TAMP will not fix tariffs for new major ports, says Shipping Ministry

The Ministry of Shipping has said that it will abolish the tariff setting regulator’s oversight for new major ports. The "in-principle" decision is meant to encourage investment in the port sector. 

“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,” Shipping Minister G.K. Vasan said in Mumbai two days ago.

This decision was echoed by the Shipping Secretary. "For all prospective port projects, we are doing away with the regulation of the fixation of tariffs by the TAMP (Tariff Authority for Major Ports)," P K Sinha told the media on the sidelines of the 14th Maritime States Development Council meeting in the city. He added that the government will be coming out with a final policy on this soon. 

Private players in the port sector have long complained about the TAMP regime and how it discourages investment in the sector, since private operators are not free to fix tariffs at their own ports. Criticism of the TAMP regime has heightened in recent times, with some private players shying away from projects, hampering the sector’s growth and throwing a spanner in the works of the government’s stated Maritime Agenda. Some State owned ports like JNPT have suffered as a result, with cargo moving to other, private, non-major ports. Reports also say that DP World and APM have lowered handling volumes as a result.

In June last year, a spat between government-owned ports and companies that run private terminals at Mumbai and Chennai saw those private operators keeping tariffs unchanged in the face of TAMP looking to cut rates-this, at a time when private operators wanted tariffs to be increased. “The current tariff-setting guidelines make it unviable for terminal operators to continue operating a sustainable business in the long run,” an unnamed executive at Gateway Terminals India Pvt. Ltd had told Livemint at that time. “Private firms should be able to run the terminals like any other business—generate positive returns and be profitable over the life of the project.”

The changes to TAMP now announced will no doubt be welcomed by large sections of the industry, and encourage tariffs based on market conditions on the ground. "This (policy), we believe, will go a long way in deregulation of the tariff fixation and will encourage more and more private players to set up new ports, new terminals and berths," the Shipping Secretary said, clarifying that existing projects will be looked at on a case to case basis.

Despite rumours to the contrary, Sinha ruled out the possibility of the government abolishing TAMP completely, indicating instead that the industry would see “TAMP in a new avatar,” whose new responsibilities could be disclosures of tariffs, monitoring efficiency parameters, competition issues and dispute resolution.