39 crore. This Authority, therefore, decided to effect an across-the-board reduction of 15% in the existing tariffs,” the tariff regulator said in a notification issued on 23 July.
The new rates will come into effect immediately and remain valid till 31 December 2009. The previous rate of Rs1,350 per teu (twenty-foot equivalent unit) was approved by the tariff regulator in 1998.
Speedy Multimodes was awarded the contract to maintain, manage and operate the 120,000 teu capacity CFS and buffer yard owned by JNP for 20 years starting 1 January 2006, extendable by another 10 years depending upon the performance of the operator. A teu is the standard size of a container and is a common measure of capacity in the container business.
Speedy Multimodes had argued in its proposal that the existing tariff that was set in 1998 was “wholly inadequate” to meet the costs of running a CFS and was “unviable” for any CFS operator.
It said in a submission to TAMP that operating costs had gone up significantly since the rates were last revised. The price of diesel, for instance, had increased by 250%, the company said.
Speedy Multimodes said that its rates were substantially lower than those being charged by 17 other CFS operating near JNP, which handles more than 60% of the container cargo moving through all the Indian ports. These CFS operators include Gateway Distriparks Ltd, AllCargo Global Logistics Ltd and Balmer Lawrie & Co. Ltd.
Last year, PSA-SICAL Terminals Ltd, which operates a container terminal at Tuticorin port, had approached TAMP seeking an increase of around 30% on the Rs2,100 it was charging per teu for its services. But TAMP reduced the tariffs by around 54%. PSA-SICAL challenged this decision in the Chennai high court and obtained a stay against the TAMP order. The case is before the court. The terminal operator reduced capacity by almost a third from 15 July, in reaction to the tariff regulator’s refusal to allow it to raise charges for the services rendered.