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Module 1 Framework for Port Reform

Module 1 Framework for Port Reform. Benefits and beneficiaries of a Port Reform. Governments : external trade competitiveness is improved and the financial burden on national budgets eased. Transport and Terminal Operators : port operations and services are more cost-effective.

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Module 1 Framework for Port Reform

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  1. Module 1 Framework for Port Reform

  2. Benefits and beneficiaries of a Port Reform • Governments: external trade competitiveness is improved and the financial burden on national budgets eased • Transport and Terminal Operators : port operations and services are more cost-effective • Shippers, exporters, importers : port costs are reduced, maritime freight rates are lower • Consumers : lower-priced goods and better access to a wider range of products Module 1

  3. Forces stimulating Port Reform • External forces of competition and technology from the shipping industry • Acknowledged financial and operational benefits of PSP in infrastructure development and service delivery • Diversification and globalization of investors and operators Module 1

  4. Toward a modern service-oriented port… • Core services : • Marine • Terminal • Repair • Estate Management • Information Management Services • Value added services : • General Logistics services • Value Added Logistics Services Module 1

  5. Core services : Public delivery or out-sourcing ? • Identify the critical basic public functions and responsibilities to be assured by public authorities in charge of the port sector • Identify the assets needed to support each function and category of service • Assess optimal conditions for service delivery based on: • Nature of the service : public/commercial • Nature of the required assets Module 1

  6. Public-private roles in Port Management Module 1

  7. Setting Reform Objectives • Reform is a means to achieve specific and well defined public interest objectives • Those objectives must take into account : • Risk and return on social capital • Specific conditions of the particular ports to be reformed (size, operating scale, physical constraints, cargo flows, …) • Services/missions to be retained in the public domain Module 1

  8. Decision Tree Module 1

  9. Key Reform Decisions (1/8) : Methods of private sector involvement Institutional options : Public service port ? Tool port ? Landlord port? Private service port? Choose the best solution fitting YOUR port Assets Restructuring : What degree of competition should be designed into port service markets ? What assets should be tendered as packages for single source responses? Module 1

  10. Key Reform Decisions (2/8) : Public Interest Oversight • What powers and authorities should be retained by a public oversight body after reform ? • Commercial activities should be carried out by the private sector • Strategic planning, technical regulation and economic regulation should be undertaken by the public sector • Should that public oversight body be … centralized, decentralized, two-tiered ? Module 1

  11. Central body (ministerial level) Port authorities Private operators Legal/Institutional setup Module 1

  12. Key Reform Decisions (3/8) : Financial Risk • Which categories of port assets should private investors and public sector be at risk for providing ? • On what basis should user fees or subsidies be used to cover the cost of long-lived port assets ? (Users pay or tax-payers pay) Module 1

  13. Pulling it all together Module 1

  14. IAME Panama 2002 Track B “After the Privatizations: The need for Port Regulation”

  15. Themes for discussion 1. Is Regulation necessary? • Forms of Regulation • Institutional location of Regulation • Regulation and Investment 5. Regulation and Strategic Development Track B

  16. Is Regulation necessary? • Imperfect contracts • Unforeseen circumstances • Alternative mechanisms/insitutions 4. Existence of an efficient market Track B

  17. Forms of Regulation Aims of regulation: productivity, investment, tariffs Best form depends on: • possible inter- or intra- port competition • natural monopolies - other models of private sector participation Track B

  18. Insitutional location of regulation Ministry of Commerce Ministry of Transport Regulatory Agency Port Administration Maritime Administration Terminal Operators Commons Track B

  19. Regulation and Investment • Forms part of contract 2. Initial works, future investment • Voluntary/involuntary • Changing circumstances 5. Different bottom lines Track B

  20. Regulation & Strategic Development We are regulating for the future not the past Next generation of container ship: channel, berths, land, road and rail accesses Who will pay for the Commons? Track B

  21. Finally ……. Does Regulation work? Are the nation’s ports optimal for national needs? Who regulates the Regulator? Role of the Press and Public Opinion Track B

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