Major ports regulator on way out; rates to be market-based

Govt to amend port laws; Bill likely to be tabled in current Parliament session

In the first instance of a government winding down a sectoral regulator, the Tariff Authority for Major Ports (TAMP) will soon be disbanded, leaving major ports free to set market-driven rates.

The government plans to amend the port laws for this purpose. The shipping ministry is moving the Cabinet for approval to place a Port Laws Amendment Bill, 2014, in Parliament during the current session. TAMP was formed in 1997 through amendments to the Indian Ports Act, 1908, and Major Ports Trust Act, 1963.

With the initiation in recent years of encouragement for private investment in the sector, it had been thought necessary to keep a central regulatory body as a check against economic destabilisation, by introducing rate ceilings. TAMP was also meant to protect against development of private monopolies.

“The idea was to ensure prospective commercial gains did not lead to exploitation of clients. There is no rationale for continuing with such a regulating authority any longer,” said a highly ranked shipping ministry official who did not wish to be named.

With time breeding greater inter-port and intra-port competition, non-major ports now account for 42 per cent of cargo handling. These are not subject to TAMP.

There are arguments on the other side, too. “Even within the ambit of 12 major ports, there are countervailing arguments to TAMP. While major ports running losses argue against the abolition of TAMP, ports that are doing well favour doing away with it,” says another ministry official.

“Ports are not uniformly developed and nor are non-major ports uniformly distributed across the coastline. A blanket rule like this might not be the best bet,” said Hemant Bhattbhatt, chief executive of HMSA Consultancy Services. Jawaharlal Nehru Port Terminal on the west coast, for instance, handles about 60 per cent of the country’s container trade.