Embracing social responsibility

One is the Tariff Authority for Major Ports, or TAMP, tariff setting. In January, the Delhi High Court received a petition from the Indian Private Ports and Terminals Association, challenging the right of TAMP to determine tariffs at private cargo terminals situated in state-owned ports.

TAMP’s tariffs are fixed on a cost-plus basis and generally revised every three years. Original guidelines for the tariffs were set in 2005 but expired in 2010. Since then the situation has been muddled.

The current court action was taken by the IPPTA to at least maintain current charging levels until new guidelines are issued by the government.

Private operators argue that guidelines covering changes in tariffs rarely reflect all costs involved, while effectively capping the rate of return they can make. Plus, the system is seen as effectively rewarding inefficient terminals and penalising the efficient operators.

An added pressure being applied to Indian ports is the requirement to undertake corporate social responsibility activities.

A dozen ports controlled by the union government have been told they must adopt a CSR policy because of the economic, social and environmental impact the activities of ports have on the society and the environment.

The 12 ports concerned are trusts rather than corporate entities but come under the control of the Major Port Trusts Act, 1963, which allows the government to issue directives to the ports.

The Indian shipping ministry has made it mandatory for these ports to allocate CSR budgets every year as a percentage of their net profits, and focus on work through voluntary agencies, self-help groups, trusts and missions.