The Tariff Authority for Major Ports or TAMP is expected to shortly issue its orders on the appeal for a hike in port charges field by two private port terminals at the Jawaharlal Nehru port.
Nhava Sheva International Container Terminal, run by DP World, Dubai, and the APM Terminals, owned by the Maersk Group, are understood to have asked TAMP's approval to increase the rates by more than ten per cent.
TAMP's ruling, expected early February, will be crucial for both terminals. The tariff authority will be considering their proposals on the basis of the 2005 guidelines as both these terminals come under these guidelines.
2005 guidelines
According to analysts, under the 2005 guidelines, the chances for allowing a hike in rates are remote when the terminals are handling much more cargo than the minimum guaranteed throughput fixed for them.
On the other hand, the authority may ask them to cut the existing rates, given the improved performance and higher revenue earnings in the case of these terminals.
Both terminals have been handling cargo beyond their installed capacity.
TAMP-fixed rates are normally for a period of three years.
New guidelines on way
Therefore, if the rates are reduced, it will be applicable for the next three years. The validity of the 2005 guidelines ended in 2010 but was extended by a year by the Shipping Ministry.
Following representations made by the private terminals in 2011 June, the Government appointed an external agency with a mandate to prepare new guidelines in four months. The agency is still studying the issues. Meanwhile, the tariffs at the two terminals have come up for review. Fearing a downward revision, the Indian Private Ports and Terminals Association (IPPTA) had approached the court seeking a stay on the revision in rates by TAMP under the 2005 guidelines. The Delhi High Court refused to grant the stay but reported to have directed the Government to revise the guidelines at the earliest.
Plea to ministry
The IPPTA has been requesting the Shipping Ministry to advice TAMP to keep in abeyance revisions in rates till the new guidelines are in place. But it did not heed the request.
In 2008, the Government had come with a new set of guidelines which allowed the port operator a 16 per cent annual return on capital. However, those covered under the 2005 guidelines are not allowed to migrate to the 2008 norms.
Private operators say that the 2005 guidelines act as a disincentive to improve performance.