Cargo handling terminals operated by private companies in major ports before the entry into force of a new 2021 law regulating state ports are about to be allowed to apply market rates for their services. This historic decision, seen as a game-changer in the port sector, aims to balance the transition to market-driven pricing without violating existing concession agreements. The Ministry of Ports, Shipping and Waterways has set up a panel, led by Sanjay Sethi, chairman of the Jawaharlal Nehru Port Authority, to assess the feasibility of allowing legacy public-private partnership (PPP) freight terminal operators to adopt a market-driven pricing structure, similar to operators after 2021.

The Major Port Authorities Act had originally authorized 11 state-run ports to set market rates for new cargo terminals, leaving the fate of older handlers uncertain. The newly formed panel will have the task of formulating guidelines for the transition of these older cargo terminals to a market-driven tariff framework, taking into account commercial aspects and interests of port authorities. This step aims to ensure that both the benefits of private operators and port authorities are reasonably balanced.

A mechanism is envisaged whereby older freight terminals can charge market-based tariffs, taking into account the revenue share or royalty obligations laid down in concession contracts. This innovative approach aims to ensure minimum transit levels while enabling private operators to benefit from market-driven tariffs. The potential for greater transparency is also on the horizon, with the obligation for terminals to display their market rates on their websites and to notify in advance of any tariff revisions.

This important policy change is expected to level the playing field between the different terminal operators while promoting viability and growth within the port sector.