Back to normal in Tuticorin after PSA International made a point to the Indian Government about the weird workings of the Tariff Authority for Major Ports (TAMP), the body which, in September 2006, effectively halved PSA’ s revenue at its Tuticorin Container Terminal (TCT) as a result of enforced tariff reductions. PSA had earlier decided, in the light of TAMP’ s actions, to “ right-size” its operations to match its concession commitment to the Government by handling just 300,000 teu per annum, down from the 377,000 teu it handled in the 12 months prior to March 2007.
This adjustment was basically designed to keep the terminal operating at a level where it could apply container handling charges that covered its costs and not at the level decreed by TAMP once it exceeded the 300,000 teu per annum mark, a level that PSA claimed made TCT commercially unviable.
Certainly, PSA’s contention in this case appears wellfounded when you look at Tuticorin’s container handling charges alongside those of other major ports in India where TAMP also has authority. The prices shown in Table 1 for PSA Sical, Tuticorin are those applied after TAMP’s ruling last year – and what is immediately apparent is that they are a fair way below the charges applied in other major ports. They also raise further question marks about TAMP’s actions when it is appreciated that the 20ft laden rate shown is 54% below the rate formerly applied – a very large drop.
Not for the first time, this situation has raised question marks about TAMP and its ability to effectively control the earning power of foreign investors who invariably have earlier shouldered significant risk. The usual quid pro quo of risk is reward but with TAMP policing the major ports reward has, in certain cases, been tempered by what amounts to excessive regulation. While PSA is the first foreign operator to scale back its operations as a result of the actions of TAMP, it is not the first one to think about doing it. When the heavy hand of TAMP came down on P&O’s operation at JNPT, prior to the DP World acquisition, this was an option seriously looked at by the former P&O management.
There is a growing ground swell of opinion that TAMP has outlived its usefulness. It may have been useful to have a body like TAMP, the argument goes, when there were only one or two container terminals functioning but now with more container platforms on-stream there is no logical reason why container handling charges can’t be decided by market forces.
Doubtless you can also add to this, the removal of TAMP would be seen as a plus in the context of future foreign investment in India’s major ports.
