The Shipping Ministry has engaged The Energy and Resources Institute (TERI) to analyse the port-wise ‘cost plus' method of tariff fixation as envisaged in the Tariff Guidelines of 2005. This exercise has been due since March 31, 2010.

The ministry has also asked TERI to explore the possibilities of introducing efficiency linked tariff scheme; to suggest periodicity of review of tariffs and norms and to furnish Draft Guidelines to implement the recommended model.

According to industry sources, the exercise could also be a prelude to the formation of the Ports Authority.

TERI has also been asked to develop a formulae to determine standard capacity of different facilities (both sea and landward) at a port/terminal and suggest the standards for different variables to be considered in computation of the standard capacity.

In this regard, the methodology prescribed in the upfront tariff guidelines of 2008 may be taken note of.

According to Mr S.S. Kulkarni, Secretary-General, Indian Private Ports & Terminals Association (IPPTA), a committee of government officials and industry representatives had suggested last September that an external agency should look into the tariff revision.

The association has been seeking a revision as the ‘cost plus' approach excludes certain cost increases.

For instance, the inflationary adjustments are being restricted to wholesale price index vis-à-vis fuel and labour. Also, terminals are not allowed to charge tariff that are driven by market forces, he said.

On TERI as a consultant, Mr Kulkarni said he was not aware of the agency doing any port-based research but had heard that it has done similar projects for the Electricity regulatory commissions and for Competition Commission.

“If that is the case, they have to first understand the entire tariff structure. It is going to take a lot of time and effort.”

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