Government Exempts Passenger Ferries From Paying Port, Vessel Charges For Six Months

The Ministry of Ports, Shipping and Waterways (MoPSW) has directed all major ports to exempt all berth hiring and vessel related charges being currently levied on the Ro-Pax/passenger ferries for the next six months with immediate effect.

The move comes amidst the backdrop of high marine fuel prices impacting the financial viability of the Ro-Ro/Ro-Pax transportation and will provide some quick respite to this sector from the impact of global increase in price of fuel.

“The rising fuel cost at international level is now making our local Ro-Pax and Passenger Ferry operations unviable so this exemption of vessel and port related charges by MoPSW will provide the necessary breather to this sector for the next 6 months,” said Sarbananda Sonowal, Union Minister for Ports and Shipping.

Rising Fuel Cost

The cost of marine fuel ‘low sulphur high flash high speed diesel’ (LSHFHSD) has increased from Rs 76,000/KL to Rs 121,000/KL. Similarly, the cost of ‘very low sulphur fuel oil’ (VLSFO) has increased from Rs 40,608/KL to Rs 80,917/KL.

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 subsidised public transport system of rail or road. These operational hurdles will only act as stumbling block in establishing this budding ecosystem of surface water transportation in the country.

Minister Sonowal had recently held a meeting with senior officials of the ministry to discuss the impact of high marine fuel prices and goods and services tax (GST) on ferry operations. He had also written to Finance Minister Nirmala Sitharaman and Petroleum Minister Hardeep Singh Puri.

The ministry has requested the Ministry of Petroleum and Natural Gas (MoPNG) to consider reduction in fuel prices and the Ministry of Finance to lower the associated taxes on it so as to provide the necessary support. The MoPSW has also requested all the states to lower their rates of VAT over the high speed diesel HSD used by this sector.

As per the existing regulation, service of transportation of passengers through inland waterways is exempted from GST. However, GST is applicable on spares and MRO services of the ferries. The GST component if, passed on to the passengers will only increase the price of tickets and negatively impact the demand of the service.

Environmental Friendly Transportation

On the other hand, Ro-Pax is the acronym of Roll-on/Roll-off passenger ferry and works as a freight vehicle transport with passenger accommodation.

This mode of transportation 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.

Existing Routes

Under its Sagarmala Programme, the ministry has operationalised Ro-Pax Ferry service between Ghogha-Hazira in Gujarat and Mumbai-Mandwa in Maharashtra. These services have transported more than 7 lakh passengers and 1.5 lakh vehicles, contributing towards a clean environment and public welfare.

The Ro-Pax services implemented by Deendayal Port Authority between Ghogha and Hazira has reduced the present road distance of 375 kilometres between the two towns to only 90 kilometres and reduced travel time from 12 hours to four hours. This Ro-Pax ferry service has carried over 78,000 vehicles and more than 2.6 lakh passengers since inception.

Similarly, Maharashtra Maritime Board initiated Ro-Pax ferry service on Mumbai-Mandwa route in March 2020. The project resulted in saving of around three hours of road travel against 45 minutes by sea route. More than 5.5 lakh passengers have availed this Ro-Pax service and more than 1 lakh vehicles have been transported. With this, Mumbai becomes the first metropolitan city in India to introduce a Ro-Pax service to its transport infrastructure.

In view of the success of these projects and high demand and potential, additional projects are planned at Pipavav and Muldwarka in Gujarat and Ghodbunder, Veldur, Vasai, Kashid, Rewas, Manori and JNPT Port in Maharashtra. In addition to the above, the ministry is supporting four projects in Andhra Pradesh, two projects in Odisha and one each in Tamil Nadu and Goa.

In order to promote the surface water transportation and to encourage the newly emerging inland passenger and vehicle movement eco system of the country, the Ministry of Ports on 16 June (read here) invited suggestions on the draft guidelines for operationalisation of Ro-Ro and Ro-Pax ferry service along the coast of India from all stakeholders.