Showing posts with label Port Tariff. Show all posts
Showing posts with label Port Tariff. Show all posts
Friday, January 9, 2015
Monday, May 14, 2012
INDIA _ EFFECT OF PORT TARIFF CUT
Two of India's private terminals post losses after tariff cuts
Two of India's earliest private container terminal projects at Jawaharlal Nehru port near Mumbai and Tuticorin port in Tamil Nadu, both owned by the Union government, have started making losses on the back of tariff cuts, reported The Mint.
On 1 March, the Tariff Authority for Major Ports (TAMP) asked Nhava Sheva International Container Terminal (NSICT) to pare rates by 27.85 percent when the firm asked for a 30 percent raise.
NSICT is owned by Dubai-based global port operator DP World. It is one of the three container-loading facilities at JN port, India's busiest container gateway.
PSA-Sical Terminals, a firm running a container terminal at V.O. Chidambaranar at Tuticorin, is 62.5 percent owned by PSA International, the world's second biggest container port operator. It has also been hit by rate cuts.
The two terminal operators say the tariff cuts would reduce their revenue earning capability and position them as loss-making units.
The royalties these firms are contractually-mandated to pay the government-owned ports on each container handled at their respective terminals have exceeded the revenue they earn from each container.
Both these contracts followed the royalty model that was in vogue when the government flagged off a port privatisation programme in 1997. The terminal operator had to pay a certain royalty, specified in the contract on each container handled at the terminal, to the government-owned port.
Both PSA and DP World were done in by the peculiar nature of the contract-royalty rates, which were low in the first 10 years of the contract and then rose rapidly over the remaining period of 20 years, making it difficult to run the terminals profitably in the face of rate cuts.
The union government-owned ports now follow a revenue-sharing model for port privatisation contracts.
The bidder willing to share the most from its annual revenue with the port wins the contract.
According to the terms of PSA's contract at Tuticorin port, the royalty per loaded standard container was US$1.9 in the first year of operations. In the 30th year of operations, in 2028, it would reach $96.37 for a loaded standard container. PSA-Sical currently charges its customers around $39.08 for handling a loaded container.
PSA pays $42.13 as royalty to Tuticorin port on each loaded container handled at the terminal. This will rise to $46.34 from 15 July this year.
In the 14 years since starting operations, PSA made three attempts to raise rates for the services provided at the terminal; but, each time, the tariff regulator slashed rates-by 15 percent in 2002, 54 percent in 2006 and 34 percent in 2008 which PSA did not implement by securing stay orders from the Chennai high court.
It is operating the 450,000 standard container capacity-a-year terminal at rates approved in 1999, when it started out on a 30-year contract.
NSICT has been a little luckier. It managed to win some tariff increases from TAMP in the first 15 years of operations.
DP World handles some 1.4 million containers at NSICT every year, more than double the original designed capacity of 6,00,000 containers.
Its royalty increases progressively from 89.09 US ents for one loaded standard container in the first year of operations in 1998 to $104.41 per container by the 30th year, in 2027, according to contract terms.
NSICT was earning $46.62 on each container handled at the terminal.
But, after the 1 March rate cut, it can charge customers only $33.63 per container.
It pays a royalty of $41.28 per container to JN port. This will rise to $43.94 per container from 3 July this year.
Between 2005 and 2006, TAMP cut rates at NSICT cumulatively by 25 percent. The latest blow came on 1 March.
Besides, the port policy that prevailed in 1998 allowed the royalty fully paid by the firms to the port as an item of cost while setting rates.
But, in July 2003, the shipping ministry altered this policy and allowed only a partial pass-through of royalty into tariffs, limiting the extent of pass-through of royalty to the maximum quoted by the second highest bidder in the auction.
Both DP World and PSA declined to comment.
"Global firms are keen to participate in India's port projects by bringing new generation technology and much wanted capital," said Samir Kanabar, partner, tax and regulatory services at Ernst and Young. "So it's important to have a consistent and sustainable policy framework that scales up to international standards."
Two of India's earliest private container terminal projects at Jawaharlal Nehru port near Mumbai and Tuticorin port in Tamil Nadu, both owned by the Union government, have started making losses on the back of tariff cuts, reported The Mint.
On 1 March, the Tariff Authority for Major Ports (TAMP) asked Nhava Sheva International Container Terminal (NSICT) to pare rates by 27.85 percent when the firm asked for a 30 percent raise.
NSICT is owned by Dubai-based global port operator DP World. It is one of the three container-loading facilities at JN port, India's busiest container gateway.
PSA-Sical Terminals, a firm running a container terminal at V.O. Chidambaranar at Tuticorin, is 62.5 percent owned by PSA International, the world's second biggest container port operator. It has also been hit by rate cuts.
The two terminal operators say the tariff cuts would reduce their revenue earning capability and position them as loss-making units.
The royalties these firms are contractually-mandated to pay the government-owned ports on each container handled at their respective terminals have exceeded the revenue they earn from each container.
Both these contracts followed the royalty model that was in vogue when the government flagged off a port privatisation programme in 1997. The terminal operator had to pay a certain royalty, specified in the contract on each container handled at the terminal, to the government-owned port.
Both PSA and DP World were done in by the peculiar nature of the contract-royalty rates, which were low in the first 10 years of the contract and then rose rapidly over the remaining period of 20 years, making it difficult to run the terminals profitably in the face of rate cuts.
The union government-owned ports now follow a revenue-sharing model for port privatisation contracts.
The bidder willing to share the most from its annual revenue with the port wins the contract.
According to the terms of PSA's contract at Tuticorin port, the royalty per loaded standard container was US$1.9 in the first year of operations. In the 30th year of operations, in 2028, it would reach $96.37 for a loaded standard container. PSA-Sical currently charges its customers around $39.08 for handling a loaded container.
PSA pays $42.13 as royalty to Tuticorin port on each loaded container handled at the terminal. This will rise to $46.34 from 15 July this year.
In the 14 years since starting operations, PSA made three attempts to raise rates for the services provided at the terminal; but, each time, the tariff regulator slashed rates-by 15 percent in 2002, 54 percent in 2006 and 34 percent in 2008 which PSA did not implement by securing stay orders from the Chennai high court.
It is operating the 450,000 standard container capacity-a-year terminal at rates approved in 1999, when it started out on a 30-year contract.
NSICT has been a little luckier. It managed to win some tariff increases from TAMP in the first 15 years of operations.
DP World handles some 1.4 million containers at NSICT every year, more than double the original designed capacity of 6,00,000 containers.
Its royalty increases progressively from 89.09 US ents for one loaded standard container in the first year of operations in 1998 to $104.41 per container by the 30th year, in 2027, according to contract terms.
NSICT was earning $46.62 on each container handled at the terminal.
But, after the 1 March rate cut, it can charge customers only $33.63 per container.
It pays a royalty of $41.28 per container to JN port. This will rise to $43.94 per container from 3 July this year.
Between 2005 and 2006, TAMP cut rates at NSICT cumulatively by 25 percent. The latest blow came on 1 March.
Besides, the port policy that prevailed in 1998 allowed the royalty fully paid by the firms to the port as an item of cost while setting rates.
But, in July 2003, the shipping ministry altered this policy and allowed only a partial pass-through of royalty into tariffs, limiting the extent of pass-through of royalty to the maximum quoted by the second highest bidder in the auction.
Both DP World and PSA declined to comment.
"Global firms are keen to participate in India's port projects by bringing new generation technology and much wanted capital," said Samir Kanabar, partner, tax and regulatory services at Ernst and Young. "So it's important to have a consistent and sustainable policy framework that scales up to international standards."
Wednesday, February 22, 2012
PORT RATE CUT
Rates at PSA's Chennai terminal cut
Shipping container cargo through India's second biggest container port, located at Chennai, will cost less for exporters and importers after the port tariff regulator cut rates by 12.23 percent at the facility run by PSA International, reported The Mint.
PSA's facility is one of the two private container loading terminals operating at the Union government-controlled Chennai port.
PSA International had asked for a 15 percent raise on the US$61 it charges customers for handling a standard container at the terminal. A rate revision was required because the validity of the existing rates ended on 31 December.
PSA International, the world's second-biggest container port operator, is fully owned by Temasek Holdings, the sovereign wealth fund of Singapore.
"An estimated additional surplus of $17.4 million will accrue during the (new) tariff cycle, if the existing tariff is allowed to continue till 2014," Rani Jadhav, chairperson of the Tariff Authority for Major Ports (Tamp), wrote in an order notified in the gazette of India on 14 February.
"As there is no justification for giving any increase over the existing tariff, the proposal of Chennai International Terminals seeking an increase of 15 percent is rejected," Jadhav wrote in the order. "A reduction of 12.23 percent is effected across the board in the existing tariff as warranted by the estimated cost position."
The new rate will be valid till 31 December 2014. Chennai International Terminals, wholly owned by PSA International, handles more than 400,000 standard containers a year. By 2014, it plans to handle more than one million standard containers.
"The terminal would incur a loss on the basis of existing tariff," Chennai International Terminals said in its application seeking a rate hike of 15 percent. This is the second rate cut ordered by TAMP in the past few days at a container gateway in India.
On 8 February, India's port tariff regulator notified a rate cut of 44.28 percent at Gateway Terminals India, the container loading facility that is 74 percent owned by APM Terminals Management at Jawaharlal Nehru port near Mumbai, India's busiest container gateway.
Chennai International Terminals said volumes were growing steadily after it started operations in September 2009. But with three quay cranes and 10 rubber-tyred gantry cranes, the terminal is in a weak position to compete with other terminals in the region.
"Hence, for strategic reasons and for competitive edge, we are investing $50.26 million to install additional container-handling equipment, including four rail-mounted quay cranes and eight rubber-tyred gantry cranes," a spokesman for the terminal said. The additional equipment will be commissioned in the third quarter of this year, he added.
"By deploying additional equipment, we will ensure faster vessel turnaround as shipping lines seek to minimise the amount of time spent in ports and prefer ports with faster vessel turnaround time," the spokesman said.
PSA has invested about $121.77 million to build the new facility. The firm won the rights to build and operate the terminal for 30 years in a public auction in 2007.
Shipping container cargo through India's second biggest container port, located at Chennai, will cost less for exporters and importers after the port tariff regulator cut rates by 12.23 percent at the facility run by PSA International, reported The Mint.
PSA's facility is one of the two private container loading terminals operating at the Union government-controlled Chennai port.
PSA International had asked for a 15 percent raise on the US$61 it charges customers for handling a standard container at the terminal. A rate revision was required because the validity of the existing rates ended on 31 December.
PSA International, the world's second-biggest container port operator, is fully owned by Temasek Holdings, the sovereign wealth fund of Singapore.
"An estimated additional surplus of $17.4 million will accrue during the (new) tariff cycle, if the existing tariff is allowed to continue till 2014," Rani Jadhav, chairperson of the Tariff Authority for Major Ports (Tamp), wrote in an order notified in the gazette of India on 14 February.
"As there is no justification for giving any increase over the existing tariff, the proposal of Chennai International Terminals seeking an increase of 15 percent is rejected," Jadhav wrote in the order. "A reduction of 12.23 percent is effected across the board in the existing tariff as warranted by the estimated cost position."
The new rate will be valid till 31 December 2014. Chennai International Terminals, wholly owned by PSA International, handles more than 400,000 standard containers a year. By 2014, it plans to handle more than one million standard containers.
"The terminal would incur a loss on the basis of existing tariff," Chennai International Terminals said in its application seeking a rate hike of 15 percent. This is the second rate cut ordered by TAMP in the past few days at a container gateway in India.
On 8 February, India's port tariff regulator notified a rate cut of 44.28 percent at Gateway Terminals India, the container loading facility that is 74 percent owned by APM Terminals Management at Jawaharlal Nehru port near Mumbai, India's busiest container gateway.
Chennai International Terminals said volumes were growing steadily after it started operations in September 2009. But with three quay cranes and 10 rubber-tyred gantry cranes, the terminal is in a weak position to compete with other terminals in the region.
"Hence, for strategic reasons and for competitive edge, we are investing $50.26 million to install additional container-handling equipment, including four rail-mounted quay cranes and eight rubber-tyred gantry cranes," a spokesman for the terminal said. The additional equipment will be commissioned in the third quarter of this year, he added.
"By deploying additional equipment, we will ensure faster vessel turnaround as shipping lines seek to minimise the amount of time spent in ports and prefer ports with faster vessel turnaround time," the spokesman said.
PSA has invested about $121.77 million to build the new facility. The firm won the rights to build and operate the terminal for 30 years in a public auction in 2007.
Tuesday, November 1, 2011
PORTS - TARIFF
Monday October 31, 2011
Ports plan tariff hike
By SHARIDAN M. ALI
sharidan@thestar.com.my
PETALING JAYA: A number of major ports in Malaysia plan to increase port tariffs or introduce new tariff items going forward.
This is because the revision of some of the tariff items has been long overdue. The move is also to match the investments that have been made to expand the ports.
Port Klang Authority acting general manager Capt David Padman toldStarBiz that some of the new rates should be applicable by the first quarter of 2012 pending the Transport Ministry’s approval.
“The revision of a number of tariff items including conventional cargo and marine services for Port Klang has been mooted since three years ago.
“This is because a large section of the conventional tariff has not been revised for 45 years since the days when Port Klang was administered by the Malayan Railways.
“Also, terminal operators have many times requested charges to be increased in line with the investments in the facilities and services including the construction of new berths, purchase of new cargo handling equipment and subsequent maintenance of the facilities.”
He said terminal operators had also requested an increase in marine service charges as fuel prices had increased substantially since 2008.
After extensive examination of the proposals by the operators and subsequent consultation with the industry and port users, charges for conventional cargo handling such as stevedorage, wharf handling and storage would be increased, Padman said.
“On the other hand, certain charges such as wharf labour and third-shift surcharge have been withdrawn as they are no longer justified given the scope of current port operations.
“Marine service tariffs will see a slight increase while container handling will see new charges for containers of more than 40 ft long,” he said.
It was reported in StarBiz last month that Penang Port Sdn Bhd also planned to introduce new tariffs in the middle of next year.
Chief operating officer Obaid Mansor was quoted as saying that the proposal to raise port tariffs, comprising largely cargo-handling and ship charges, had been submitted to the Penang Port Commission.
Penang Port tariffs were last revised in 2003 and implemented in 2007, which saw a 30% increase in handling charges for container cargo to the present rate of RM182 for a 20-ft container and RM273 for 40-ft container.
About 80% of the cargo handled at Penang Port’s North Butterworth Container Terminal comprises full container load cargo, which is expected to generate 75% of Penang Port’s revenue this year compared with about 65% in 2010.
Meanwhile, ports in Johor namely Johor Port and Port of Tanjung Pelepas, (PTP) are also expected to introduce new tariffs of some sort.
Chairman for both ports, Datuk Mohd Sidik Shaik Osman said Johor Port had recently received approval for a small revision of its port tariff only after 24 years.
“The new port tariff at the Johor Port has been effectively implemented since August 2011.
“The previous revision in Johor Port’s tariff was in 1987,” he said.
As for PTP, Mohd Sidik said it was currently exploring with the Johor Port Authority on the possibility of introducing new tariff items which were not currently prescribed.
“However, the expected impact on port users will be very minimal,” he said.
As of last year, Port Klang, which comprises Northport and Westports, were ranked at 13th place in the global container ranking by volume at 8.87 million twenty-foot equivalent units (TEUs).
PTP came in at 16th place last year with a volume of 6.54 million TEUs,
It was reported that for the first five months of this year, Malaysian ports handled a total of 8.2 million TEUs, up 10.9% from the same period last year.
Thursday, October 20, 2011
SEAPORTS
ICTSI, Asian Terminals allowed to raise tariff rates
Philippine-based port operator International Container Terminal Services Inc (ICTSI) said today the Philippine Ports Authority had decided to allow a two-step increase in the tariff rate for vessel-related container handling services at the Manila International Container Terminal (MICT) and South Harbour, reported Dow Jones Newswires.
The ports authority will allow a two-step increase in the tariff, with a six percent rise from the 2009 level taking effect from November followed by another five percentage point increase in April. Philippine port operators are allowed to apply for tariff increases two years from the last adjustment.
ICTSI operates the MICT, while Asian Terminals Inc (ATI) operates the container port in Manila's South Harbour. The two companies had been seeking an increase in the vessel-related container handling services tariff to cover rising operating costs.
ICTSI had been seeking a 21 percent increase, while Asian Terminals wanted a 19 percent hike
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