(Published in Part – III Section 4 of the Gazette of India, Extraordinary)
|No. 196||New Delhi, the 19 July , 2001|
Authority for Major Ports
In exercise of the powers conferred by Sections 48, 49 and 50 of
the Major Port Trusts Act, 1963 (38 of 1963), the Tariff
Authority for Major Ports hereby disposes of a representation submitted by
Sarat Chatterjee & Co. (VSP) Pvt. Limited
for a special consolidated charge for dry bulk cargo handling using a
floating crane and a conveyor belt system jointly at the Visakhapatnam
Port Trust as in the Order appended hereto.
( S. Sathyam )
Sarat Chatterjee & Co. (VSP) Pvt. Limited …
Visakhapatnam Port Trust (VPT)
R D E R
on this 28th day of June 2001)
M/s. Sarat Chatterjee & Co. Pvt. Limited (SCCL)
have reportedly developed and stationed a Mobile Cargo Handling System (MCHS)
for the benefit of large vessels discharging dry bulk cargoes at the ore
berth of the Visakhapatnam Port Trust (VPT) outer harbour. The SCCL has claimed that this system, in conjunction
with a floating crane being built by it, will enable discharge of
bulk cargoes from large vessels efficiently and economically.
The SCCL has sent a representation to introduce a consolidated
charge at the VPT for the vessels utilising the MCHS developed by it.
It has requested to extend the benefit of the consolidated charge
for transhipment vessels (fixed by this Authority vide its order dated 22
August 1997) to the vessels utilising the MCHS for discharging cargo.
The SCCL has made the following points in its representation:
The MCHS is the first of its kind in India and the system can be
used with or without the floating crane with the ship’s gear. The
system need not utilise overside operations for discharge of cargoes,
but can utilise the Ore Berths of the VPT (used for loading of Iron ore
and transhipment of vessels) for loading as well as unloading through its
A discharge rate of over 10,000 tonnes per day can be
achieved with this system for discharge onto conveyors and with a
combination of overside discharge onto daughter vessel / barges,
the discharge rate can be increased to over 25,000 tonnes per day.
Hence optimum utilisation of the system will ensure efficient and
congestion free handling of the increased projected traffic at the VPT.
The VPT will earn substantial revenues due to increase in the
volume of cargo without any additional capital expenditure. The country will also save a lot of foreign exchange.
A substantial amount of investment has been made by it without any
guaranteed traffic. Also,
it will have to incur over Rs.30 lakhs on the vessel related
charges alone if the benefit of the consolidated charge is not extended to
it. This will make its system financially unviable.
No infrastructure is to be provided by the VPT to facilitate
direct discharge of cargo using its system.
A copy of the proposal of the SCCL was sent to various port
users/representative bodies of port users and the VPT. Comments
received from them are summarised below:-
Tata Iron and Steel Company Limited (TISCO)
Since they do not operate at the VPT for coking coal and limestone, they expressed their lack of interest in the proposal submitted by the SCCL.
Shipping Corporation of India (SCI)
The benefit of extension of the consolidated charge (of the
lightening operations at the VPT, operated by the ETA (Dubai),
can be granted to the cargo handling system developed by the SCCL.
The TAMP had already clarified during the joint hearing held on 2
July 1999 that the arrangement shall be available for application to any
case of transhipment.
Steel Authority of India Limited ( SAIL)
The system envisaged by the SCCL will facilitate berthing of
cape-size vessels at the ore berth.
The system in operation shown by the SSCL has performed
satisfactorily and the system, once made fully functional,
can serve the intended purpose.
As the ore berth is not a traditional berth for discharge of bulk
cargo in a regular manner; the innovative system to be put into
operation at the ore berth by the SCCL will meet the requirements of the
SAIL, subject to its commercial viability.
The request of the SCCL may be favourably considered.
ESSAR Steel Limited (ESSAR)
The SCCL’s innovative system has the following advantages:
Use of daughter vessels and barges and hence the utilisation of
berths for daughter vessels / barges for unloading onto shore can be
Usage of ports’ tugs and pilots for bringing the daughter
vessels / barges to the berths can be avoided.
The congested berths in the VPT can be avoided.
Any innovative method that will augment the port’s cargo
handling capacity shall be eligible for consolidated charges for
Handling rate of 10,000 tonnes / day cannot be achieved by
Indian National Shipowners’
They do not have any objection if the benefit extended vide the
TAMP order dated 22 August 1997 is extended to other Shipowners using
Vizagapatam Chamber of Commerce and Industry (VCCI)
VCCI has forwarded a copy of the grievances raised by one of the members
of its Managing Committee viz. A.V. Bhanojirow Garuda
Pattabhiramayya & Company. (The VCCI has subsequently clarified
at the joint hearing that the comments given are not one company’s
views; they are the Chamber’s views.)
issues raised therein are summarised below:
Since no additional cargo is guaranteed, there is no
justification for reduction in the port charges.
The port has built an Iron Ore berth at a considerable cost which
must be recovered by them in the normal course.
No penalty has been proposed, if the guaranteed discharge
rate of 10000 to 25000 tonnes per day is not achieved.
The VPT is investing heavily in erecting grab unloading facility at
G.C. berth (GCB) for higher throughput of coal which is
handled at the GCB/ ETA (Dubai)’s floating crane only. The cargo
handling system of the SCCL will, in addition to coal,
handle fertilizer, which is a seasonal cargo and arrives at the VPT
for 6 months in a year. That
being so, the gainful utilisation of the existing berth is not apparent in
view of any additional quantities not being proposed.
The VPT is also building a new berth in the Outer Harbour as well
as investing heavily on higher duty cranes in the Inner Harbour which will
adequately meet the growing demands of the Port.
The benefits of the system to the Port and the users need to be
clearly quantified before considering the proposal.
has forwarded the comments offered by the Visakhapatnam Steel Plant (VSP),
Rashtriya Ispat Nigam Limited.
In its comments, the VSP has made the following points:
The proposal does not indicate the benefit to the VSP as a
charterer if such system is installed in the port and also the amount of
port charges that shall be leviable with such system in operation.
The proposed discharge rate of over 10,000 MT per day and
over 25,000 MT per day with a combination of over-side discharge,
does not give the details as to stacking of the cargo in the Outer Harbour
and / or evacuation of the same by rail or road. The present rail
system available does not permit evacuation at the rates indicated above
on daily basis.
The scheme does not indicate the lay out of the system from the ore
berth upto the discharge point with reference to the existing structures /
equipment / facilities duly approved by port authorities.
Instances of similar usage of such system for discharge of bulk
cargo around the world is not mentioned.
The system does not indicate the ‘escape route’
when a single conveyor or number of conveyors in the route either in
series or in tandem fails.
(vi). There is no indication as to who will operate the system. It is presumed that either the port or an agency appointed by the port will operate the system and deliver the cargo at the designated places. Storage space/evacuation facility matching with the discharge shall be provided by the port authorities.
The scheme does not indicate the measures to control dust pollution
on account of transfer of cargo from one conveyor to the other.
Demurrages / dispatches, if any, will be to the
proposers’ account who will operate the system and hand over the
cargo to the charterers at the designated point on shore.
The system is innovative and, in a way, a simple solution in
providing scope for handling of bulk cargoes (in-bound) at the ore berth
as this berth does not have a wider wharf-space.
This system, however, necessarily requires a wharf to
lay the conveyor system and also a wider dispatch space adjacent to the
wharf for clearing of the material from the system.
The system can certainly augment the productivity of the wharf area,
which otherwise could not be used for import of certain cargoes.
The system can assist in effective moving of the cargo from the ore
berth to another wider berth / space for handling and clearance.
The system proposed is not a Transhipment Operation (ship to
ship/barge) but a direct discharge system from a ship to the wharf.
Though the system envisages the use of floating crane for handling
large gear-less ships, the handling of cargo shall be essentially
and always between the ship and the wharf.
This system must be considered on its own merits. To
encourage private participation in the infrastructure development of the
port sector in future, it must be accorded some concessions.
Port Trust (VPT)
The port users deploy various mechanical handling equipment on
shore for loading and unloading of cargoes and remove them immediately,
after the completion of their operations.
Permanent conveyer system has already been provided at Ore Berths 1
and 2 for export of iron ore mechanically. Installation of the
proposed system should not cause hindrance to the export of Iron Ore
The VPT has no objection for installation of the proposed system as
long as it is not an obstruction for loading of the Iron Ore mechanically;
and, shore based MCHS has to be removed immediately within 8 hours’
notice from the ore berth.
All the vessel related
charges, such as port dues, pilotage and berth charges are
required to be paid by all the vessels discharging the cargo through the
shore based MCHS as per the notified charges.
Since it may not come within the purview of transhipment operations
as per TAMP order dated 22 August 1997, the question of
applicability of transhipment charges does not arise.
In response to the observations of A.V. Bhanojirow,
Garuda Pattabhiramayya & Co. (AVBGPR), the SCCL has made
the following points:
Its system will enable gainful utilization of the Ore berth,
which is generally a non-workable berth for cargoes other than Iron Ore.
It has not guaranteed any additional cargo to the VPT as it has not
asked any guarantee from the VPT about berth availability.
Considerable investment made by the VPT in the Iron Ore berths can
be recovered only by full utilization of them.
The SCCL proposal is to fully utilise the Ore berths.
The SCCL agrees to give performance guarantee and accepts penalty
for under performance.
Increased volume of traffic will take care of the investments made
by the VPT in the heavy duty cranes.
With reference to the comments made by the SAIL, the VSP and
the VPT, the SCCL has responded with the following arguments:
The issues raised by the VSP are technical in nature.
The SCCL will give a demonstration of its system to the VSP
separately to sort out all technical queries.
The VPT’s argument that the SCCL operation will not fall
under the transhipment operations as envisaged by the TAMP is not correct.
The TAMP’s Order dated 22 August 1997 needs to be read in
conjunction with its Order (letter) dated 19 July 1999 which states that ‘Overside
operations’ will qualify for this special arrangement as
transhipment operations, only when such operations are done at a
non-workable berth for dry bulk cargo.
The MCHS of the SCCL can simultaneously discharge cargo on to the
conveyor system as well as into daughter vessel / lighters. The daughter vessels may also carry cargo to other ports.
The ETA (Dubai) is also using the Ore berths for its operations.
A joint hearing in this case was held on 28 January 2000 in
Visakhapatnam. At the
joint hearing, the following submissions were made:
Sarat Chatterjee & Co. (VSP) Pvt. Limited
The system is a combination of floating crane and conveyer.
It is mainly for imports; but, it can also be used
There shall be no obstruction to the VPT operations at all.
The system shall utilise the ore berths gainfully. The
system can easily be dismantled well within 8 hours (we can demonstrate
Cape size vessels can also start coming in.
Even if the conveyer system is not transhipment; give us the
same composite rate because we are using a non-workable berth gainfully.
With the present shore system, 8,000 MT per day can
be evacuated and if
over-side discharge operations are also there, then, 15,000
to 17,000 MT more can also be easily evacuated.
We are ready to accept a penalty clause with respect to levels of 8,000
MT on conveyer and 12,000 MT on transhipment.
As regards the ‘escape route’, an arrangement to
keep the spare conveyor belts is made which can be replaced in one or two
hours (we can demonstrate it).
There will be no spillage because the joints are all covered;
later on, if necessary, the whole system can be covered.
We do not want cross-subsidisation. We do not even want to
divert the inner harbour cargo. The VPT can refuse to allow our big
vessels if inner harbour berths are vacant.
We want a composite charge only for vessel-related charges.
We do not want any concession on cargo-related charges for cargo going
Visakhapatnam Port Trust
The innovative systems are welcome.
But, exploitation of such operations is causing us loss.
This must be avoided.
If transhipment concessions are given to the conveyer operations,
all the inner harbour traffic will shift to outer harbour.
The tariffs will go down by 10 times and the operator will gain
that much more. We
cannot, therefore, agree to what the applicant wants.
When larger vessels come, users are benefited.
They must be willing to share that. They cannot expect the
VPT to bear all such losses.
If inner harbour traffic shifts to outer harbour, our loss
will be to the extent of 90% in the tariffs which we cannot absorb.
The Port Trusts are expected to have an IRR of 12% on their
projects. The Government talks of an IRR of 16% on private projects.
The SCCL cannot make more than that.
The TAMP may go into their investments and scrutinise.
We cannot go into a situation of private monopoly. The
applicant cannot be allowed to charge whatever he pleases and also takes
National Shipowners’ Association (INSA)
The SCCL has made the general observations and stated nothing
specifically. Let them
(a). The VPT itself is
developing facilities at the Outer Harbour General Cargo Berth with Gantry
cranes. The points
whether adequate traffic to support the new system will be available and
sufficient water space for such operations exists or not need to be
(b). The implications
of development of Gangavaram Port have to be taken into account.
For 8,000 MT per day, conveyer system does not
qualify for any special consideration. With its new projects,
the VPT itself can look forward to 12,000 MT per day.
The concession cited must add to the revenue of the VPT.
There shall not be any unintended cross-subsidisation.
The TAMP must ensure that this does not happen.
Authority of India Limited (SAIL)
Not long ago, there was a long waiting time at the VPT.
It may happen again. We must provide for the outer harbour
The new system will help us to charter cape size vessels.
This will reduce costs all around.
The situation of lack of cargo at the second port of discharge will
The VPT must protect its interests.
But, at the same time the VPT must also become competitive.
We cannot shut our eyes to this.
Ore berths 1 and 2 are not conventional berths. In normal system they cannot do even more than 1000 MT per
day. Therefore, the ore berths cannot be compared with inner
Chamber of Commerce and Industry (VCCI)
The comments given by us were not one company’s views;
they were the Chambers’ views.
Instead of giving benefits to one company, allow the market
to decide. Do not give
concessions to cargo discharged on berths.
We support the proposal.
In 2 to 3 years our exports will increase to 7 MT.
We want to take advantage of the system for the next 2-2½
years after which our imports will cease and we will focus on exports.
If we load the cape-size vessels conventionally through lighters,
it will become expensive. We
have to take advantage of such innovative systems.
ETA (Dubai) Limited
Innovative systems must be encouraged.
This system of the SCCL cannot be recognised as a transhipment
It was agreed in the joint hearing that the Chairman of the VPT
would hold consultations with the SCCL and the concerned users to explore
the possibility of evolving an agreed position on the following issues:
Cases of transhipment operations will be governed by the same rates
as for the ETA’s floating crane.
Will the shore-based operations (i.e., the conveyer
belt system) qualify for any concession; and, if so,
If there is a combination of the two sets of operations,
then, what will be the tariff approach.
Will tariffs like Port Dues, Pilotage, and Berth hire
apply at the usual rates in cases of shore-based operations (i.e.,
the conveyor belt system).
Is it possible for the VPT to assure, to whatever extent,
availability of the Ore Berths subject to assured minimum levels of
In case of emergence of assured minimum level of traffic,
will the concept of ‘volume discounts’ be made
applicable to this case also.
What safeguards can be introduced to ensure that traffic does not
shift form the inner harbour to the outer harbour just to take advantage
of a ‘concessional package’ thereby depriving the VPT of
the revenue earnings at regular berths.
After the joint hearing, the SCCL submitted its comments on
various issues raised by the users. In
addition to reiterating their earlier comments on use of the idle capacity
of the ore berth and generation of additional traffic/revenue to the port
by the use of such facility, they stated as follows:
For cargoes consigned for the Visakhapatnam Port, an amount
of Rs.27.50 PMT will accrue to the VPT in case the
consolidated charge benefit is passed on to them as against the VPT’s
view of only Rs.5.90 PMT.
The SCCL has only requested that a consolidated vessel related
charge, as applicable to transhipment vessel and normal notified
landing / wharfage charge on the cargo be charged.
It has further requested to fix an even lower consolidated charge
on vessels utilising its system, as the pilotage and tug movements
of the VPT will be less than that for transhipment vessels.
It has proposed to handle 3 million tonnes of cargo per annum
consisting of about 1million tonnes of coal already being consigned to the
VPT, 0.5 million tonnes of coal to be transhipped to other
ports (additional cargo to Visakhapatnam Port) 0.75 million tonnes
per annum of fertiliser and fertiliser raw materials (out of this about 0.25
million tonnes of cargo is generally consigned to the VPT in the normal
course and about 0.5 million tonnes will be the additional cargo
that will arrive in view of the benefits to importers for bringing their
cargoes in the large panamax vessel) and new cargoes to the tune of 0.75
million tonnes of imported iron ore (proposed to be imported by Hy Grade
Pellets Limited for their iron ore fines pelletisation plant at Vizag in
cape size vessels) or steam coal for the cement plants / thermal power
plants. The SCCL’s
system will divert only 1.25 million tonnes of the VPT’s
existing traffic to its system and this will make the normal berths where
these cargoes are presently handled, free for handling the other
cargo to the tune of 0.625 million tonnes.
A comparative analysis of the financial benefits accruing to the
VPT presently and that will accrue to the VPT, if the SCCL is
charged a consolidated vessel related charges as applicable to
transhipment operations is given below:
(a). The present earning
to the VPT (by way of handling 1 million
tonnes of coking coal @ Rs.50/-
pmt and 0.25 million tonnes
of fertilizer @ Rs.59/- pmt) are Rs.6,47,50,000/-.
The proposed earnings to
the VPT in case consolidated charge benefit is passed on to vessels and
cargoes utilising their system for the projected traffic (of 10,000,000
tonnes of Coking Coal for Vizag @ Rs.27.50 pmt, 5,00,000
tonnes of Coking Coal for other ports @ Rs.7.50 pmt,
7,50,000 tonnes of Fertilser @ Rs.27.50 pmt,
7,50,000 tonnes of Iron ore/Steam Coal others @ Rs.27.50
pmt, 6,25,000 tonnes of Other cargoes assumed to be
handled by Vizag Port in view of free berth capacity @ Rs.59.00
pmt) shall be Rs.10,93,75,000/-
It is assumed that 50% each of vessels utilising the system will be
Panamax type and cape size carrying about 70,000 and 1,30,000
MT of cargo respectively. Hence,
average vessel size will be 1,00,000 MT.
Accordingly, vessels related charge will be Rs.3.50
PMT as the vessel related consolidated charge presently is Rs.3,50,000/-
per vessel. Also it is assumed that normal notified cargo landing /
wharfage charge will be paid on cargoes finally consigned to the
Visakhapatnam Port @ Rs.24/- PMT and a concessional wharfage of Rs.4/-
PMT on cargoes being carried to other ports.
Thus, the gain that will accrue to the VPT by passing on
the consolidated charges will be to the tune of Rs.4,46,25,000.
This income accrues to the Port without any additional investment.
Even taking the most pessimistic view that no additional cargo will
accrue to the VPT due to diversion of 1.25 MT to SCCL system,
the net gain to the VPT will be Rs.77,50,000/-.
As decided at the joint hearing, the VPT submitted its
comments, in consultation with various user organisations and the
SCCL, on various issues raised, a summary of which is given
Two meetings with the SCCL,
Stevedores Association, INSA, Steamship Agents’
Association, SAIL, ESSAR and C&F Agents Association were
held and the proposal was discussed in detail.
The points brought out by the SCCL as given in para 6 above were
The statement of the SCCL that the VPT would be earning Rs.1093
lakhs per annum against the present earnings of Rs.647 lakhs is a
mis-interpretation of the facts.
The assumption that a notional cargo of about 6.25 lakhs
tonnes will be handled on account of utilisation of the system is purely
arbitrary in the sense that in-spite of availability of free berth days
during lean period from December to March in every financial year,
the VPT is not able to attract any additional cargo other than traditional
and captive cargo. Extending
concessional benefits based on notional cargo is not correct and will lead
to a serious audit objection, more so where a private firm is
As regards diversion of about 5 lakhs tonnes of coking coal from
other ports and handling of 7.5 lakhs tonnes of additional cargo on
account of the ESSAR, the VPT had discussed with the ESSAR who
informed that they were not very sure about the materialisation of the
traffic. The port has given comparison of revenue estimated by the
SCCL and the estimates modified by the VPT, which shows a net loss
of revenue of Rs.263.75 lakhs per annum to the Port.
The port is spending a substantial amount on the modernisation of
the cargo transfer system and construction of additional service centers
and by 2002, there will be 6 additional berths, 14 higher
capacity cranes and 2 grab un-loaders at the port which will increase the
productivity making port more competitive to attract additional cargoes. If the benefit is extended to one party, there is
every possibility of diversion of significant volumes of the cargo from
the inner harbour to the outer harbour rendering the investment made by
the Port infructuous.
A proposal to extend the inner harbour rates to outer harbour in
respect of cargo which is meant for handling at inner harbour berths like
fertilisers, steam coal, coking coal (i.e.
other than captive cargo) has already been sent to the TAMP for approval
and the same is under their consideration. This facility shall be
an incentive to the trade to handle their vessels at the outer harbour
berths instead of waiting at the anchorage.
It will enable the shipping community to avoid the payment of the
demurrage charge and there will be substantial reduction in the standing
costs of the ship as the users will get a concession of about 25% on
vessel related charges.
During the discussions with the users, it was suggested by
the trade members to examine the feasibility of extending 10% discount on
vessel related charges for any user who come forward to utilise the
non-workable berth for cargo operations.
The port is not in a favor of extending the benefit of consolidated
vessel related charge to the SCCL since it is strongly felt that it shall
amounts to loosing sizable revenue of about Rs.2.5 to 3
crores per annum to the port. Also
the present consolidated vessel related charges of Rs.3.5
lakhs for ETA operation have been
proposed to be revised upward to Rs.8.5 lakhs (to be charged
slab wise) for this operation which awaits TAMP’s approval.
Two more points which were mutually agreed upon were (a) extending
discount on berth hire charges if the performance exceeds the stipulated
norm and (b) the discount on tariff for higher volumes of throughput.
Another joint hearing in this case was held on 3 April 2000 at the
VPT along with the ETA (Dubai) case.
At the joint hearing the following submissions were made:
Port Trust (VPT)
(i). We are against any subsidies (or cross subsidisation). Why should a public trust subsidies a private company?
(ii). In spite of many representations from us, the TAMP has still not fixed a proper tariff for ETA operations.
(iii). (a). Do not fix separate rates. Let the common rates prevail. The stated concessions can be offered upfront. After all, the new system will make an otherwise unworkable Port facility work.
(b). The Government allows us 13.5% ROCE. Why should we subsidise private parties to earn a much higher ROCE?
(c). Should there not be a ceiling on the ROCE of private parties? Will it not further increase with subsidies? There should be some way of estimating the capital employed. The TAMP must also decide on a reasonable ceiling on the ROCE for a private party.
(iv). The SCCL says, heavy investments will be made, but, no details are available.
(v). The SCCL has given commitment of a minimum performance.
(vi). There is no case for concessions to ‘shore based operations’.
(vii). We do not consider the third ‘combined operations’ at all.
(a). There will be a
substantial freight differential (estimated at $ 5 per MT) on the bigger
vessels that ETA will service.
Since, the charter terms vary substantially, the
lines / shippers shall gain $ 8 per MT depending on the speed of operation.
A part of these gains must go to other concerned agencies also.
Sarat Chatterjee & Co. (VSP) Pvt. Ltd. (SCCL)
(i). We are making an (otherwise) unworkable berth operative. This will benefit the Port. Give me some concession.
(ii). No ceiling rate for our operation is fixed. We are agreeable to either TAMP or DG (S) fixing it.
(iii). The response of the detailed discussion with the VPT has come only on 27 March 2000. We are yet to study and respond.
Port Users Association (VPUA)
The tariff offered is not concessional; it is more
The VPT was originally avoiding ETA (Dubai) proposal. Then, they started supporting.
Now, after three years, they oppose. This is a
very strange inconsistency.
We do not insist on separate rates.
Let there be common rates with concessions for better performance.
Cape-size vessels would not have come to VPT otherwise. This is an extraordinary achievement.
Shipping Corporation of India (SCI)
freight rates came down because of a global trend.
The credit cannot be given to the ETA.
The Port Users’ Association has grossly exaggerated the
merit of ETA facility.
Rashtriya Ispat Nigam Limited (RINL)
ETA is a monopoly. Why
give subsidy to them?
ESSAR Steel Limited
(i). The ETA crane can do very well. It can handle 15000 MT per day, but barges are not available to carry the cargo into the Port.
(ii). Facilities for unloading 15000 MT both at outer and inner harbour will be required. Unless this happens, the system will not succeed.
Only a combination system like the SCCL’s will work.
At the joint hearing, it was decided to give 10 days time to
the SCCL to respond to the VPT’s observations dated 27 March 2000.
Some of the users who attended the joint hearing felt that the SCCL
should arrange to organise some trial-runs to check on the operational
factors, environmental hazards, etc.
The SCCL agreed to arrange such trial operations.
It was decided to wait for the report from the SCCL on the trial
The SCCL submitted its comments on the observations of the VPT vide
its letter dated 7 April 2000.
summary of the comments offered by the SCCL is given below:-
The following points may be considered before taking a decision:
(a). The optimum and efficient utilisation of Port facilities that presently remain unutilised.
(b). The economic viability of the project (either private or public).
(c). The competition from other neighbouring ports (Kakinada, Dhamra, etc.)
(d). The handling of additional projected traffic and reduction of detention time of vessels at roads to zero level at all times of the year.
(e). No investment from VPT’s side.
The calculations of financial benefits to the VPT are based on the
assumption that additional cargo will use the available free berth days.
It is presumed that 50% of the available free berth days shall be
utilised for handling additional cargo which is increasing by 8-10% every
year. Hence the facts with respect to the generation of additional
cargo on utilisation of its system, which shall improve the berth
availability, are not misinterpreted.
The Multipurpose Berth constructed by the port at the outer harbour
will handle containers and hence the system shall not economically clash
with the investments made by the port.
The vessel related tariff for vessels utilising the SCCL system can
be fixed on per-metric-ton basis. For quantity discharged on to the
daughter vessels, same tariff as applicable to ETA can be made
applicable by equating it with the average carrying capacities of the
cargo and for the quantity discharged on to the shore system, a
reasonable tariff similar to that fixed for ETA operations may be fixed.
The VPT has given its further comments on the request of the SCCL
which are summarised below:
The Port welcomes the installation of innovative facilities by any
user. Such facilities
shall not, however, be detrimental to the interests of other
users. In this case,
the inference of the SCCL that the proposed system will not in any way
economically clash with the investments made by the Port is not correct in
view of the possibility of diversion of a substantial portion of inner
harbour cargo to the proposed facility.
No commitment regarding percentage discount can be given at this
stage as the percentage discount depends upon the final rates of port dues
and pilotage to be approved by the TAMP
for various sizes of vessels. The figure stated in the VPT’s
letter dated 27 March 2000 is only indicative because after revision of
the Scale of Rates the percentage
discount may vary.
The concept of consolidated vessel charges cannot be extended to
the SCCL as the modus operandi does not come under the transhipment
operation. Also, the fixation of per tonne rate will not be
helpful in case of simultaneous discharge as it is not practicable to
maintain data of the quantity discharged on to the shore and the daughter
The inner harbour rates of port dues may be extended to vessels at
outer harbour for draft availability of up to 10.7 meters.
Beyond this, the port is not prepared to extend any
concession to the SCCL since it amounts to loss of substantial amount of
revenue to the Port.
The difference in the amount payable towards vessel related charges
for deploying cape size vessel at outer harbour vis-à-vis handy max
vessels at inner harbour is not significant since in the later case,
the user will be paying for more number of ship calls.
Without any substantial increase in the expenditure, the
user will get additional benefit of minimum 3 to 4 dollars per tonne in
freight by deploying cape size vessels.
Till now the MCHS has not been demonstrated by the SCCL. It is too early to debate and decide about the concessions
and rebates in the absence of actual data on productivity levels and
technical feasibility of the facility.
Though the port is willing to sacrifice a certain amount of revenue
if the proposal is beneficial to the customer in the overall interest of
the nation, it becomes difficult to estimate such tangible benefits
in the absence of practical results of the facility proposed.
The SCCL vide its letter dated 15 September 2000 has intimated that
they have successfully carried out the trial operation of the system
developed by them with coking Coal landed on account of SAIL. They have also submitted details of the discharge of cargo
along with a report from marine surveyors.
The VPT has submitted its comments on the trial operation report of
the SCCL. The VPT has
given the following comments:
The SCCL has carried out trial run for
the vessel M.V. AMBER-K with the consent of the SAIL
for discharge of imported coking coal at GCB, which is a regular
along side berth for discharge of coking coal and
not the ore berth.
The SCCL has used its system partly with two hooks out of total
number of four hooks that could be worked for the said ship.
During the course of operation of the system the conveyors deployed
were stopped due to frequent jamming as well as breakdown of the system.
Hence, part of the cargo at these hooks was discharged by
Carrying out of piece-meal operations at the convenience of the
firm does not indicate the real performance of the system.
The Survey report reveals that the output from the two hooks of
the system was less than the output achieved at the other hooks worked on
the conventional system.
Unless the system works satisfactorily, the proposal for
extension of discount on tariff shall not be considered.
Another joint hearing in this case was fixed on 8 December 2000 in
Visakhapatnam. The SCCL had sought an adjournment of the case.
However, the joint hearing as scheduled was held. It
was decided to give a hearing to the SCCL in Delhi.
In the joint hearing held on 8 December 2000, the following
points were made:
Visakhapatnam Port Trust
The trial runs was held on a regular berth and the output was also
low even there.
If they off-load cargo faster, they get their return by
reducing the turn around time.
What more do they want?
The claim for a part of the benefit of using a non-workable berth
is also not valid. They
have not used a non-workable berth.
The Rules and Regulation of Indian Railway shall apply.
The Port Railways have no Rules and Regulations of their own.
The delivery of wagons is at the convenience of Railways.
Before the wagon are to be sent back to railways seven operations
have to be completed, loading / unloading are only two out of those.
Some free time (five to nine hours) is available to users,
however, to the port, for seven operations 36/28 hour’s
free time is available. Beyond this, demurrages will apply.
(vii). Grant of waiver of demurrage is at a total discretion of the Port. It is fraught with dangers. We do not want to be so vulnerable.
Vizagapatam Chamber of Commerce and Industry
Where is the non-workable berth?
The export of iron ore to China has picked up.
Port Trust and Indian National Shipowners’ Association
Tariff shall be one fixed rate and incentives can be given for
quantity (volume), speed (turn around) and use of non-productive
assets. If concession is given for promoting innovation then its
quantum and duration need to be defined.
It cannot be forever.
The concessions should be a part of a stated tariff and nothing ad
hoc should be there.
The inner harbour rates can be extended to outer harbour on draft
considerations (10.7 meters).
The INSA opposes grant of any consolidated charge for such
The SCCL submitted further comments on the observations of the VPT
on the operations carried out by them. In addition to reiterating
its earlier comments it has stated as follows:
The trial was not carried out at an ore berth as no receiver was
willing to bring in the vessel to the ore berth without the tariff being
There can be minor initial teething problem as the concept is new
and innovative which will be over come as more and more cargo is handled
and the system is entirely streamlined.
The system is primarily designed to operate with one or two
floating cranes which were not used in the trial runs as no receiver was
willing to bring in gearless vessel till a tariff is fixed.
No tariff concession is required for utilisation of the system at
normal berths for all cargoes. A structured consolidated tariff may
be fixed linked to the productivity achieved.
It is to be clarified whether the consolidated tariff as applicable
for transhipment will be applicable in a case where the daughter vessel /
barge may not be available simultaneously with the mother vessel and the
cargo has to be discharged and separately reloaded into the daughter
vessel and / or barge for onwards carriage.
As was decided, a separate hearing for the SCCL was allowed
on 15 February 2001 in New Delhi.
The VPT was also invited to participate in the hearing. During
the joint hearing, the following submissions were made:
Sarat Chatterjee & Co. Pvt. Limited (SCCL)
(i). This is a new system.
Teething problems will be there.
Please be considerate in evaluating.
(ii). We have done a trial on the
general cargo berth. The
results are good.
(iii). We are not asking for subsides.
We want consolidated charges for an innovative operation.
(iv). We are not asking for priority on
the Ore berth. Iron ore will always get the priority.
Inspite of exports to China has picked up, the berth is
vacant for long periods. We
only want to utilise the lean time.
(v). The VPT’s own
reports show an increase of 9.5% in the traffic.
How can they say, there is no additional traffic?
(vi). This ore berth is a deep draft
berth. With our
innovative system, more large vessels can come giving advantages of
scale to all parties.
(vii). We have learnt form the ETA case.
We have overcome their infirmities.
(viii). This system can be seen as a handling
gear. We are not
asking for any concessions on other berths. We ask for concessions
only when we use an otherwise unworkable ore berth for unloading of the
(ix). Significantly, the
vessel-related charges for ore berths are much higher than for the other
berths, so VPT will gain, if we make the ore berth work more.
(x). Trial runs were not conducted at
the ore berths, as users were unwilling to pay more for the trial
at the expensive berths. If
a special rate can be fixed, we can have the trial there.
(xi). The conveyor system is well
designed. It will
occupy only the given area and operate within that.
There will be no obstruction to ore loading.
(xii). We have proved that the system is
we have not been able to prove the efficiency parameters. The TAMP
can fix the efficiency parameters and, if necessary, give a
graded Scale of Rates.
(xiii). The VPT has invested in modernisation.
But that should not come in the way of more competition.
Let us compete with them; and, let the user benefit.
(xiv). We are middleman undoubtedly. We are only a handling agent. Why should there be any objection to our investment in this
system. After all,
only a service provider has to arrange for these facilities.
Port Trust (VPT)
The conveyor system is basically one type of gear of a handling
The SCCL cannot be compared with ETA.
The ETA has a turn-key operation contract.
The SCCL is only a handling agent at the VPT.
At the ore berth, first priority will be to iron ore,
second priority will be to oil transhipment; and, the SCCL will get only
When iron ore is being loaded, the SCCL cannot operate in
ore berth 2 without obstructing the loading.
We are spending Rs.100 crores on modernisation of many new
cranes and will be able to unload 12000 MT per day. The SCCL itself has done so.
We are likely to install two heavy-duty (33MT) grab un-loaders at
the general cargo berth in outer harbour to suit 1,00,000 MT
vessels. We will be
able to unload 18,000 MT per day.
In this backdrop, how is the SCCL’s venture
At the SCCL trial at GCB, the output was less than the
normal output. Where
is the advantage?
With our modernisation schemes, there will be no congestion
at all. There is no
particular attraction for new installations at a concessional rate.
The SCCL is only a handling agent.
What extra cargo they will bring in. If they give a clear assurance of additional traffic,
we can consider.
As there is no particular advantage, we are,
therefore, not in favor of this new system.
When cargo-handling operation is in progress we will not charge the
SCCL for using our space to install their system.
After all it is a part of their handling gear.
During the joint hearing, the SCCL submitted a copy of its
reply to the Rashtriya Ispat Nigam Limited (VSP) on their objections.
The SCCL also furnished its further written submissions reiterating
its earlier comments, which are summarised as below:
It is willing to pay cargo wharfage at normal prescribed tariff of
the port for different cargoes. The benefit of lower wharfage may,
however, be extended whenever it tranships cargo from vessel to
vessel and / or whenever cargo landed at the port is reloaded on to
another barge for onward carriage to a different port.
It is agreeable to pay 25% of the prescribed berth hire for vessels
discharging cargo consigned to Visakhapatnam, on to its system at
ore berth. Since ore
berths does not have any shore crane facility and is generally a
non-workable berth for cargo discharge, its system will gainfully
utilise the idle capacity by generating additional revenue for the VPT.
Berth hire be collected on the basis of slab prescribed for vessels
with GRT of 15001 to 30,000 since, the cargo proposed to be
handled on to its system presently arrive in the vessels with GRT of 15001
As regards pilotage and port dues, the SCCL shall be given
the benefit of the same consolidated charges as applicable on vessels for
transhipment of cargo as the services are exactly similar to what is being
extended to transhipment vessels.
These transhipment vessels are also presently berthed at the ore
In case of simultaneous operation of both transhipment and
discharge on to their shore based system, the tariff be fixed on
the basis of per metric tonne based on the quantity carried by the vessel.
This Authority had already passed an Order on 16 May 2001,
after reviewing its earlier Order dated 22 August 97 relating to fixation
of consolidated charges on mother vessels for lightening operations
carried out by a floating crane.
The revised rates for transhipment of dry bulk cargo were approved
as proposed by the VPT. While
approving the revised rate, this Authority had ordered that the
revised rates would be applicable to all cases of transhipment operation
of dry bulk cargo including the case of the ETA (Dubai); and,
the revised rate would replace the consolidated charge prescribed in its
earlier Order dated 22 August 97.
With reference to the totality of information collected during the
processing of this case, and taking into account the arguments
advanced at the joint hearings, the following position emerges:
The SCCL has submitted its proposal for installation of an
innovative cargo handling system at the VPT in the backdrop of this
Authority’s stated position about encouraging ‘innovative
The proposed system will consist of a floating crane (for overside
operations) and a conveyor belt system (for shore-based handling) each
operating either independently or in tandem.
floating crane is still being manufactured.
The conveyor belt system, however, is ready and has
also been subjected to a trial-run albeit somewhat unsatisfactorily.
(iii). (a). The SCCL has stressed the point, it will be innovative in the sense that it will make an unworkable berth work. The Ore Berth in the Outer Harbour has been constructed for export of iron ore. The SCCL claims that, with its (innovative) MCHS, it will make the Ore Berth workable (even) for imports. It is noteworthy that the Ore Berth remains empty especially in the lean season; and, the SCCL proposes to gainfully utilise this ‘idle capacity’.
(b). The SCCL has accepted the position that at the Ore Berth first priority will be for iron ore, second priority for ‘oil transhipment’, and only third priority will be for its cargo.
(c). The SCCL has also recognised the position that there are special operational guidelines governing occupancy of Ore Berth-I and Ore Berth-II requiring compulsory vacancy of one or the other berth under stated conditions.
(d). The SCCL has specifically accepted the VPT stipulations that its MCHS operations must not
other traffic; and,
in loss of revenue.
(iv). Besides the other stated advantages, the more important additional advantage will be that larger size (i.e., cape-size) vessels can come to the VPT which may not otherwise happen. This has in fact been seen to happen in the case of the trial-runs organised by the ETA (Dubai) for use of its floating crane.
(v). (a). If there is additional traffic, and if the SCCL system is operated efficiently, it will result in decongesting the port besides yielding additional revenue for no investments by the Port. But, before such a happy situation can be countenanced, the conditions listed in paragraph 16.(iii).(d). above will have to be satisfied. It is necessary in this case to emphasise this aspect because one of the constituent units of the system (viz., the floating crane) is still not in position and the other constituent unit (viz., the conveyor belt system) has not really demonstrated its capabilities.
(b). As earlier stated, the conveyor belt system has not yet had a proper trial-run. Its only trial-run has been in a regular berth and not in the Ore Berth. Even in such a trial-run, the following problems were noticed:
hardware problems like frequent jammings and many break-downs;
handling problems like ability to utilise only two out of the
four hooks available in the vessel;
occurrence of spillages causing pollution and environmental
poor standard of performance in the sense that the (other) two
hooks operated in the conventional method could give greater output
than the two hooks operated by the MCHS;
accumulation of cargo at the discharge point leading to
congestion due to limitation of the evacuation system;
aggravation of the evacuation system due to railway-related
uncertainties (e.g., availability of wagons).
It has to be recognised in this context that, even if there is improvement in the performance standard of the SCCL, its overall impact will still be hit by the systemic limitations cited above.
(c). The SCCL has sought to explain away the gaps in its trial-run with the observation that, in the absence of a special consolidated tariff for its operations, users have not been willing to bring in larger size vessels for (cargo) handling at the Ore Berth where they will have to pay higher vessel-related charges. This explanation is obviously not tenable for the reason that any operator propagating a new system will have to find his ways of demonstrating its feasibility and efficiency; he cannot expect this Authority to fix tariffs for experimental operations and trial runs or (even) expect the Port to accept such a proposition.
(d). Likewise, the SCCL has sought to meet the criticism about lack of guaranteed levels of traffic by stating that such guarantees are not possible in the absence of ‘berth reservation’. The implication here, possibly, is that this Authority must persuade the VPT to work out ‘a package’ for an experimental phase of operation. This, again, is not a tenable proposition. The SCCL must do its groundwork to tie up all the issues instead of leaving them for this Authority to do the needful.
(e). Talking of ‘guarantees’, the SCCL has agreed to give guarantees about performance standards and accept penalties for under-performance. Although the standards stated in the proposal are 10,000 MT/day for the conveyor belt system and 15,000 MT/day for the floating crane, in this context, the SCCL has chosen to ‘assure’ only 8,000 MT/day and 12,000 MT/day, respectively. It is difficult to accept such steep reductions in performance standards. As has rightly been highlighted by the INSA, there will be little point in talking about a performance level of 8,000 MT/day when, with the new investments that are being made, the VPT itself can achieve much more.
(a). The SCCL has
presented the proposal about its MCHS in three facets –
overside operations with the floating crane;
shore-based handling with the conveyor belt system; and,
a joint working of both.
(b). The SCCL has requested for a special consolidated tariff for its floating crane operations citing the special transhipment model prescribed for the ETA (Dubai). It is relevant here to point out that the example of the ETA (Dubai) is somewhat outdated in the sense that this Authority has prescribed on 16 May 2001, in supersession of its earlier special prescription in favour of the ETA (Dubai), ‘common rates’ for transhipment of dry bulk cargo as proposed by the VPT. In other words, the ‘common rates’ (and, the attached conditionalities) will apply to the transhipment operation using the SCCL floating crane also whenever it is ready and commissioned; there will be no need for any separate prescription of rates (and, conditionalities) exclusively for the SCCL. Significantly, in the joint hearings, the VPT and many of the users have argued against ‘special arrangements’ and pleaded for common rates with concessions for better performance.
(c). The SCCL has requested for a special consolidated tariff (even) for its conveyor belt system. The logic is that it can augment cargo handling by about 10,000 MT/day which will considerably reduce the turnaround time of vessels and thereby enable the VPT to maximise its utilisation of the Ore Berth. The basic point to be recognised in this context will be that the conveyor belt system involves ‘shore-based handling’ and cannot, therefore, qualify for concessions available to transhipment operations. The SCCL itself also admits this distinction; in fact, there is somewhat of a pathetic plea that at least the cargo that is subsequently reloaded on barges to go to other ports must be recognised as ‘transhipment’!
Apart from the basic distinction described above, the claim of this system for special consideration has been challenged on other considerations also by the VPT and others like the INSA, the VCCI, and the SCI. It has been argued that, unlike in the case of floating cranes where additional revenues accrue through operations of daughter vessels, in this case, there are no such accruals; on the contrary, there may be a loss of revenue because of a possible shift of Inner-Harbour-traffic to the Outer Harbour; the feasibility/efficiency of the system has not been demonstrated; and, in any case, as explained in paragraph 16.(v).(b). above, its capability will be constrained by systemic limitations. In the face of this stark factuality, it will be difficult to justify any special consideration for grant of concessions in this case.
(d). The SCCL has also requested for special consideration to the facet of ‘joint operations’ of the floating crane and the conveyor belt. The VPT has peremptorily dismissed this proposition. Its contention is that, when there can be no special consideration for the independent operation of the conveyor belt system, how can there be any consideration for a ‘joint operation’? It will be difficult to refute the logic of this contention. Additionally, it has to be noted that any recognition of a ‘joint operation’ can open up possibilities of exploitation of the concession. Based on a nominal operation of the floating crane, the concession can be passed on to a full-fledged operation of the conveyor belt system which, in effect, will nullify the decision referred in paragraph 16.(vi).(c). above about not recognising ‘shore-based handling’ by the conveyor belt system for special consideration.
The VPT has invested about Rs.100 crores for installation by
2002 six new berths, 14 higher capacity cranes, and 2 grab
unloaders. All this
will result in substantial increase in productivity.
That being so, as has been stressed by the VPT and many
users, the conveyor belt system of the SCCL (with all its
infirmities discussed earlier) for ‘shore-based handling’
of cargo holds no particular attraction. Again, as has been stressed by many users, the
proposal is couched in very general terms without any specific projections
by the SCCL who is only a handling agent without any hold on traffic
assessment of the proposal cannot but be seen to hold substance.
The SCCL will have to do its groundwork more strenuously and tie up
its proposal with greater specificity.
Significantly, the VPT has offered to consider giving ‘discounts’
if the SCCL can come up with clear assurances of additional traffic.
The SCCL has sought to bolster its proposal with calculations to
show that adoption of its MCHS will fetch additional revenue of Rs.4.5
crores to the VPT. The
VPT has countered this claim with its own calculations to show a net loss
of over Rs.2.5 crores.
There may be no need to go into the details of costing in this
regard because the calculations are all based on ‘assumptions’,
not reasoned projections; and, we have only the assumptions
of one against the other. It
has to be recognised in this context that, in cases like this,
the onus to establish details will be on the party putting up the proposal
(in this case, the SCCL).
Talking of ‘assumptions’, the SCCL assumption
about additional traffic of 6.25 lakh MT is not borne out by recent
trends; berths have been relatively ‘free’ in the
lean season. Not
surprisingly, therefore, the VPT has styled the SCCL
assumption as “arbitrary”.
In response to the VPT averments about its own investments leading
to installation of additional capacities, the SCCL has raised a
valid point about others making similar investments to compete with the
Port Trust. But,
the flaw in this case is that the SCCL investments are predicated on
prescription of special arrangements.
And, its proposal, as earlier stated in paragraph 16.(vii).
above, is vague and couched in general terms to warrant special
SCCL will have to formulate its proposal with greater specificity and
based on proven feasibility of the system(s).
This Authority cannot be expected to work out the details and fill
up the gaps.
There have been observations about the monopolistic character of
the systems installed by the ETA (Dubai) and the SCCL.
In this connection, there have been demands that, to
prevent exploitation by them of the special consideration given,
their rates must also be regulated.
As this Authority knows, the rates charged by the ETA
(Dubai) have indeed been so regulated by the Director General (Shipping).
The SCCL has also volunteered to submit to such regulation by the
Director General (Shipping) or by this Authority.
Since the Director General (Shipping) has already gone into this
matter once in the context of the ETA (Dubai), the balance of
convenience will seem to lie in favour of letting the rates be prescribed
for the SCCL also by the Director General (Shipping).
In the result, and for the reasons given above, and
based on a collective application of mind, this Authority decides
The floating crane of the SCCL (whenever it is ready and
commissioned) is to be governed by the common prescription ordered by the
Authority on 16 May 2001.
The SCCL request for a special rate for its conveyor belt system is
rejected on the ground that it is a shore-based operation not amounting to
Likewise, its supplementary request for treating at least cargo that is subsequently reloaded on barges to go to other ports as transhipment is also rejected.
In the light of the decision at (ii). above, the
request for a special consolidated rate for the ‘joint operation’
is also rejected.
The SCCL is advised to formulate a fresh proposal with greater
specificity, proven feasibility, and clear assurances about
additional traffic if it wishes to pursue the VPT offer on concessions for
( S. Sathyam )