Industry observers feel that the recent policy steps taken by the union shipping ministry may instill confidence among investors and thereby improve the pace of port project execution.
A key step taken by the ministry is to allow terminal operators at major ports in the country to fix market-linked tariffs for projects coming up after April 1.
Following this, private operators will be free to fix market-linked tariff for new terminals from April 1. Accordingly, the new norms will be applicable to all major port trust-owned terminals and PPP projects for which the requests for proposal are issued after April 1.
Until now, the Tariff Authority for Major Ports (TAMP) fixed tariffs for 12 major ports. Following the above move by the ministry, the role of TAMP would be reduced to assessing the turnaround time, average ship berth day-output and average idle time to total time of vessels at berth. It will also fix a reference tariff rate. Companies can fix their tariff above or below that rate.
While there is uncertainty about existing projects and their tariff structure, this measure will instill confidence among investors, reports suggest.
One of the main reasons holding up port projects in the country is tariff regulation with private companies finding the returns on their investments unviable as they couldn’t raise rates on their own.
However, there are other factors such as security clearance for port companies and delay in implementation of projects by port authorities, which are also forcing the private sector to stay away.
The shipping ministry, meanwhile, has put forward new norms for security clearance and fixing of tariffs and has also decided to award more than 25 projects this year.
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