Ports Tariff Body To Stick To Old System Till Norms Are Ready

Although certain major decision-making powers of port trusts have now been transferred to the newly created Tariff Authority for Major Ports, it will be some time before the latter is able to perform its functions effectively.

Till then, the authority intends to proceed on 'conventional lines', meaning that it will formally scrutinise proposals coming from the port authorities and give them a go-ahead going by the existing norms and practices so that the tempo of work at ports does not slow down.

But such a clearance may be subject to reconsideration by the authority, if such a need arises after the norms and regulations are framed and notified.

 

If at this stage any change in the permission granted earlier is required, then it will be with prospective effect, and not retrospective.

However, no definite time-frame is available from the authority as to how long will the framing of the rules and regulations take, and how long will this transitory phase continue.

"We will do it as quickly as possible....Otherwise, there would be no justification for the authority (having come into being)," the first chairman of the authority, S Sathyam, told Business Standard in an interview.

The five-week old authority, which has two other members -- Rakesh Mohan and V Shetty -- has already held two meetings and discussed the broad principles and the criteria for tariff calculations besides disposing of 11 out of 30 pending proposals of the port trusts.

The authority's functions are mainly two-fold-- to determine vessel-related and cargo-related tariff at the major ports, to scrutinise the port proposals on leasing of the port properties and the rental, and approve these if the proposal in its view is in order.

Both these functions were hitherto discharged by the respective nine port trust boards. These port trusts fixed tariff and published schedules covering the different kinds of the vessel-related and cargo-related charges.

Similarly, they were empowered to take decisions on leasing of the port properties and the lease rentals. Though the technical clearance of the surface transport ministry was necessary in both the cases, it was mandatory as far as the leasing powers were concerned.

The scene has changed with the government throwing open the port sector to liberal private investment. Even though the policy does not allow the private sector to set up a major port, it gives it almost a no-holds-barred scope to put up port facilities on build, operate and own/transfer basis.

In either case, a promoter will need leasing facilities as also a tariff structure to recover the investment with a reasonable rate of return.

The task of the authority is precisely this-- to fix a fair and reasonable port tariff and to allow leasing of land/ water-front and such other infrastructural facilities to the private sector to spur investment in the port sector.

But this is no easy job. The authority has to work out a fair port-wise traffic structure covering so many different categories of fees chargeable by the owner of the facility at the port, be it the port trust or a private promoter. Similarly, the Authority has to evolve norms and principles on leasing of the port properties.

Besides, what the authority will fix will only be the ceiling tariff which means that if a private investor so wants, he can charge a lower tariff. As regards leasing of the port properties, the authority will have the sole discretion to approve or disapprove such proposals, going purely by the merit of each case, as and when such proposals are received from the port authorities.

In both the cases, however, if the need so arises, the ministry has the right to issue directives to the authority.

Illustrating it, Sathyam said, if the government feels that it is in the national interest in a certain emergent situation not to charge tariff on a particular vessel carrying a particular type of commodity, the authority may in turn issue such a directive to the port trust. This will not amount to interfering with the authority's working.

Sathyam also does not agree that the new authority has a pro-private sector bias because it has come into being to ensure a fair deal to the private sector. Nor does the authority have a pro-government bias.

The authority's aim is to work in a fashion that improves the efficiency of the ports, increases the capacity and leads to a quicker vessel-turn-around time and a larger turn over as far as the ports are concerned.