A private port operators lobby has urged the government for an “early resolution” of its demand to allow Public-Private-Partnership (PPP) cargo terminals at major ports to migrate to market-based tariff regime and bring them on par with new terminals. The Major Port Authorities Act, 2021, allowed 11 major ports and new cargo handling terminals, set up by private firms at these ports, to levy market-determined rates, by scrapping the Tariff Authority for Major Ports or TAMP, the erstwhile rate regulator for the state-run ports.
In 2023, the Ministry of Ports, Shipping, and Waterways set up a three-member panel, headed by Sanjay Sethi, the then Chairman of Jawaharlal Nehru Port Authority, to examine the issue of permitting the regulated old PPP cargo terminal operators to migrate to a market-pricing regime, similar to the freedom available to private cargo handlers that started operations after the new law took effect in 2021.
The Sethi-led panel suggested a set of guidelines for migrating the old cargo terminals to a market-driven rate regime with prospective effect, keeping in view the commercial and other aspects, a government official said.
There will be no change in royalty per unit/metric ton/twenty-foot equivalent unit/ forty-foot equivalent unit or royalty on revenue share basis per the original concession agreements, the panel suggested.
“As an additional measure, the royalty as revenue share of the major port, would not under any circumstances go below what it would have got under the regime when tariff was fixed/determined as per the tariff guidelines. This would be done by converting the revenue share to royalty based on the Annual Revenue Requirement (ARR) of the project as determined earlier,” the panel noted.
Some of the old PPP cargo terminals are operating on the revenue-share model wherein they share a percentage of their annual gross revenue (discovered through a competitive bidding process) with the port authority.
Since 2021, the new PPP terminal operators pay royalty per ton or per twenty-foot equivalent unit (TEU) handled at their facilities to the port authority.
The royalty that the private operators are contractually mandated to pay the port authorities will be based on the market rates set by them, subject to the minimum guaranteed throughput (MGT) written into the contracts. The royalty payouts will be based on actual traffic or MGT, whichever is higher, the panel recommended.
The old terminal operators have been lobbying for such a shift, arguing that it is needed to “improve the efficiency of the old terminals and for their financial viability”.
Backbone of the port industry
“PPP projects are the backbone of the port industry, and the stress points need to be addressed with promptness,” said Devki Nandan, President, Indian Private Ports and Terminals Association (IPPTA), a lobby group.
“The resolution of many important issues in respect of old PPP concessionaires is pending, as whatever changes have been brought out in the model concession agreement are applicable only to the new concessionaires. There has been a constant demand from IPPTA members for existing concessionaires to migrate to market-based tariff, which is pending for long, and we request the government to bring an early resolution of the same,” Nandan stated.
The Maritime Development Fund, announced in the Budget, should be made applicable to all infrastructure projects in the maritime sector, IPPTA said.
“Issues like inter- and intra-port competition, absence of level-playing field between existing and new concessionaires, speedy settlement of disputes, resolution of inter-ministerial issues, removal of snags in the Model Concession Agreement need prompt attention. This will boost investments by the private sector to build world class port infrastructure as envisaged by the Maritime India Vision 2030,” Nandan said.
IPPTA has also called for streamlining the procedures for levying and collecting Goods and Services Tax (GST), noting that a GST Appellate Tribunal has to be formed “on priority” basis.
“The lack of proper operating procedures in dealing with GST matters is also a concern, as varying interpretations and multiple jurisdictions are causing undue harassment to the taxpayers,” said Senthil Kumar, Treasurer, IPPTA.
(source: ET Infra)
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