India's busiest container port wants tariff-setting to be left to market forces, joining a growing band of private container terminal operators making similar demands, reported The Mint.
"Tariff regulation is not required for container terminals operating at major ports (controlled by the Union government), particularly in the western region where there is enough capacity for market forces to determine the rates," said N N Kumar, deputy chairman of Jawaharlal Nehru port.
JN port is controlled by the Union government and is located near Mumbai. Tariffs at Union government-controlled ports are regulated by the Tariff Authority for Major Ports (TAMP) since 1997.
"The current regulatory regime benefits foreign shipping lines because there is no mechanism to ensure that the benefits of lower rates ordered by TAMP are passed on by lines to the trade (exporters/importers)," Kumar said. "So the current regulatory regime benefits only the shipping lines, majority of whom are foreign owned."
Shipping lines are not covered under any regulations on rates.
"Besides, there is no need for regulating tariffs in business-to-business dealings where the trade/users are not directly involved like electricity and telecom sectors," Kumar said.
JN port loaded 55.63 percent of India's container cargo shipped through the 12 ports controlled by the Union government in the year to March.
TAMP recently cut rates at two private container loading facilities operating at JN port, reducing the revenue it can receive from the terminals.
On 8 February, TAMP cut the rate at the JN port facility run by Gateway Terminals India (GTI) by 44.28 percent whereas the firm had sought an increase of 8.72 percent. Gateway Terminals is majority-owned by Denmark's APM Terminals Management.
On 1 March, TAMP cut the rate at Nhava Sheva International Container Terminal (NSICT) by 27.85 percent when it had sought a 30 percent raise. The JN port facility is run by Dubai's DP World.
To cut losses arising from the rate cuts, the two terminals are looking to scale down the volume of containers handled to the minimum levels mandated by their agreements with the port.
NSICT pays JN port a fixed royalty on each container handled at the terminal irrespective of the TAMP rates. But Gateway Terminals is mandated to share 35.50 percent of its annual revenue with the port, and this share is calculated on the rates notified by TAMP. Both the terminals are not billing at the lower rates ordered by TAMP, Kumar said. "Whether the two private terminals will raise the bills based on the new lower rates now or settle it later is a matter of understanding between the terminals and the lines," Kumar said. "We are receiving the royalty as specified in the contract in the case of NSICT and the revenue share based on TAMP rates in the case of GTI."
"To protect its revenue JN port is ignoring the larger interests of India's exporters and importers," said a spokesperson for the Federation of Indian Export Organisations.
"Tariff regulation is not required for container terminals operating at major ports (controlled by the Union government), particularly in the western region where there is enough capacity for market forces to determine the rates," said N N Kumar, deputy chairman of Jawaharlal Nehru port.
JN port is controlled by the Union government and is located near Mumbai. Tariffs at Union government-controlled ports are regulated by the Tariff Authority for Major Ports (TAMP) since 1997.
"The current regulatory regime benefits foreign shipping lines because there is no mechanism to ensure that the benefits of lower rates ordered by TAMP are passed on by lines to the trade (exporters/importers)," Kumar said. "So the current regulatory regime benefits only the shipping lines, majority of whom are foreign owned."
Shipping lines are not covered under any regulations on rates.
"Besides, there is no need for regulating tariffs in business-to-business dealings where the trade/users are not directly involved like electricity and telecom sectors," Kumar said.
JN port loaded 55.63 percent of India's container cargo shipped through the 12 ports controlled by the Union government in the year to March.
TAMP recently cut rates at two private container loading facilities operating at JN port, reducing the revenue it can receive from the terminals.
On 8 February, TAMP cut the rate at the JN port facility run by Gateway Terminals India (GTI) by 44.28 percent whereas the firm had sought an increase of 8.72 percent. Gateway Terminals is majority-owned by Denmark's APM Terminals Management.
On 1 March, TAMP cut the rate at Nhava Sheva International Container Terminal (NSICT) by 27.85 percent when it had sought a 30 percent raise. The JN port facility is run by Dubai's DP World.
To cut losses arising from the rate cuts, the two terminals are looking to scale down the volume of containers handled to the minimum levels mandated by their agreements with the port.
NSICT pays JN port a fixed royalty on each container handled at the terminal irrespective of the TAMP rates. But Gateway Terminals is mandated to share 35.50 percent of its annual revenue with the port, and this share is calculated on the rates notified by TAMP. Both the terminals are not billing at the lower rates ordered by TAMP, Kumar said. "Whether the two private terminals will raise the bills based on the new lower rates now or settle it later is a matter of understanding between the terminals and the lines," Kumar said. "We are receiving the royalty as specified in the contract in the case of NSICT and the revenue share based on TAMP rates in the case of GTI."
"To protect its revenue JN port is ignoring the larger interests of India's exporters and importers," said a spokesperson for the Federation of Indian Export Organisations.