COVID-19: Major ports to defer lease fee, waive rentals, penalty in view of EXIM cargo drop

COVID-19: Major ports to defer lease fee, waive rentals, penalty in view of EXIM cargo drop
New Delhi, Apr 21 () Against the drop in export-import (EXIM) cargo due to supply chain disruptions on account of the COVID-19 outbreak, the 12 major ports of the country have been asked to defer the lease fee, waive rental and penalties, a Shipping Ministry official said on Tuesday.

The decision is aimed at boosting supply chain logistics and comes as a great relief to the shipping liners, exporters, importers and logistics providers impacted by the coronavirus outbreak.

"The logistics chain-related businesses including traders, importers, exporters, port operators, shipping lines, 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 official told .

The official said 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 and the logistics chains are going through an unusual and massive shock from disruptions on the supply side as well as the demand side.
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"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 official said.

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, license fee on pro-rata basis without any interest".

This shall be applicable only to the annual lease, rental, license fee to be received by the port for year 2020.
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The official said that 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, fees etc. up to June 30, 2020, 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".
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The official said these ports shall allow a waiver of lease, rental, license 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 official 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.
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The Ministry of Shipping 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 Chidambarnar, Visakhapatnam, Paradip and Kolkata (including Haldia) that handled nearly 705 million tonnes (MT) of cargo in 2019-20. NAM RC
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