Guidelines for Determination of Tariff for Projects at Major Ports announced.

Guidelines for Determination of Tariff for Projects at Major Ports announced.
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Union Minister for Shipping Mr. G K Vasan announced the New Tariff Guidelines for projects in Major Ports in Mumbai on July 31, 2013. Minister of State for Shipping, Mr. Milind Deora and Secretary, Shipping Mr. Vishwapati Trivedi were also present 
Union Minister for Shipping Mr. G K Vasan today announced in Mumbai the new Guidelines for determination of tariff for major port projects in the country.  The new simplified guidelines are expected to pave way for increased investment flows into the port sector.
Addressing a press conference, Mr Vasan said “the new guidelines allow the competitive market forces to play a greater role in tariff determination and impart flexibility. This is a major step forward.”
The Shipping Ministry had been contemplating to come up with new tariff guidelines in response to feedback received from various stakeholders, who felt the existing Tariff Authority for Major Ports’ regulations were detrimental to the growth of the sector. It was also felt that there was no level playing field between the major ports and the non-major ports, as the latter were outside the ambit of TAMP.
The Minister informed that an Inter-Ministerial Task Force headed by Member, Planning Commission B K Chaturvedi, looked into the issue in a holistic manner and gave its recommendations. Mr Vasan said “the new guidelines are being issued after extensive consultations with all the stakeholders and I hope that  they will encourage more private investment in port projects.”
The Ministry of Shipping has set an ambitious target to award 30 port projects during 2013-14, which would add 288 Million Tons Per Annum (MTPA), with an investment of approximately Rs 25,000 crores.  This includes Rs 8000 crore big ticket project of the fourth container terminal at the Jawaharlal Nehru Port, JNPT in Navi Mumbai.
During 2012-13 the Ministry awarded 32 port projects at an estimated cost of Rs 6,765 crores, entailing capacity addition of 136 MTPA.
The new guidelines for determination of tariff for projects and major ports come into force with immediate effect.  Beside providing for tariffs to be indexed to inflation, they also set out performance standards for port projects to improve accountability and ensure improved quality of service. The focus TAMP will now gradually shift to performance monitoring and redressing grievances.
Tariff Guidelines 2013- Main Features
·         The Tariff Guidelines will have prospective effect. The projects already awarded will not be covered under the new guidelines.
·         2005 and 2008 guidelines shall continue to apply to projects bid under them.
·         Tariff Authority for Major Ports, TAMP will first set the Reference Tariff for a particular commodity  at a major port. Such Reference Tariff will typically be the highest prevailing rate that was set on the basis of guidelines framed in 2008 for handling a particular commodity in a port.
·         If that commodity is not handled at that Port, highest tariff in nearest Major Port shall be taken as Reference Tariff.
·         Reference Tariff so set, shall be applicable for 5 years. It will be indexed to inflation up to 60 of Wholesale Price Index.
·         TAMP will also notify Performance Standards of facilities and services offered at the port project
·         Both the Reference Tariff and Performance Standards shall be mentioned in the bid document and the bids will be evaluated on the basis of Reference Tariff.
·         Indexed Reference Tariff would be the ceiling tariff in the first year of operation
·         Operator shall be free to propose tariff higher than indexed Reference Tariff from the second year subject to Tariff Cap of 15% over and above the indexed Reference Tariff.
·         Upward revision will be allowed only once in Financial Year
·         Proposal for increase in tariff should be sent to TAMP, stating achievements in Performance Standards in the previous year.  These should be certified by an Independent Engineer drawn from an approved panel.
·         If Performance Standards as per the Concessionaire Agreement are not achieved, TAMP shall not consider any hike in traffic.
·         Revenue Sharing will be as per the Concession Agreement.
·         Major Port Trusts shall draw Performance Standards for the new berths, comparable to similar PPP berths.
·         If PPP operator fails to achieve Performance Standards the stakeholder can make a representation to TAMP.
·         TAMP will hold an inquiry and give its findings to the Major Port Trust
·         Major Port Trust will be bound to take action on the findings as per Concession Agreement