Major Ports Exempted from Paying Port and Vessel Related Charges for Next 6 Months

Ministry of Ports, Shipping and Waterways (MoPSW) is promoting the Ro-Ro/Ro-Pax/Ferry waterway transportation which has lower emissions compared to other modes of transport for the same amount of cargo. Also, there is a significant time and cost saving compared to the traditional transportation modes. Concurrently traffic congestion on road/railways, noise pollution and the accidents on the roads may also get reduced. Such water-based transportation service is an effective measure to lower the logistics costs, reducing travel time and promotion of coastal shipping on several feasible routes.

In order to provide some quick respite to this sector from the impact of Global Increase in Price of Fuel, MoPSW has directed all Major Ports to exempt all berth hiring and vessel related charges being currently levied to the Ro-Pax/Passenger Ferries for the next six months with immediate effect.

The cost of Marine fuel ‘Low Sulphur High Flash High Speed Diesel’ (LSHFHSD) has increased from Rs.76,000/KL to Rs.1,21,000/KL. Similarly, the cost of ‘Very Low Sulphur Fuel Oil’(VLSFO) has increased from Rs.40608/KL to Rs.80917/KL. It is to be noted here that in the beginning of FY 2021-22 the cost of marine fuel-LSHFHSD used to be 10-15% less than retail diesel-HSD. Hence, effectively the rise is more than 40%.

To discuss the Impact of High Marine Fuel Prices and GST on Ferry Operations Union Minister MoPSW Shri SarbanandaSonowalhad recently held meeting with Navneet Mohan Kothari, Joint Secretary (GP Division) Ministry of Petroleum and Natural Gas and Niba Ram, Joint Commissioner, Department of Revenue, Ministry of Finance and other senior officials.

In this regard he had also written letters to Smt. Nirmala Sitharaman, Union Minister, Ministry of Finance and Corporate Affairs and Shri Hardeep Singh Puri, Union Minister, Ministry of Petroleum and Natural Gas highlighted this issue and requested them to extend their support for this sector by reducing taxes and price of the Fuel respectively. MoPSW has also requested all the states to lower their rates of VAT over the HSD used by this sector.

It is noteworthy that, marine fuel prices inclusive of taxes have cascading effect on the full value chain of Mass Surface Water transport system and ecosystem, the burden of which the ferry operators cannot pass on to the common public who has the option of using other Government subsidized public transport system of rail or road. These operational hurdles will ultimately act as a stumbling blocks in establishing this budding ecosystem of surface water transportation in the country.

As per notification no.1212017- Central Tax (rate) dated 28.06.2017, it is mentioned that service of transportation of passengers through inland waterways is exempted from GST. lf in case the GST component, applicable on spares and MRO services of the ferries, is passed on to the passengers where Mass Surface Water transport system and ecosystem is competing against the Govt. heavily subsidised Road, Rail and Air travel under Regional Air connective scheme UDAN, the price of tickets will increase and, the demand of the service may be impacted negatively.

Shri SarbanandaSonowal said, “The rising Fuel cost at the international level is now making our local Ro-Pax and Passenger Ferry operations unviable so this exemption of vessel and port-related charges by MoPSWwill provide the necessary breather to this sector for the next 6 months. We have also requested MoPNG to consider a reduction in Fuel prices and Ministry of Finance to lower the associated taxes on it so as to provide the necessary support to this sector in present circumstances.”

The Ro-Pax services implemented by Deendayal Port Authority between Ghogha and Hazira under Sagarmala Programme have reduced travel time from 12 hrs. to 4 hrs. This Ro-Pax ferry service have carried over 78,000 vehicles and more than 2.6 lakh passengers since its inception. Similarly, Maharashtra Maritime Board initiated Ro-Pax ferry service on Mumbai - Mandwa route. The project resulted in saving of around 3 hours of road travel against 45 minutes by sea route. More than 5.5 Lakh passengers have availed of this Ro-Pax service and more than 1 lakh vehicles have been transported.

In order to promote surface water transportation and to encourage the newly emerging inland passenger and vehicle movement ecosystem of the country, the various issues of rising Global Marine Fuel prices and their bunker pricing, ineffective GST input credit for Ferry Operators, and Growing difference between the cost of Marine Fuel and Retail Fuel should be looked into and necessary consideration should be given to promote this sector.