PSA International run BMCT seeks performance linked rate hike of 7%
MUMBAI : Bharat Mumbai Container Terminals Pvt Ltd (BMCT), the facility run by Singapore’s PSA
International Pte Ltd at Jawaharlal Nehru Port, has sought a performance-linked rate hike of 7 percent from the state-run port authority, the first such instance by a private terminal operator after the feature was introduced in 2013 to address investors’ concerns over rate revisions and make port projects attractive.
BMCT started operations in February 2018 on a 30-year contract from a km-long berth having a capacity to handle 2.4 million twenty-foot equivalent units or TEUs a year. The terminal can berth super post-Panamax vessels.
PSA International is a wholly owned unit of Temasek Holdings (Private) Ltd, the state holding company owned by the Singapore government.
PSA International has started work on the second phase of BMCT that will add 2.4 million TEUs by 2025, taking the total capacity of the terminal to 4.8 million TEUs a year. A TEU is the standard size of a container and a common measure of capacity in the container business.
BMCT ended FY 23 with a 29 percent share in the containers handled at J N Port, India’s busiest stateowned container gateway and the country’s second biggest. The terminal handled 1.714 million TEUs in the year to March, clocking a growth of 37.72 percent over the 1.244 million TEUs handled in FY22. It registered the highest growth rate among the five container terminals operating at J N Port.
JN Port officials said that BMCT has applied for permission from the port authority to raise rates by 7 percent using the performance linked tariff clause in the concession agreement.
BMCT is governed by the rate guidelines finalised by the government in 2013 that is applicable to private terminals bid out since then.
The 2013 tariff-setting norms allow private cargo-handlers operating at major ports to seek a performance–linked rate hike of as much as 15 percent every year if they achieve certain stipulated performance standards during the preceding year.
“We are verifying the performance parameters submitted by BMCT in support of its claim for a 7 percent performance-linked rate increase,” a port official said, adding that a decision on the proposal will be finalised in the next few days.
The performance linked tariff revision is in addition to the annual inflation linked indexation of rates available to the terminal operator, whereby the rates are automatically indexed to the wholesale price index (WPI), a measure of costs, to the extent of 60 per cent, according to the rate guidelines framed by the government.
By applying the indexation factor, BMCT has announced a rate hike of 7.27 percent from 1 April.
PSA International won the rights to develop and operate the terminal by offering the highest revenue share of 35.79 percent to the port authority in an auction. It is the largest single foreign direct investment (FDI) in an Indian port project.
The first phase of the terminal designed to handle 2.4 million TEUs was built with an investment of Rs4,719 crore. In the second phase, the terminal’s capacity will be expanded by 2.4 million TEUs involving an investment of Rs3,196 crore.
PSA International also runs container handling facilities at Chennai Port, V O Chidambaranar Port (Thoothukudi) and Syama Prasad Mookerjee Port (Kolkata).