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As part of a major reform of the port sector, the Union Minister for Ports, Shipping and Waterways, Shri Sarbananda Sonowal, today announced the 2021 tariff guidelines for PPP projects in major harbors. The need for new guidelines arose following the new Major Port Authorities Act 2021, which came into force on 3.11.2021. In the new law, the provision of the former Tariff Authority for Large Ports (TAMP) is removed. The guidelines allow concessionaires in major ports to set tariffs based on market dynamics. Currently, Major Port’s PPP concessionaires handle about 50% of the total traffic handled by all major ports in India. The biggest benefit of moving to a market-linked tariff is that a level playing field will be provided to PPP concessionaires in major ports to compete with private ports. PPP concessionaires in major ports were constrained to operate under the stipulations of these guidelines (by the TAMP), while private operators/PPP concessionaires in non-major ports were free to charge tariffs according to market conditions. These new guidelines will be applicable to future PPP projects, including projects that are currently at the tendering stage.

In making the announcement, Shri Sonowal said government-imposed tariff concessions for transhipment and cabotage will continue to apply to all future PPP concessionaires. In fact, the government has gone further and made further concessions to promote transhipment and cabotage. The fee payable for transshipment freight will now be 1.0 times (previously 1.5 times) the normal container. Similarly, for coastal freight, the concessionaire only has to pay 40% of the royalty payable for foreign freight (compared to 60% previously) in accordance with the government’s coastal concession policy. For the sake of transparency, the prices set in this way must be posted on the concessionaire’s website.

The Minister added that these guidelines will usher in an era of market economy for the sector and will go a long way towards making major ports competitive. He added that the announcement of the market-related tariff guidelines also comes at a time when the government is celebrating the current week as “good governance” week.

(With GDP entries)