Major ports to be allowed to fix market-linked tariffs

The shipping ministry has issued draft tariff norms for major ports in the country so as to enable them to compete with private players. Accordingly, the 12 major ports in the country, including those operated by private players, will be allowed to fix tariffs based on market conditions.

''The major port trusts would be free to fix the market linked actual tariff, which may be higher or lower than the prevailing reference tariff,'' the shipping ministry said in draft guidelines for Tariff Setting in Major Ports, 2013.

While the Tariff Authority for Major Ports (TAMP) will continue to fix the reference tariff for each port for different commodities, the major port trusts may set their own tariff, which may be higher or lower than the reference tariff.

The reference tariff will be indexed to inflation, but only to an extent of 60 per cent of the variation in the wholesale price index (WPI) occurring between 1 January of the year in which the reference tariff was originally notified and 1 January of the subsequent relevant year.

The revision of actual tariffs will be permissible only once in a financial year with the new rate taking effect from 1 April, the ministry said.

In case no tariff has been fixed for a particular commodity in a particular major port under the 2008 guidelines, then TAMP will notify the highest tariff under the 2008 guidelines for that commodity in the nearest major port along that coast.

TAMP will notify a new reference tariff, port-wise and commodity-wise, every 5 years, based on the norms and principles of 2008 guidelines.

''The reference tariff will be applicable for 5 years indexed to inflation. To notify the Reference Tariff for a particular commodity, TAMP will take the highest tariff fixed for that commodity in the concerned major port under the 2008 guidelines,'' it said.

TAMP will specify the minimum efficiency standards after duly considering the best international practices as well as local conditions. TAMP may engage consultants, if required, to assist them in this exercise.

The reference tariff for different commodities as well as the efficiency standards so notified by TAMP will be mentioned in the bid documents in respect of PPP projects.

Bids for award of PPP projects will be invited and evaluated on the basis of reference tariff.

The PPP operator would be free to fix the market-linked tariff  (actual tariff), which may be higher or lower than the reference tariff.

However, the revision of tariff would be permissible only once in a financial year. This revised tariff would come into force from the first day of the following financial year.

While bidding for the revenue share, the qualified bidders would keep in view the market-linked tariff that they are likely to be fixed during the concession period after commencement of operation.

The PPP operator should intimate the concerned port trust and TAMP the actual tariff fixed for the year in question. If the actual tariff proposed to be levied is higher than the reference tariff, a proposal for notification of the same shall be forwarded to TAMP at least 90 days before the beginning of the financial year.

The proposal should also include the upgraded efficiency standards to be maintained by the PPP operator.

The proposed tariff along with the proposed upgraded efficiency standards should be published by TAMP within two working days of its receipt on its website inviting comments from the various stakeholders within three weeks.

As per the draft policy, the MPTs will have to inform the TAMP at least 90 days in advance if the proposed actual tariff is higher than the reference tariff.

The MPTs, as per the draft, will also furnish to TAMP, monthly reports on cargo traffic, berth day output, average turnaround time of ships, average pre-berthing waiting time, percentage idle time of total time of vessels at berth as well as the actual tariff levied for each MPT owned berth/terminal within 15 days following the end of each month.

The 12 major ports include – Mumbai Port, Jawaharlal Nehru Port Trust, Kolkata (with Haldia), Chennai, Visakhapatanam, Cochin, Paradip, New Mangalore, Marmagao, Ennore, Tuticorin and Kandla.

The government is planning to expand their capacity by 767.15 million tonnes by 2020 at an investment of over Rs1,00,000 crore. However, a major part of the investment will come from the private sector.