Suc­cess be­yond shores

Ship­ping & Ports

Cargo Talk - - Industry Speak -

Pri­vate sec­tor play­ers, op­er­at­ing in ma­jor ports un­der the PPP regime, are func­tion­ing un­der mul­ti­ple tar­iff regimes.

Of this, the older set of play­ers op­er­at­ing un­der 2005 tar­iff guide­lines of TAMP have seen ma­te­rial fall in prof­its and re­turn on the cap­i­tal em­ployed, on ac­count of sharp tar­iff cut.

More­over, many of the tar­iff or­ders have been lit­i­gated upon re­sult­ing in a stale­mate in the in­dus­try. In or­der to at­tract pri­vate cap­i­tal, it is im­per­a­tive to sim­plify the tar­iff regime and mi­grate the older set of play­ers to the 2013 tar­iff regime, which of­fers some up­side to the re­turns by giv­ing par­tial free­dom to fix tar­iff in line with the mar­ket con­di­tions.

The Govern­ment is also ex­pected to give a re­newed thrust to the sec­tor un­der ‘Saga Mala’ pro­gramme, which could mean more projects be­ing bid out un­der PPP and devel­op­ment of new ports.

Coastal ship­ping and In­land wa­ter ways could also get more at­ten­tion from the Govern­ment, as they are sup­posed to bring in ef­fi­ciency in goods trans­porta­tion, which could ben­e­fit play­ers op­er­at­ing in this space. Dredg­ing com­pa­nies and other ser­vice providers such as tug-boat op­er­a­tors could also ben­e­fit if the port sec­tor were to see pick up in awards. The Govern­ment might also take a de­ci­sion on the de­mand of the for­eign ship­ping com­pa­nies and the port op­er­a­tors to re­lax the ‘cab­o­tage law’, which gives the first right of re­fusal to do­mes­tic own­ers for coastal ship­ping.

K Ravichan­dran, Sr. VP, Co-head Cor­po­rate Sec­tor Rat­ings, ICRA Ltd

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