New port regulatory body: the right approach

New port regulatory body: the right approach
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First Published: Thu, Jun 25 2009. 09 10 PM IST

Updated: Thu, Jun 25 2009. 09 10 PM IST
The Union government’s plan to give more teeth to a proposed regulatory body that will replace the existing tariff regulator for its dozen ports is a step in the right direction.
The new regulatory body will be created through a separate, independent legislation. The current regulator, the Tariff Authority for Major Ports (TAMP), was created in 1997 when the government opened its ports sector to private investment. TAMP was set up by an amendment to the Major Port Trusts Act, 1963, because 11 of the 12 government-owned ports are governed by this legislation. The only exception to this is Ennore Port in Tamil Nadu, which was set up under the Companies Act, 1956, and hence remains outside the jurisdiction of TAMP.
The new regulatory authority, intended to be comprehensive and powerful, will oversee all Union government-owned ports, whether governed by the Major Port Trusts Act or the Companies Act. It will also help when the 11 ports now functioning under the Major Port Trusts Act are converted into companies. TAMP has been criticized as being a toothless regulator with no powers to enforce its own tariff rulings or penalize those found violating the terms and conditions governing tariffs. It has a limited role—to set tariffs—without any regard for the facilities given to the end-use customers of port services. The proposed regulatory body would remove these shortcomings.
Unlike TAMP, the new port authority would be a full-fledged regulator. It would have the powers to set rates for the facilities and services provided at the 12 ports, to prescribe and monitor performance norms and standards for services and facilities provided by port authorities and private operators and also to decide on disputes between port authorities, private operators and users of the facilities and services.
The new regulatory body would have powers similar to that of a civil court to call for information, conduct investigations, summon witnesses, inspect books of accounts, reports or other documents of any port authority or private operator. There have been instances in the past when private operators refused to share vital information necessary to process a tariff proposal on the plea that it would be misused by their rivals.
The new regulatory body will also act as a grievance redressal forum, thus taking the role of an appellate authority. Under the existing regime, several tariff orders passed by TAMP have been challenged in courts. The new regime will not not take away the right of an aggrieved party to challenge the order of the regulator in the high court. But at least the port authorities, private operators and users would know they have a regulator with powers to settle their disputes and look into their problems arising from running or using port services.
The new regime will also go a long way in making ports more efficient since it will have the powers to set performance standards for port authorities and private operators, and to impose penalties in case of non-adherence.
A few years ago, a government-appointed task force had concluded that the frequent congestion at Jawaharlal Nehru Port, India’s busiest container port, and the resultant heavy demurrage (penalties for delay in loading or unloading cargo into/from a ship) and other extra charges paid by exporters and importers resulted from the lack of an integrated action plan for the port authority, the private terminal operator and other service providers. Its recommendation that exporters and importers be refunded the demurrage charges arising from problems not attributable to them is yet to be implemented.
In another instance, the Bombay high court is yet to pass a ruling on a writ petition filed by a group of container shipping firms way back in June 2001 that challenged a tariff order passed by TAMP, substantially reducing certain elements of port charges at Mumbai port.
Overall, the new regime is expected to be much more stable than the existing one, paving the way for a smooth flow of private investment into the 12 Centrally-owned ports. The government should now start planning the opening up of tariff setting at these ports to market forces as competition increases from newly developed/developing private ports located in many states that are outside the regulatory ambit of the Centre.
P. Manoj is Mint’s resident shipping expert and writes on issues related to shipping and logistics every other Friday. Respond to this column at allaboveboard@livemint.com
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First Published: Thu, Jun 25 2009. 09 10 PM IST