Jawaharlal Nehru Port wins large rate hikes from tariff regulators

JNPT wins tariff regulators trust

Jawaharlal Nehru Port Trust (JNPT) has won large rate hikes from the tariff regulators when its volumes have plummeted by 31.38% during the first quarter, putting the port authority in a dilemma over implementing the hike.

The Tariff Authority for Major Ports (TAMP) has approved a rate hike of 19.03% in vessel-related charges (VRC) and 22.56% each in the container, bulk and liquid cargo related charges for a three-year period beginning August 3.

The rates approved by the tariff regulators will be indexed annually to the wholesale price index (WPI), a measure of costs, to the extent of 100%.

The vessel-related charges comprise port dues, berth hire and pilotage and are collected from ships calling at the port.

According to the government, the rates approved by the regulator are ceiling rates and the port has the flexibility to charge lower rates.

The port users were not in the favour of rate hikes during the consultation process and JNPT has indicated that it may defer the implementation of the increase due to the market conditions.

“If the emerging market conditions demand that the upward revision need to be deferred or rebates to be given on its revised rates, for growth of the business or to sustain the existing business, such proposal can be decided by the Board of Trustees of the port at the appropriate time,” JNPT said.

Due to the outbreak of the pandemic, the cargo volume at the port also witnessed a dip. During the April-June quarter of FY21, JNPT handled 12.099 million tons (mt) of cargo, a drop of 31.38% on the 17. 631 mt handled during the same period last year.

The import container volume handled by the port in April 2020 is 80% of the imports handled in April 2019; and the overall throughput is 63% of the cargo handled during April 2019.

Earlier on April 17, Nhava Sheva International Container Terminal (NSICT), one of the five terminals operating at JNPT, won the backing of TAMP to raise rates in the range of 50 to 138% in various services for a three-year period beginning May 17.

As it is indexed WPI to the extent of 60 per cent, the rates will automatically rise every year.

NSICT handled 122,690 TEUs during the April-June quarter.

The rates are worked out on the basis of the annual revenue requirement (ARR). The ARR (a cap) is the average of the actual expenditure for the past three years plus 16% return on capital employed (ROCE).

The 16% ROCE will be calculated on gross fixed assets. It also includes capital work in progress and working capital.

Source: Business Line

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