Tariff plan soon to open up ports

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New Delhi, Aug 21: In a move that may finally throw the country’s ports open to public private partnerships, the government is likely to finalise the models for tariff and concession agreement for the development of major ports.

Government sources told FE that the as per the new model, the tariff would be set upfront before the project goes for bidding. It will be a part of the new model concession agreement.

The tariff plan for ports will now be akin to the toll rates for national highway projects. The Tariff Authority on Major Ports would be in charge of setting the tariff, and will also give the projected increase in rates for the entire concession period. While the exact method of calculating the tariff is still to be worked out, government sources said it is likely to be estimated by the authority based on normative data. The current cost-plus model is likely to remain, however, with a financial cap. This would be the maximum tariff, and the port developer can decide to charge less as well.

Commenting on the move, a government official said, “This system will give a complete picture of the project to the bidder who would be able to calculate his risk vis-a-vis the revenue he will earn.”

The Planning Commission and the department of shipping are finalising the details of the tariff model as well as the concession agreement. Sources said they should both be firmed up by October and released.

The two government departments have been at loggerheads for over a year now, leading to a delay in finalisation of the concession agreement as well as the tariff model. While the shipping ministry wants to continue with the current model of cost-plus tariff fixation, the planning commission is of the view that it does not provide any incentive to private players to cut down on costs.