Bangalore: As the global recession hits cargo volumes, some of India’s dozen Union government-owned ports and private firms operating cargo handling terminals at these ports are seeking to delay tariff revision that was meant to be carried out in January.
True picture: JN Port near Mumbai. Some ports are exploring the option of withdrawing rate revision applications filed with the regulator. Ashesh Shah / Mint
Some of these ports are even exploring the option to withdraw rate revision applications filed with the Tariff Authority for Major Ports, the tariff regulator for such ports.
Tariffs are approved by the regulator for a three-year period. State-owned ports and private firms operating cargo berths at such ports are required to file revision applications at least three months before expiry of current tariffs. It takes the regulator four-five months to conclude the revision exercise.
But port officials say it is unreasonable to file for new rates now. “The tariff, if decided at a time of economic turmoil, fluctuating foreign exchange rates and unpredictable volumes, will not reflect a true picture since the new rates have a validity of three years,” said an official at Chennai port. He did not want to be named.
The dozen Union government ports handle close to 75% of India’s overseas cargo shipped by sea. In the fiscal year ended March 2009, these ports recorded a cargo volume of 530 million tonnes (mt), a mere 2% increase from 519mt registered in the previous year. Some ports have even seen a decline in this fiscal.
State-owned ports also handle cargo at their respective ports in addition to private operators. Both argue that formulating a proposal has become difficult because they can no longer reasonably estimate volumes for the next three years. Guidelines say any request for extension of tariff validity will not be considered unless sufficient and justifiable reasons are given.
Even in exceptional cases where such requests are entertained by the regulator, an ad hoc reduction in the existing rates could be made but for no more than three months. Grant of extensions will also be subject to the condition that surplus, if any, accrued during the extended period would be fully set off in the next tariff revision cycle.
Kolkata port, which lost 5.8% in cargo volume in fiscal 09, has got an extension till 30 September, while International Seaports (Haldia) Pvt. Ltd, that runs a dry bulk cargo handling berth at Haldia dock of Kolkata port, filed its revision application on 30 January, two months before validity of existing tariffs ended. However, it was not in the format prescribed by the regulator for private operators.
It has extended the existing tariffs till 31 July for International Seaports, in which Larsen and Toubro Ltd has a stake, and which is yet to file a revision application in the prescribed format.
Cochin port, which saw a 3.7% decline in cargo, has received an extension till 31 July or till the effective date of implementation of the revised rate to be notified, whichever is earlier. Mumbai port can continue with current rates till 31 July or till new rates are notified, whichever is earlier.
Gammon Infrastructure Projects Ltd, which runs the container terminal at Mumbai port along with Spanish port operator Dragados SPL, can continue with existing tariffs till 30 June.
“Any increase in tariffs will make it difficult to retain existing customers,” said an official at APM Terminals Management BV, which runs a container terminal with Concor at Jawaharlal Nehru Port.
Some ports and terminal operators, however, find the delay in clearing their revision applications to be a blessing. For instance, United Liner Agencies of India (Pvt.) Ltd, which runs a container terminal jointly with DP World Ltd at Visakhapatnam port, is yet to get clearance for its revision proposal filed in February 2008. The validity of the existing rates ended on 31 March 2008. The regulator has extended the validity of the existing rates till 30 April.
DP World Ltd, which also runs the container terminal at Cochin port, has filed a revision application in April 2008 after validity of its existing tariffs ended on 31 March 2008. This also has not been cleared yet and existing rates have been extended till 30 June.
Mormugao port and Jawaharlal Nehru Port have also had rates extended till 31 July.