JNPA, DP World's NSICT settle 20-Year tariff dispute with Rs 705 cr deal

The Jawaharlal Nehru Port Authority (JNPA) and Nhava Sheva International Container Terminal (NSICT), run by DP World — a UAE government entity — settled a 20-year-old tariff dispute today  NSICT operates a container terminal in JNPA.

 

The dispute arose in 2005 when NSICT was disallowed to recover royalty payable to the port authority as a cost item of the rate of services, leading it to file claims totaling approximately Rs 2,653 crore against JNPA.

 

Following arbitration proceedings and the conciliation process, a compromise formula was agreed upon. The settlement determined Rs 705 crore as the amount adjustable through future volume-based royalty discounts until the remaining period of the concession.

   

The details of the settlement are still being worked out. Broadly, this will involve additional cargo commitment by NSICT, which will enable the firm to become eligible for volume discounts that will be offered once the volumes reach certain levels.

 

Considering that the volumes had gone down to more than half of what they were before the tariff dispute, the settlement is expected to result in a substantial increase in cargo volumes through NSICT. Its claims will be partly recovered over the remaining period of the concession through the discounts that the operator may obtain against the enhanced traffic.

 

“This settlement structure protects JNPA's revenue while requiring NSICT to increase future volumes to claim volume-based discounts, making it a win-win solution for both parties. This is expected to significantly boost traffic at JNPA, generating higher revenues for the port from vessel-related charges, berth hire, and royalties,” a statement from JNPA noted.

 

In 1997, JNPA awarded a terminal concession to DP World. NSICT, DP World's Special Purpose Vehicle (SPV), entered into a 30-year concession agreement with JNPA. This marked the first such public-private partnership (PPP) agreement in India's port sector.

 

Earlier, NSICT handled 1.2 million twelve-foot equivalent units (TEUs) in the financial year 2024-25 (FY25), up by about 6.7 per cent year on year (YoY), accounting for a 15.54 per cent share in the total cargo traffic at the JNPA.

 

The port authority, through its six container terminals, handled over 7.3 million TEUs in FY25, the highest in a financial year in the port’s history. The Bharat Mumbai Container Terminal (BMCT), operated by Bharat Mumbai Container Terminals Pvt. Ltd., a subsidiary of Port of Singapore Authority, handled 2.3 million TEUs, accounting for 31.1 per cent of the total container cargo handled at JNPA, the highest.