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New rate regime in the offing for initial Major Port container terminals

The Shipping Ministry is understood to be in the process of revising the rate regime for the first batch of public-private partnership (PPP) cargo terminals at the Major Ports. The Container terminals in Southern Indian ports operating for more than a decade, have been clamoring for rate increase for the past several years but both the Port administration and the Tariff Authority for Major ports TAMP have not conceded their demand.

The Terminal Operators have been demanding rate revision saying they tend to lose revenue if they performed well. A section of the customs brokers in Chennai firmly believe that the output in the terminals could not be stepped up since there was no incentive for the terminal operators to do more containers

The Ministry has dropped an earlier plan to allow the terminals to migrate to a more favorable and market-friendly pricing guidelines announced for new terminals in 2013.

One of the key aspects of the guidelines was a guaranteed increase of as much as 15 per cent on the base reference or ceiling rate during each year of the 30-year contract if the terminal operator complied with certain performance standards. The ceiling rate was set upfront by TAMP at the beginning of the contract.

Operators were unhappy with the 2005 guidelines as they said it penalized them for efficiency. A terminalís rate was cut in the next tariff cycle if it loaded more than the projected volumes in the current cycle, reports said.

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