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Jawaharlal Nehru Port gets nod to increase rates after 17 years

LiveMint logoLiveMint 26-05-2014 P. Manoj

Bangalore: After 17 years of holding rates, the Jawaharlal Nehru Port near Mumbai will raise cargo-related charges by 40% and vessel-related fees by 12% with immediate effect. The rates will be reviewed in March 2016.

The port, India’s busiest container gateway, had asked for a hike of 284% for vessels charges, 218% for container cargo and 500% for bulk cargo from the Tariff Authority for Major Ports (TAMP), which fixes charges for all Union government-owned harbours.

JN Port showed a net deficit of `499.77 crore at the existing level of tariff in the three years between 2013 and 2016.

“Based on the deficit position, an increase of 12% in vessel-related charges and 40% in the container-related charges and bulk-related charges over the existing tariff of JN Port is approved,” T.S. Balasubramanian, member, finance, at TAMP, wrote in a 19 May gazette notification.

JN Port started operations in May 1989 and has been allowed rate revisions only twice—in January 1994 and March 1997.

TAMP was established in April 1997. Rate revisions have always been a vexed issue between ports and the regulator. In 2000, TAMP ordered a status quo on rates at JN Port when it asked for a raise. In September 2004, the regulator cut vessel-related charges by 10%. In November 2006, vessel-related charges were again cut by 30% and container-related charges by 15%. In February 2011, the regulator again held rates.

Industry associations expressed concerns on the revision in rates.

“The escalation in tariff is not desirable for container lines,” said a spokesman for the Container Shipping Lines Association, a trade body.

“An increase in vessel-related charges at this critical phase would adversely affect the shipping trade,” said an official at the Mumbai and Nhava Sheva Ship Agents Association. “The steep hike in container-related charges is not justified when the export-import trade is under pressure due to recession in international trade.”

The port defended the hike.

“JN Port has never got any upward revision in tariff, but only downward revisions have been granted since the inception of TAMP,” a spokesman said. “The rates have been stagnant from 1997 and the port users have derived the benefits of lower rates. Due to steep increase in input costs of operations—electricity, fuel, wages and maintenance—it is difficult to sustain operations of the port with the existing tariffs.” JN Port handled 62.34 million tonnes of cargo in the year ended March, including 4.16 million containers.

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