According to the Indian media this week, the government seems to be “preparing the ground” for scrapping the Tariff Authority for Major Ports (TAMP), the regulator for terminal operators at Union government run facilities.
This would indicate that the Indian government has started to wise up to the fact that this may stimulate much needed investment in the port sector and help India get back on track with its growth aspirations.
Union shipping minister, GK Vasan, quoted in theThe Wall Street Journal, said: “We have given in-principle approval for free tariffs for major port projects. The government has decided to free all future projects from TAMP. We will decide shortly what do with the current port projects.”
For most private operators, who have traditionally found India a tough nut to crack, this will come as welcome news.
The last casualty in the battle over India’s tariffs was PSA International and its consortium, which last September has to walk away from Jawaharlu Nehru Port’s fourth box terminal after repeatedly missing a deadline to sign on the dotted line. The operator was said to have been holding back because of a battle with TAMP.
The end result of this was that JNPT recommended PSA be barred from further Indian projects – hardly a way to attract new private investors. Unsurprisingly, India is having difficulty in getting new investors onboard for much needed port projects.
Mr Vasan said this week that the ministry has awarded 17 port projects out of a total of 42, which suggests India will miss its target to create port capacity for the current fiscal year. But he says that now he is hopeful that most of the others should be awarded by March.
TAMP was created in 1997 to collect tariffs when the terminals at major ports were privatised. It also controls the leases of government run ports and the private operators located there. Since its inception it has been marred in controversy, mostly over its tendency to reject demands for tariff increases from private terminal operators, some of which were accompanied by orders to cut existing tariffs.
The government will reportedly be issuing new guidelines to govern tariff determination at Union government ports which will replace the existing two sets of guidelines established in 2005 and 2008.