Port Strategy | Visakhapatnam storage charge solution

The Hindu Business Line has reported that the country's Shipping Ministry is seeking to breathe a new lease of life into at least four stalled public-private-partnership (PPP) projects in Visakhapatnam Port Trust by reaching an amicable solution regarding the issue of storage charges.

According to the business newspaper, a Shipping Ministry official commented: “Either the PPP operators will have to sign a supplementary concession agreement with the port trust to enable payment of revenue share on the actual revenue realised by them, or the storage charges itself have to be revised downwards. Both the options are before the government.”

PPP operators like Vedanta, Essar, Adani Ports and Special Economic Zone and ALBA Asia, in order to compete with private ports that offer free cargo storage for 120 days, have asked to cut the storage charges set by the rate regulator and make available longer free days for cargo storage from the current 10 days.

This will help tackle the problem of revenue share payment to the port trust, as PPP operators, according to the concession agreement, must now pay the revenue share on the upfront ceiling rate, set by the Tariff Authority for Major Ports, on a normative basis.

Rate discounts, which are granted by the PPP operators to attract cargo, are therefore effectively ignored while paying revenue share to the port trust.

Currently, storage charges increase exponentially the longer the cargo stays in the port after the free days.

The Shipping Ministry ....

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