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Govt approves concession in royalty regime for transhipment boxes and coastal cargo handled by new PPP operators

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Herons Logistics

NEW DELHI : In a policy boost to promote container transhipment and costal shipping in the country, the government has approved concession in royalty payable by private firms handling transhipment and coastal containers/cargo at their facilities in Centre-owned major ports.

“The royalty payable for transhipment container will now be one time the normal container. Similarly, for the coastal cargo, the concessionaire has to pay only 40% of the royalty payable for foreign cargo in accordance with coastal concession policy of the government,” Union Minister for Ports, Shipping and Waterways, Shri Sarbananda Sonowal, said.

For transparency, the tariffs so fixed are to be hosted on the website of the PPP operators, he said.

The concession in royalty payable on transhipment containers and coastal cargo forms part of the tariff guidelines for upcoming public-private-partnership (PPP) projects issued by the Ministry of Ports, Shipping and Waterways on Wednesday. The rate norms allow new PPP terminals to set tariffs based on market dynamics.

Transhipment containers are those that arrive at a port on smaller feeder ships, gets unloaded and then re-loaded onto larger ships for transportation to final destinations. This entails double handling of the same container at the terminal.

Despite the double handling, the government policy currently permits terminals handling a transhipment container to charge such cargo boxes at 1.5 times that of a normal container instead of double.

In the case of coastal containers (those shipped between two Indian ports), the policy currently allows terminals to charge only 60 per cent of the export-import (EXIM) container, translating into a discount of 40 per cent.

In the earlier regime, PPP terminals operating on the royalty model had to pay the royalty on handing transhipment/coastal container in full to the port authority, according to the contract terms. But those operating under the revenue share format were not affected by this as the revenue share pay-out (in percentage terms) is calculated on the gross revenue earned.

“PPP operators were discouraged from handling transhipment and coastal containers because of the way royalty pay-out was structured despite offering the government mandated concessions in tariff for transhipment and coastal cargo,” an official with a port operating company said.

This issue has been resolved in the new rate policy. Accordingly, in the case of foreign transhipment containers, royalty would henceforth be levied at one time the normal foreign container for a 20-foot transhipment container, 1.2 times the normal foreign container for transhipment containers between 20-foot and 40-foot and 1.5 times the normal foreign container for transhipment containers beyond 40-foot, according to the new rate policy.

In case of coastal transhipment containers of 20-foot, containers between 20-foot and 40-foot as well as boxes above 40-foot, the royalty payment by the PPP operator will be 40% of the royalty payable on foreign transhipment container of the corresponding size.

The royalty payable by the PPP operator on coastal containers or cargo (on which concessional tariff of 60% is levied) shall also be 40% of the royalty payable on normal foreign cargo/ containers.

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