Ports frown on waiver of pilot fees

Close on the heels of providing a 40 per cent discount to coastal vessels on vessel-related charges, the government is considering waiving the pilotage fee for the coastal vessels to boost traffic.

The proposal, however, is not being well received by the various ports as the pilotage fee is a major contributor to the revenues of the port trusts. Its contribution to the total revenue is in the 3-5 per cent band for the coastal vessels. But in absolute terms, the waiver will mean a loss of up to Rs 20 crore in the case of some port trusts.

The ministry has sought the opinion of various ports on the feasibility of such a step and the matter will be discussed in the next meeting of chairmen of port trusts.

Pilotage is the fee charged by the port trusts for guiding the vessel to the shore. The exemption for pilotage charges was also recommended by Tata Consultancy Service in its report for promoting coastal shipping.

Some port officials pointed out that there was also confusion over whether exemption meant that the vessels would be required to berth directly on the port. If this was true, then such a step would be unadvisable from the point of view of safety too, they said.

They said if pilotage was to be provided free, then it would translate into additional costs for the port trusts with a further strain on its revenue stream.

The expenditure on pilotage for coastal vessels could be anywhere between Rs 2 crore and Rs 20 crore. "This step could put pressure on the resources of the port as the port would have to continue incurring expenditure on pilotage to cater to the non-coastal vessels," another official pointed out.

Moreover, he said the Major Ports Act stipulated that all vessels greater than 200 Gross Registered Tonnage would have to pay the pilotage. This meant any such exemption would require an amendment in the act.

Visakhapatnam would be affected the most as it handled the greatest amount of coastal traffic of 17.08 million tonnes in 2002-03.

Moreover, ports like Mumbai with a delicate financial health may not be able to withstand such strain on its revenue stream. Mumbai suffered from operating losses of the order of Rs 10 crore in 2002-03.