Indian port tariffs driving PSA to downsize Tuticorin throughput

Indian port tariffs driving PSA to downsize Tuticorin throughput Container terminal operator PSA International said Monday it will have to reduce the number of TEUs it handles at its Tuticorin, India, terminal in order to make the operation financially viable.
   The terminal, a joint venture between Singapore-based PSA and South India Corp. Agencies Ltd., has a concession with the Indian government to handle 300,000 TEUs per year, meaning it has guaranteed the government it will handle at least 300,000 TEUs.
   But the terminal operator giant said that tariffs imposed by India's Tariff Authority for Major Ports, an independent body that oversees tariffs at India's public and private marine terminals, have become so onerous that the company will only meet the minimum volume required by the concession.
   'While PSA-SICAL is committed to operating and developing TCT, the decision by India's Tariff Authority for Major Ports in September 2006 to halve the TCT's revenues has made the terminal commercially unviable,' the companies said in a statement. 'The much reduced revenue per TEU is not able to cover the cash operating expense and the royalty payment per TEU. Consequently, PSA-SICAL, after careful deliberation, decided it has no choice but to right-size its operations to match its concession commitment to the government by handling 300,000 TEUs per annum. PSA-SICAL wishes to announce that with effect from 15 July 2007, TCT will be operating with two quayside cranes and terminal operations will continue as per normal on this configuration. Some ships will likely experience a longer port stay as a consequence.'
   For the year ending March 31, TCT handled 377,000 TEUs, 77,000 TEUs more than its annual minimum guaranteed throughput under the terminal concession agreement. The terminal was set up to take advantage of increased textile trade out of the southern state of Tamil Nadu.
   'PSA-SICAL deeply regrets the possible delays to its customers and port users,' the statement added. 'It hopes that the relevant authorities and PSA-SICAL can find an expedient solution so that TCT can return to its normal operating conditions to meet and serve the demands of the local industries. It requests the patience and understanding of its customers and port users for the possible delays and inconvenience in the months ahead.'