Private investors in ports under State Governments, such as Pipavav and Dhamra, were able to get benefits from rupee depreciation, but not their counterparts in ports owned by the Union Government.
This is because the existing tariff regulations prevent investors in Centrally owned ports from linking their revenue to dollar, while there are no such limits for non-major ports under State Governments, such as Gujarat Pipavav Port, in which APM Terminals has invested, and Dhamra Port, in which Tata Steel and L&T have invested.
Port tariffs consist of cargo and vessel-related charges, of which the latter are dollar-denominated.
As a result of regulatory guidelines, private terminal developers in Central Government ports tend to lose out since they only get that portion of cargo charges that are defined in rupee terms.
However, ports under State Governments have the flexibility to link a larger share of their total tariff to the dollar.
For instance, Gujarat Pipavav Port now receives 70 per cent of its total revenue in dollar terms against 12-15 per cent about a year ago, said Hariharan Iyer, CFO.
Gujarat Pipavav Port Ltd made container tariff dollar-denominated since August 2012, whereas before that, only the vessel-related charges were dollar-denominated.
Similarly, Dhamra Port linked its vessel-related charges to dollar from September 1. “By regulation, we were allowed dollar-denominated tariffs for vessel-related charges earlier as well. But, we were charging in rupees earlier,” said a source from Dhamra Port.
But, private developers in major ports do not have such flexibility. “The developers in major ports get only the cargo component, which is fixed in rupee terms,” said S.S. Kulkarni, Secretary-General, Indian Private Ports and Terminals Association.
Meanwhile, Anand V. Sharma, Director, Mantrana Maritime Advisory, struck a note of caution. From the ports’ perspective, the tariff structure should be consistent, and they should continue to charge in dollars even if the rupee appreciates, said Sharma.