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Friday, August 10, 2007

‘Raghupathy paid for inability to resolve Tuticorin port crisis’

Sethusamudram channel project chief N.K. Raghupathy who was asked to go on leave by the shipping ministry may well have paid a price for his inability to resolve a stand-off with container terminal operator PSA Sical Terminals Ltd, as chairman of the Tuticorin Port Trust, his other responsibility. PSA Sical is a joint venture between Port of Singapore Authority (PSA) and local company South India Corp. (Agencies) Ltd (Sical).

People close to the development who did not wish to be identified say that the tension between the terminal operator and the port may have contributed to his being asked to go on leave, much as other reasons related to the Sethusamudram project that envisages dredging Adams Bridge between India and Sri Lanka to allow passage of ships. The people and shipping ministry officials familiar with the matter say that Raghupathy had taken a “rigid view” on revision of tariff for the operator.
Shipping minister T.R. Baalu could not be contacted for his comments and Raghupathy was unavailable for comments as his cell phone was switched off.

PSA Sical operates the container terminal at Tuticorin port. Tariffs at this Central government-owned port are set by the Tariff Authority on Major Ports (TAMP). In response to an application last year from PSA Sical to allow it to increase tariffs, TAMP had reduced tariffs. PSA Sical had then approached the courts that stayed tariffs at the original rate. The case is still before the courts. Meanwhile, last month, PSA Sical had said it was reducing its service infrastructure at the port to the minimum mandated in its agreement with the government. This would have resulted in delays for ships calling at the port to load and unload cargo. PSA Sical subsequently decided to revert to full capacity last week.

For almost two weeks, though, the operator did lower service capacity at the port and some ships stayed berthed for longer periods. Some cargo was also diverted to neighbouring ports such as Colombo in Sri Lanka.

One person who is close to the discussions between the shipping ministry, the port authorities, and port operator said that Raghupathy had insisted that PSA Sical do business on TAMP’s terms. “The minister wanted the issue to be resolved at the earliest so that port operations would not be affected. But the issue dragged on,” this person said. A Sical executive who did not wish to be identified said that the situation had demanded that the former chairman take some proactive measures to resolve the crisis. However, a senior government official who did not want to be named said that there was not much that Raghupathy could have done as chairman of Tuticorin Port Trust to defuse the crisis.

“There is no way that the port chairman could have done anything other than implementing the TAMP order. There is no provision for revision of the concession agreement,” said an expert on the port sector who did not want to be named.


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