The Hindu Business Line : Directive to cut vessel-related charges — Chennai Port seeks clarification from Ministry

THE Chennai Port Trust is in a quandary on lowering the vessel related charges at the port and bring them on a par with the rates prevailing at the Colombo Port as directed by the Union Shipping Ministry.

Seven months after the Shipping Ministry issued an order on March 3 directing the three east coast major ports of Cochin, Tuticorin and Chennai to cut their vessel related charges, only Chennai is yet to implement the directive that was primarily aimed at weaning away India's transhipment traffic from Colombo port. It is reckoned that 40 per cent of the total container traffic handled by Colombo Port is transhipped from India.

As per the concession agreement signed between P&O Ports and Chennai Port Trust for operating the container terminal at the port, 20 per cent of the total container cargo handled by the private operator will have to be shipped on mainline vessels without any transhipment within three years of operating the facility. The three-year deadline expires this fiscal and the matter will come up for review in March 2005, Ministry sources said.

"Now, the question arises, suppose if we give a concession by lowering the vessel related charges, it will be an additional benefit to P&O Ports. Whereas, according to the agreement, it is the duty of P&O Ports to bring in mainline vessels by itself to carry 20 per cent of the total cargo handled at its terminal directly to destinations without any transhipment," a Port Trust official said here.

P&O Ports will have to pay penalty to Chennai Port Trust for not complying with this clause. The Port Trust also reserves the right to terminate the concession agreement if P&O Ports fail to achieve this stipulation for three consecutive years.

The Port Trust is not sure whether the Shipping Ministry while passing the March order to cut the vessel related charges was conscious of this provision in the concession agreement. The Port Trust has sought a clarification from the Ministry to avoid any hassles in future for implementing the order. This issue is typical only to Chennai whereas Tuticorin and Cochin Ports do not envisage any problem of this kind and have implemented the Ministry order though Tuticorin has signed a concession agreement with PSA Corporation for operating a container terminal at the port. Likewise, Cochin is close to inking an agreement with Dubai Ports International for operating a container transhipment terminal at the port.

On its part, P&O Ports have been pleading with the Shipping Ministry and Chennai Port Trust to lower the vessel related charges to bring in mainline vessels. Experts say that it would be a "national waste" if the physical infrastructure at the port is not properly utilised for lack of lower vessel related charges to attract mainline vessels. "Main line vessels will come only if there is enough cargo and the calling costs are less," an expert pointed out.