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TAMP to lose its tariff fixing role

Posted to TAMP to lose its tariff fixing role (by on January 9, 2013

Set on capacity enhancement of major ports, the government plans to withdraw the tariff fixing function of TAMP known for creating havoc for terminal operators and the drop in efficiency

Facing all round flak the government has finally decided curtailing the tariff fixing function of the Tariff Authority for Major Ports (TAMP). This was one of the major decisions taken at the 14 Maritime States Development Council (MSDC) meeting of 8 January 2013. The Union Shipping Minister G. K. Vasan stated, “For all prospective port projects we are doing away with the tariff regulation by TAMP and the operators will be allowed to fix their own tariff. The ministry will come up with new set of guidelines for TAMP to replace the current ones in about two to three months.” 

The issue of tariffs at the private terminals operating inside the major ports of India came up when India’s first Major Port privatization agreement was signed in 1997. This was because it was felt the land-lord port would also be competing with the licensee (terminal operator). The Tariff Authority for Major Ports (TAMP) was therefore constituted as an independent authority to regulate all tariffs at the 12 major ports run by the Federal government. Unfortunately, the norms fixed by TAMP has hit private terminal operators. The norms compel terminal operators to implement lower rates if they do well in order to “share profits with port users”. With the result operators are forced to slash efficiency and reduce their revenue earning by cutting down the amount of business handled at these terminals. 

The straw that broke the camel’s back appears to be the recent results declared by India biggest container Port, the Jawaharlal Nehru Port Trust (JNPT) whose container volume fell 1.4 percent year-on-year in 2012. The number of containers handled by this west coast port’s three terminals totaled 4.25 million TEUs down from 4.31 million TEUs in 2011.

The Gateway Terminal (APM Terminals - Mumbai) JNPT’s largest box facility, handled 1.96 million TEUs, up 3.6 percent from 1.9 million TEUs a year earlier. Traffic through DP World’s Nhava Sheva International Container Terminal fell about 25 percent to 1.09 million TEUs from 1.45 million TEUs. The state-owned Jawaharlal Nehru Container Terminal contributed 1.2 million TEUs, a gain of 23.5 percent over 2011.

The JNPT chairman L. Radhakrishnan stated that the port regulator Tariff Authority for Major Ports’ decision to cut service rates at the three terminals was a huge setback for the port in 2012. “The tariff revision adversely impacted the port’s revenue and its capacity to build up reserves for non-return investments in projects like dredging.”

Following the MSDC meeting the Union Shipping Secretary P. K. Sinha clarified, “Unlike today where the operators are being regulated by TAMP, the new operators will be free to fix their own tariff for their own ports. We are in the process of coming out with a new policy for TAMP, which will continue to function, but not to fix tariff. We will be changing its role. In its new role TAMP will have different functions such as to intervene in tariff dispute, offer advice, etc. This will go a long way to encourage more players to come into the port capacity building plan. We are also looking at freeing the operators from TAMP regulations so that future operations will not get affected. We are studying to see how to give relief to those affected. “

In the current year, the government plans to award 42 capacity augmentation projects in the major ports at a cost of $ 2.69 billion for achieving a capacity addition of 251 million tones. As on 31 December 2012 the government has already awarded 17 projects and plans to award the remaining by March end.

Tags: government India New infrastructure MarineNews Maritime news port ports marine development containers investment Container freight