Regulator cuts rates at Mumbai container terminal by 10%

Regulator cuts rates at Mumbai container terminal by 10%

Bangalore: The tariff regulator for ports has ordered a 10% cut in the rates charged by Indira Container Terminal Pvt. Ltd (ICT) after the private terminal operator at Mumbai port sought a 25% hike.

The Tariff Authority for Major Ports, or TAMP, which regulates all rates at 11 Union government-owned ports, said in a 26 February order the port operator’s cost position showed it would be in a surplus at current rates and there was no justification for granting a 25% hike.

“On the contrary, the tariff is to be reduced for the relevant period. This authority decides to effect a reduction of 10% in the existing rates of Indira Container Terminal," TAMP said in the order.

The terminal operator, in its proposal to the regulator, had said it would not be able to make profits even after a 25% hike in rates. “It will be barely sufficient to cover our costs," it had said.

The reduced rates, effective immediately through 31 March 2012, is expected to provide substantial savings to container lines serving the Mumbai port.

The Container Shipping Lines Association had said a hike would lead to a diversion of cargo from ICT. The Indian National Shipowners Association had said a rate hike would be “unjustified".

ICT is a joint venture of Gammon Infrastructure Projects Ltd and Spanish port operator Dragados SPL to develop a new Rs1,015 crore container terminal at Mumbai port. It was allowed to run the existing terminal at Mumbai port till the new terminal could begin operations.

Gammon declined to comment on the issue.

The private operator began running the terminal in June 2008 under a licence arrangement with Mumbai port.

The company had said the global trade downturn had cut the volume of containers moving through the port. It handled just 20,783 twenty-foot equivalent units (TEUs) in its first year of operations, far lower than the minimum guaranteed volume of 72,000 TEUs.

Container traffic at Mumbai port has declined in recent years due to inadequate infrastructure and a shallow draught that doesn’t allow large ships to berth. Between April and January, volume dropped to 47,089 standard containers from 83,975 containers a year earlier.

In December, the financially troubled Dragados decided to exit the joint venture by selling its 50% stake to Gammon in two phases.

It has sold a 24% stake and can sell the remaining interest after the new terminal completes three years of operations.