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| About six years ago the government amended the Major Port Trusts (MPT) Act, creating a regulatory authority called the Tariff Authority for Major Ports (TAMP) with powers to fix tariffs in major ports.
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| While doing so, TAMP would ensure that ports functioned efficiently and that their inadequacies were not passed on to the consumer in terms of higher prices. How has regulation worked in the port sector and are mid-term course corrections needed?
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| Regulation is essential wherever the provider of services functions in a monopoly or near monopoly situation. This is true even when the monopoly provider is the state. The idea is to protect the consumer against any arbitrary or capricious fixation of prices without reference to cost.
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| Regulation is most needed when public road transport is nationalised or when the state is the monopoly supplier of power under the provisions of the Electricity Act.
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| Typically, an inefficient public transport utility with a poor record of maintenance seeks to cover this up by charging higher fares. The hapless customer must not be forced to pay for the fuel inefficiency of the utility or the fact that its maintenance is deplorable.
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| Similarly if an irresponsible management is determined to buy industrial peace and popularity by entering into wage agreements that place an impossibly high burden on the utility, this must not be passed on to the consumer. It is here that the regulator has a major role to play.
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| The crucial prerequisite in these cases is the existence of monopoly or near monopoly conditions. If there is adequate competition and the customer is able to pick and choose, inefficient service providers will fall by the wayside.
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| A profligate management will see the writing on the wall the moment customers vote with their feet and take their business elsewhere. It is only when such mobility is not possible that a regulator is needed.
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| Is this the case in the Indian port sector? Till fairly recently the answer would have been an emphatic Yes. When the legislation creating TAMP was put on the statute book, Indian ports faced no competition and in most cases laid down the law in their own domain without any fear of losing customers.
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| There was little pressure on them, for example, to reduce the horrendous length of time that ships spent at anchor waiting for their turn to berth. The law expressly stated that they were under no obligation to compensate the customer for any loss even if it was caused by their own carelessness or inefficiency.
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| In the monopolistic environment in which Indian major ports functioned, shippers and shipping lines had to suffer all their inefficiencies because there was no other way of trading with India. It was in this context that TAMP was created.
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| The events of the last few years have changed all this drastically. Where formerly ships approached Indian ports with a hope and a prayer that they could berth within periods that could be counted in days rather than weeks, today waiting time is down to a minimum.
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This is because capacity in the port sector has increased dramatically. Right through the decade of the
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