Oil Cos Plea Against High Tariffs At Ports Rejected

The Tariff Authority for Major Ports has turned down complaints from oil companies that ports are charging high tariffs for discharging crude oil and liquid bulk cargo.

Oil companies say that the oil pollution cess adds to the high handling charge for liquid bulk cargo and this results in escalation of import cost.

Ports have begun levying a cess on hazardous items, particularly crude oil, petroleum products and certain hazardous liquid bulk cargo for the last two years. These revenue from this head is credited to a separate fund administered by the ministry of shipping and transport. This levy is charged at the rate of 50 paise per tonne.

 

Currently, about 98 million tonnes of petroleum and petroleum products are imported annually through the major ports and the handling costs go up by about Rs 5 crore on a levy of 50 paise per tonne. However, this cess does not go into the port revenue.

Instead, these funds are used by the ministry of surface transport for meeting contingency expenditure such as oil spills and for meeting compensation expenditure in the event of such contingencies.

Besides, ports were obliged to create this fund in compliance with the international safety management code since these cesses were levied on the cargo for maintaining minimum safety standards in the ports, where the cargo was being discharged. The authority has informed the oil companies, official sources said, that there was no flexibility for reduction of the cess.

The cess would have to be either be levied on the vessels transporting such cargo or on the cargo itself. In case the cesses are loaded on to the shipping rates, these would tend to be treated as pass through and loaded on to the freight costs. Currently this cess is levied only on the imported crude and petroleum products and does not include crude shipments from the Bombay High.

The sources said, that since pass through of all expenditure was being done by the oil companies, there was no reason for the complaint. Port safety has to be maintained and there cannot be any compromise on that count, they added.