New Delhi/Mumbai: Port users of the Nhava Sheva International Container Terminal (NSICT), India’s first port that was set up under public-private partnership, were overcharged by 80% during 2002-05, a new study said.
The study questions the role played by the Tariff Authority for Major Ports, the independent statutory regulator responsible for fixing tariff.
It alleges that the regulator allowed the terminal to extract “inadmissible returns of Rs524 crore” during this period, which translated into 100% annual return on equity as opposed to the permissible 20%.
A copy of the study has been posted on the website of the Secretariat for the Committee on Infrastructure, which operates under the purview of the Planning Commission.
A note on the website states that the report should not be seen as the views of the Planning Commission.
The terminal is part of the Jawaharlal Nehru Port Trust (JNPT), near Mumbai. In 1995, the trust invited bids for construction, operation and maintenance of a new container terminal for 30 years on a build-operate-transfer basis.
The contract was awarded to a consortium of P&O Australia Ports, Konsortium Perkapalan Berhad and DBC Group of companies.
Ganesh Raj, senior vice-president of DP World, which is the present owner of the terminal, said: “I cannot comment on this report because it is baseless.The tariff charged by state- owned terminal JNPT and private terminal NSICT is almost the same.”
But the study alleges that the terminal “made profits far in excess of permitted returns, and that a significant part of these profits could be attributed to monopoly rents arising out of a flawed regulation of tariffs in an environment of inadequate capacity creation compared to rising demand.”
From its inception and up to March 2005, the terminal’srevenues totalled to about Rs1,624 crore, out of which the royalty amount payable to the port trust was Rs117 crore, some 7.2% of its total revenues.
A representative of a leading shipping line based out of Mumbai, speaking on the condition he wouldn’t be identified, said the initial tariff was 15% to 17% higher than that of the trust during initial years but that the terminal had reduced it over the past year.