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Shipping Ministry to unveil new policy to deregulate port tariffs
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Shipping Ministry to unveil new policy to deregulate port tariffs
The Union shipping ministry will unveil a new policy to de-regulate the tariff fixed at major ports in the country and allow operators to fix market-linked tariff at the ports in a move to attract private sector participation and increase investments in the sector.
The move follows a slew of measures that the shipping ministry has lined up to implement in the current fiscal to boost the shipping industry which has been witnessing one of its worst phases.
In a major boost to the port infrastructure, the ministry is also working on a policy to deregulate tariff at existing terminals at major ports in the country and fix marketregulated tariff. Tariffs at existing terminals are governed by a 2005 guideline which grants the Tariff authority the right to fix rates. "The ministry is working on a policy to deregulate tariffs at ports.
We had earlier allowed the terminal operators to fix tariffs at major ports for projects which were to be implemented after April 1. We have not set a timeframe yet, but we are working in that direction," Milind Deora, Union minister of state for shipping, said.
The shipping ministry had earlier announced a partial deregulation of the tariff regime, where it allowed terminal operators to fix marketlinked rates for projects which were announced after April 1.
Port operators had then said that clarity on the tariff regime for existing projects was needed, as they have not been able to raise revenue from the operations at the existing rates.
Operators had also approached courts for a revision in the rates in some cases. With the ministry now looking to completely deregulate the tariff structure, experts believe that the private sector participation in port projects is likely to see a revival.
"The industry has been demanding this step for a long time. We believe that the move will make the projects more viable and install confidence in private sector players to invest in port projects," said an executive with a terminal operator.
The shipping ministry has also decided to award more than 30 new projects in the current fiscal at an estimated investment of 24,000 crore to improve the capacity constraints at major ports in the country.
"Among others, the port project in Chennai and JNPT will be awarded in the current fiscal to improve capacity at major ports," PK Sinha, Union shipping secretary, said. He also expressed hope that a decision on Adani Ports will be taken soon. Adani's plan to bid for the project in Chennai has been pending with the home ministry as they had denied clearance to the company.
Last year, a consortium of Port of Singapore and ABG Ports had backed out from the construction of a .`9,000-crore mega container terminal project at JNPT after they had offered the port more than 50% in revenue share. Officials had cited that the tariff regime would not have allowed the company to raise enough revenue through tariffs to pay the high revenue share.
The project has since been delayed by a year. Similarly, at Chennai Port, fears of recovering investments from tariff had led to low private sector participation and the project has so far only seen interest from Adani and Essar Ports.
The Union shipping ministry has also lined up measures to improve the shipping and the shipbuilding industry in the country as they have been in trouble following the global financial crisis. "We are working on policies for the shipbuilding sector and looking at different kinds of tax exemptions for them.
In addition, we also want to increase the number of Indian-flagged vessels in the country and boost coastal shipping," Sinha added. Experts have also expressed optimism at the measures that the ministry is taking to fast track port projects.
"The move to deregulate the tariff structure has been long overdue and a relook into the tariff structure was needed. Minor ports have been making progress, but the major ports have been suffering due to the tariff structure. This step will definitely improve private sector participation," said Vishwas Udgirkar, senior director at Deloitte Touche Tohmatsu.
Source: Economic Times
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