PORTS AND HARBOUR ENGINNERING
PRIVATIZATION AND FINANCIAL ASPECTS
OF PORTS IN DEVELOPING COUNTRIES
1
Process of Study
The Manila Meeting focused on laws and regulations related
to private investment. (BOT, PPI, PFI, Port Privatization
Law)
At the Brisbane Meeting, we explained the standard terms
and contents in concessions and /or contracts for private
investment in ports.
The Singapore Meeting was cancelled.
This time we will examine the recent situation of PSP in the
development and operations of ports based on results of
questionnaires and discuss how to introduce PSP to the
development and management of ports.
2
Presentation Points
1.
2.
3.
4.
5.
Finance System For Port Infrastructure
PSP in Terminal Operation
Regulation on Private Investment
Recent Movement of PSP in Ports
Remarks for PSP in Ports
3
Sampling Study of
World Terminals
Australia
Bangladesh
Brunei
Cambodia
Canada
China
Egypt
1
2
1
1
1
1
2
El Salvador
Estonia
Indonesia
Iran
Japan
New Zeeland
Peru
1
1
3
1
2
1
1
Philippines
Syria
Taiwan
Thailand
Tonga
USA
Vietnam
2
2
2
1
1
1
2
4
Ownership of Terminal
100%
90%
80%
70%
60%
private
50%
40%
30%
20%
10%
0%
both
public
land owner
terminal owner
5
Finance System for Port
Infrastructure
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
private
both
public
channel
dredging.
berth const.
yard const.
h'dling
equpment
inst.
6
Finance System For Port
Infrastructure
REPAYMENT
BY TAX
PUBLIC WORK
CRANE WAREHOUSE
HANDLING EQUIPMENT
REPAYMENT
BY REVENUE
BREAK WATER
QUAY & WHARF
NAVIGATION CHANNEL RECLAMATION
DEVELOPMENT
FINANCE
COMMERCIAL
7
FINANCE
Private Sector Participation in
Port Operation
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
private
both
public
m antainace
dredging
tug/P ilot
Term inal
operation
8
Private Sector Participation
in Terminal Operation (1)
1. Joint Operation
(PMB maintains the employment of his workers and
takes advantage of the efficiency of private companies )
2. Joint Venture
(Companies pool resources to share risks.
Management company can be a fully owned
subsidiary of PMB)
9
Private Sector Participation
in Terminal Operation
3. Lease
Lease holder takes operation risks.
4. Concession
(superstructure and cargo handling)
Concessionaire has rights to finance, build and
operation
5. BOT
(including infrastructure development)
After the limited period of time, the facility and its
equipment will be transferred free of charge to the
grantor
10
Feature of PSP in Terminal
Operation
9
8
7
6
5
4
3
2
1
0
JO
JV
Lease
Consession
BOT
11
Contract Term
6
5
4
3
2
1
0
less than
5
5years
10years
20years
25years
30yeas
more
than 50
12
Examples of Laws on
Private Investment
Malaysia’s Port (Privatization) Act
of 1990 (Act 422)
Build Operate Transfer Law
Republic Act No.7718
of 1994 in Philippines
Korean Act 5654 on Private Participation
in Infrastructure of 1998
13
Privatization Movement
In Thailand
1) The old Bangkok port has been operated
as a service port using personnel of PAT.
2) In Leam Chabang port, PAT prepared infrastructures
including facilities of Terminal B1-B4 and leases them to
the private sector.
3) B5 terminal was developed by the BOT method
including berth construction.
4) Privatization of PAT itself is underway
despite protests from the labor union
14
Japanese Examples for PSP
1. Enforcement of the PFI Law (Sept. 1999)
 Cargo handling facilities at container terminals
 Low interest loan by DBJ
 Exemption of the special land ownership tax
2. Effective Port Management Scheme (Dec. 2002)
 Provision of Public Berths to Private Sector
 Long-term Concession
 Effective Operation and
 Flexible Tariff Setting by Private Sector
15
PFI
PFI Project Promoter
Gantry
Crane
Yard
Transfer
Control House
Crane
Wharf
Public Use
P.M.B
Constructed
by the public
Constructed by the public(State)
→Controlled by P.M.B committed by the State
16
Kitakyshu Port Hibiki Container Terminal
Construction and Operation Project
25years （after inauguration)
Image
17
Conceptual Image of Effective Port Operation
(Current)
Port Management by Public Sector
Company
A
Company
B
(Future)
Port Management by Private Sector
Comprehensive Operation by Private Sector
Company
C
Constructed
by Private Sector
Utilization License from Public Sector
Utilization License (Yard: per 1 year, Wharf: per 12 hours)
Shipping Company
Z
Shipping Company
Y
Lease from Public Sector
Long-term (30 years) Contract (Lease/Concession)
Shipping Company
Y
Shipping Company
Z
Contract
Contract
Contract
Company
A
Warehouse
owned by A
事業者
Company
B
Warehouse
owned by B
Company
C
CFS
owned by B and C
Port Administration Building
CFS
18
Basic Port Management Models
Infrastructure Superstructure Port Labor
Public Servic e Port Public
Public
Public
Tool Port
Public
Public
Private
Landload Port
Public
Private
Private
Private Servic e Port Private
Private
Private
Other Functions
Majority Public
Public /Private
Public /Private
Majority Private
19
Strong and Weak Points of Port
Management Models
(Public Service Port)
Strength:
•Unity of Command
Weakness:
Labor Problems
•Lack of Internal Competition
•Lack of innovation
20
Strong and Weak Points of Port
Management Models
(Fully Privatized Port)
Strength:
 Maximum Flexibility of Investments and Port Operations
 No Direct Government Interference
 Market Oriented Port Development and Tariff Policies.
 High Price for the Sale of Port Land
Weakness:
 Monopolistic Behavior
 Lack of Economic and Regional Development Policy
 Considerable Amounts of money is necessary to buy back
the port land
 Serious Risk of Speculation with port land by private
owners.
21
Conditions for Successful
Privatization
•
•
•
•
Access to the international trade route
Sufficient traffic – sufficient revenue
Profit with sufficient safety margin
Stable economy with less government
intervention
22
Fear and Expectation
• Public
– If no applicant appears?
– Operator generates
enough revenue?
– Operator operates
efficiently?
– Operator helps
development of economy?
– Can avoid monopoly
situation?
• Private
– Is government
regulation too strict or
not transparent?
– Any risk involved in the
contract:- stability of
social, economic and
regulatory rules?
– Sufficient traffic
guaranteed?
23
Which is Profitable?
Private
operator
Port authority
$
$
24
Thank for your attention !
25