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

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The Ministry of Shipping is reportedly in the process of revising the rate regime under which fall the first batch of public-private partnership (PPP) cargo terminals at the Major Ports.

This follows the Ministry dropping an earlier plan to allow the terminals to migrate to a more favourable 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 penalised them for efficiency. A terminal’s rate was cut in the next tariff cycle if it loaded more than the projected volumes in the current cycle.

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