Draft Migration of Tariff Guidelines, 2024 Issued by Ports Ministry

The Ministry of Ports, Shipping and Waterways (MOPSW) has issued a draft of the Migration of Tariff Guidelines, 2024, for comments. The guidelines are for adoption of Market Determined Tariff for PPP projects under Guidelines for Regulation of Tariff 2005, Guidelines for Upfront Tariff Setting for PP Projects 2008, Guidelines for Determination of Tariff for Projects 2013 & Tariff Guidelines 2019—Regarding.

In the past, tariffs were regulated due to a limited competitive landscape, but the evolving market necessitated deregulation. The migration was deemed pertinent since, with the transition to the land-lord port model and increased private sector participation, the utility of tariff regulations (and fixation) had diminished. In addition, intra-port parity and competition, parity with respect to non-major ports, consistent user experience and a level playing field for PPP operators dictated this transition.

The proviso to Article 27(1) of the Major Port Authorities Act, 2021 (MPA Act), mandated the notification of the conditions for market-determined tariffs, and all PPP concessionaires had to be given the same treatment, i.e., even the ones where CA was entered before the coming into effect of the MPA Act. The tariff regime was therefore codified through the Model Concession Agreement (MCA), 2021 and Tariff Guidelines, 2021. However, PPP concessionaires operating at the major ports are being governed under different sets of tariff guidelines, i.e., Tariff Guideline 2005 superseded by Tariff Guideline 2019, Tariff Guideline 2008, and Tariff Guideline 2013.

To address this disparity, a committee was formed by the MOPSW for deliberation regarding the migration of existing PPP concessionaires to a market-driven tariff regime as prescribed in Tariff Guidelines 2021. The recommendations of the committee, which are reflected in the draft guidelines, include signing of a supplementary agreement, freedom to fix tariffs/fee/scale of rates of the services on migration, no change in royalty per unit/MT/TEU/FEU etc., or royalty on a revenue share basis. However, royalty, as a revenue share of the major port, should not go below what it would have gotten under the regime when the tariff was fixed. Further, concessions extended by the Central Government with regards to tariff for coastal cargo/container, transshipment container, etc. shall be applicable. Also, past disputes relating to tariffs and other concession conditions may be resolved between the parties (Major Port Authority and PPP Concessionaire).