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2005 tariff regime discourage efficiency

2005 tariff regime discourage efficiency

Industry observers opine that the tariff regime of 2005 followed by the Tariff Authority for Major Ports (TAMP) does not reward efficient performance of port operators or terminal operators.

They point out several lacunae in the tariff regime of 2005, the main ones being that operational efficiency is penalized.

In other words, if a terminal loads more than the projected cargo volumes, it will lead to a reduction in rates in the next tariff revision exercise.

According to the tariff norm, the operator can retain only 50 percent of the efficiency gains (revenue) accruing from handling higher cargo volumes. The balance 50 percent is passed on to the customers (shipping lines) in the form of lower terminal rates.

Yet another unique feature of IndiaÂ’s port tariff regulation is that it regulates rates in a business-to-business (B2B) set-up where the users are not directly involved as in the electricity and telecom sectors.

Thus, the current tariff regulatory regime benefits shipping lines, the only customers of the cargo terminals, as there is no mechanism to ensure that the benefits of lower rates ordered by TAMP are passed on by the carriers to exporters or importers.

Although the 2008 tariff norms is an improved version of the 2005 regime, its efficacy is yet to be tested. Very few projects have been offered for bids under this format and those that have are yet to start operations.

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