Allow state-run ports to fix market driven rates: Icra

Private ports are outpacing their state-run peers in cargo handling, and there is a need to pass on benefits of the dissolution of the tariff-setting authority (Tamp) to existing terminals as well, rating agency Icra said.
It said the total cargo handled at the ports increased by 5.4 per cent to 1,043 million tonne (MT) in 2014-15, which included a 4.7 per cent increase in cargo handled by major ports at 581 MT, while private ports witnessed a 10 per cent growth at 462 MT.
"Uniform application of the 2013 guidelines to all existing terminal operators will provide the requisite impetus to fresh investments in the sector for capacity creation as well as for advanced technology in the existing terminals," the agency said in the note.

It can be noted that in 2013, the UPA government had taken a major reform by excluding all new projects from the Tamp (Tariff Authority for Major Ports) guidelines. After the deregulation, ports were allowed to set market-driven rates.
Commenting on the benefits of passing the benefit of this deregulation to existing operators, Icra said there will be a jump in investments if this is done and added that "investments will in turn improve operational efficiencies and provide better services."
The report said outlook for cargo growth remains strong in the medium-to long-term as requirements for coal and crude oil will continue to be high.

In 2014-15, the major ports, which are owned by the state, lagged in terms of cargo growth on mining restrictions in Karnataka, Goa and Odisha and other policy measures such as imposition of export duty, Icra co-head for corporate ratings K Ravichandran said.
The agency, however, believes that if implemented, government initiatives rolled out in recent weeks should boost the overall development of the sector.
It specifically mentioned the Sagar Mala project, saying it is indirectly targeted towards removing the bottlenecks which impede the optimal usage of the operational port capacities.