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Plan panel against more power to Tariff Authority for Major Ports

Planning Commission objected shipping ministry’s move of enhancing powers of the Tariff Authority for Major Ports (TAMP).

, ET Bureau|
Last Updated: Sep 10, 2013, 04.57 AM IST
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NEW DELHI: Planning Commission has strongly objected to the shipping ministry’s move of enhancing the powers of the Tariff Authority for Major Ports (TAMP) while undermining the provisions of the model concession agreement in determining the performance standards of major ports and linking tariff to the performance of ports saying this would lead to ambiguity and disputes.

Besides, it has also objected to real tariffs proposed in the 2013 guidelines for tariff setting at major ports saying that these would either make future projects unviable or significantly reduce the revenue share of Port Trusts.

The shipping ministry came up with new tariff guidelines last month after complaints from various stakeholders that existing tariff regulations were detrimental to growth as there was no level-playing field between major ports and non-major ports, which were outside the purview of TAMP.

The shipping ministry’s recent guidelines on tariffs said that Port Trusts would propose a set of performance standards which would be approved by the TAMP for each port. Planning Commission is of the view that under the present dispensation, performance standards and consequent penalties are specified in the model concession agreement (MCA).

“TAMP does not deal with performance standards under the present dispensation. Hence, involving TAMP in setting and monitoring performance standards could lead to ambiguity and disputes, besides creating a multiplicity of fora. These items are best handled under the MCA, which has been approved by the Cabinet on the clear understanding that performance standards will be enforced by the Port Trusts through the MCA. Therefore, the proposed departure implying dilution of the responsibility of Port Trusts in enforcing the provisions of MCA may need Cabinet approval,” the plan panel had said in a letter written to the shipping ministry recently.

The guidelines also provide PPP operators to propose a performance-linked tariff over and above the reference tariff for every year. Plan panel, on the contrary, says that till now tariffs have been indicated upfront in the MCA, even before bidding.

“Hence, changes in tariff due to their being linked to performance would vitiate the existing transparent bidding system and would also imply significant modification of the MCA, which would require prior Cabinet approval,” planning commission said. Objecting further to the shipping ministry’s proposal of escalating the reference tariff to the extent of 60% of WPI, plan panel said that since only 60% of WPI is accounted for, this would lead to continuous decrease in real tariff.

“This could result in notification of unsustainable tariff and either make future projects unviable of significantly reduce the revenue share of Port Trusts,” it said.

Pointing out that there would also be conflict between the provisions of MCA and orders of the TAMP during redressal of grievances under the new guidelines, the Planning Commission has asked the shipping ministry to redraft these guidelines, which suffer from serious infirmities and are contrary to Cabinet decisions.
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