Indian tariff cuts hurt PSA
PSA, which has been expanding its global portfolio of ports, has run into problems with its long-standing Indian investment. Faced with a situation of lower port tariffs and higher payouts the container terminal operator is scaling down operations in Tuticorin on the east coast in the southern state of Tamil Nadu. PSA’s Indian joint-venture PSA Sical has explained that the decision to force the terminal operator to halve tariffs has made the terminal “commercially unviable.” PSA has been operating Tuticorin since 1998. PSA Sical has conceded that reduced operations could result in delays, but has pleaded helplessness. Last September, the Tariff Authority for Major Ports or TAMP slashed rates by 54% at Tuticorin citing reduced costs. Port sources told Fairplay that even operational costs cannot be recovered under these rates. PSA Sical has obtained a stay order from a local court, but is cutting back on volumes to fulfil its royalty payment commitments to the Port Trust. It will stick to just 300,000 teu per annum against 377,000 teu handled for the year ending 31 March.