Mumbai: The Tariff Authority for Major Ports (TAMP), India’s tariff regulator for the 12 Union government-owned ports, is facing stiff legal opposition from container terminal operators to its moves to reduce the fees the operators charge customers.
Speedy Multimodes Pvt. Ltd, a private container freight station operator at Jawaharlal Nehru Port, has filed a writ petition against the tariff regulator’s decision to cut its tariffs by 15%. “We have filed a writ petition in Bombay high court against the TAMP order,” said Speedy Multimodes managing director S. Krishnamoorthy.
This is the second such incident in recent times when a service provider has approached the court against an order of the tariff regulator. Earlier, PSA-SICAL Terminals Ltd had filed a writ petition in the Madras high court against the regulator’s decision in September 2006 to cut tariffs at its container terminal in Tuticorin Port by 54%. The court has since quashed the order and has asked the regulator to pass a fresh order within eight weeks on a representation made by PSA-SICAL.
A container freight station is an off-dock facility that decongests a port by shifting cargo and customs-related activities outside the port area. Speedy runs the largest such operation at India’s busiest container port, Jawaharlal Nehru Port, in Navi Mumbai.
It had filed a proposal with the tariff regulator in November last year to hike rates for the services rendered at the station by 88-151%. But, after studying 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,” TAMP said in a notification dated 23 July.
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 station and buffer yard owned by the port for 20 years starting 1 January 2006, which is extendable by another 10 years depending on 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.
There are 18 such operators, including Gateway Distriparks Ltd, AllCargo Global Logistics Ltd and Balmer Lawrie & Co. Ltd that service the Jawaharlal Nehru Port, which handles more than 60% of all the container cargo moving through all Indian ports. But Speedy manages the only container station whose tariffs are regulated by the regulator. Speedy’s 54-acre facility is owned by the Union government-owned port.
Speedy had argued in its proposal that the existing tariff that was set in 1998 was “wholly inadequate” to meet the cost of running such a station and was “unviable” for any operator. It said that the operating costs had gone up significantly since the rates were last revised in 1998.