COVID-19: Govt asks major ports to defer rentals, waive charges, penalty

New Delhi: Noting a drop in export-import (EXIM) cargo due to supply chain disruptions on account of the COVID-19 pandemic, the government has asked India’s all 12 major ports to defer the lease rentals and licence fees-related charges for April, May and June.

They have been asked to waive rentals in proportion to the cargo drop and not to levy penalties.

In a letter, the shipping ministry has asked the ports to provide relief in the form of exemptions/ remission of charges to the shipping liners, exporters, importers, logistics providers and other stakeholders hit by the coronavirus outbreak.

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The relief measures are aimed at boosting EXIM cargo by supporting and rebuilding the logistics chain.

“The logistics chain-related businesses including traders, importers, exporters, port operators, shipping lines and transporters are facing a huge challenge in maintaining their businesses due to a lower trade volume as well as cash flow issues. Therefore, it is required that some relief measures are taken to support and rebuild the logistics chain,” the Ministry of Shipping said in directives to chairpersons and chairman & managing directors of all the major ports.

Due to the COVID-19 pandemic and lockdown measures in several countries, the logistics chain has been severely disrupted and the associated production and consumption centre has been affected, it said.

It added that the logistics chains are going through an unusual and massive shock from disruptions on the supply side as well as the demand side

“The lockdown measures and associated disruptions in the logistics chain have impacted the Indian ports and port users. There is an impact in the form of drop in imports and export volumes, delays in evacuation of cargo, cash flow issues etc., resulting in inability of port users, concessionaires and other stakeholders to fulfil their obligations to port authorities, banks and lenders,” the ministry said.

Free storage time

Under this extraordinary situation, all major ports have been directed that they shall allow free storage time to all port users during the lockdown, besides “deferment of April, May and June months’ annual lease, rentals, licence fee on pro-rata basis without any interest”, according to it.

This shall be applicable only to the annual lease, rental and licence fee to be received by the port for year 2020.

As per the directive, it has also been decided that “no penal charges, demurrages, detention charges, dwell-time charges, anchorage charges, penal berth hire charges, performance-related penalties are levied on any port user (traders, importers, exporters, shipping lines, concessionaires, licensees, CFS etc.) for any delay in berthing, loading, unloading operations or evacuation, arrival of cargo during the lockdown period plus 30 days recovery period”.

Besides, the ports have been asked to provide additional storage land without any charges, rental and fees till June 30, if asked.

Due to the impact of COVID-19 and lockdown measures, there is a drop in the cargo volume at several PPP berth terminals at the major ports and the ports have been asked to “allow a deferment of April, May and June months’ revenue, royalty and equipment hire charges without interest to concessionaires”.

Waiver of lease

These ports have been asked to allow a waiver of lease, rental, licence fee and similar charges for three months to the extent of the volume of cargo dropped, compared to the monthly average cargo volume of the last calender year.

If the average cargo drop is 40 per cent, the ports will waive 40 per cent of lease rentals, the directive explained and added that in case such waived amount is already received by the port, then an adjustment of the same will be done.

The ports have also been asked not to levy any penalty or charges for any shortfall in performance standards and allow interest-free 60 days’ deferment of marine dues and vessel-related charges to Indian coastal vessels.

The ministry has already intimated the major ports that the COVID-19 pandemic shall be considered as a “natural calamity” that would entitle invocation of the “force majeure” provision. Force majeure means extra-ordinary events or circumstances beyond human control.

India has 12 major ports — Deendayal (erstwhile Kandla), Mumbai, JNPT, Marmugao, New Mangalore, Cochin, Chennai, Kamarajar (earlier Ennore), V O Chidambaranar, Visakhapatnam, Paradip and Kolkata (including Haldia) that handled nearly 705 million tonnes of cargo in 2019-20.

PTI