The Union government intends to boost investment in port infrastructure. By allowing port operators to tweak freight handling tariff for new public- private partnerships projects in the 12 government-owned ports. It's a clarion call for more investment in port infrastructure. The government's new guidelines for future port projects will allow port operators to annually increase, upto a set limit, cargo handling rates, on the basis of market forces.
But for existing port-operators who could potentially invest in future projects too, the problem has not been solved. Rates at existing terminals are still decided and capped by the Tariff Authority For Major Ports (TAMP), a structure which puts operators at a disadvantage against private or state-owned ports, where no such restrictions apply.
Henrik Lundgaard Pedersen, CEO - Asia Pacific, APM Terminals says that their current investments are in a squeeze. The firm had to cut its tariffs by 44 per cent last year after an order by the regulator. Now port-operators have been lobbying for long to move to a market-driven tariff model in existing projects that includes doing away with TAMP.
While changing TAMP's role to monitoring performance under the new guidelines, the government says a complete revamp will take time as it requires changes in the existing law. While critics question the prospective nature of the new policy, the government assures that the next phase of de-regulation will look at a similar tariff model for existing port projects. In the meantime, it is confident future investors will be interested.