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PORTS AND HARBOUR ENGINNERING. PRIVATIZATION AND FINANCIAL ASPECTS OF PORTS IN DEVELOPING COUNTRIES. Process of Study. The Manila Meeting focused on laws and regulations related to private investment. (BOT, PPI, PFI, Port Privatization Law)

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PORTS AND HARBOUR ENGINNERING


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ports and harbour enginnering
PORTS AND HARBOUR ENGINNERING

PRIVATIZATION AND FINANCIAL ASPECTS

OF PORTS IN DEVELOPING COUNTRIES

process of study
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.

presentation points
Presentation Points
  • Finance System For Port Infrastructure
  • PSP in Terminal Operation
  • Regulation on Private Investment
  • Recent Movement of PSP in Ports
  • Remarks for PSP in Ports
finance system for port infrastructure1
Finance System For Port Infrastructure

BREAK WATER

NAVIGATION CHANNEL

QUAY & WHARF RECLAMATION

CRANE WAREHOUSE

HANDLING EQUIPMENT

DIRECT REVENUE

REPAYMENT

BY TAX

REPAYMENT

BY REVENUE

INDIRECT BENEFIT

PUBLIC WORK

COMMERCIAL

FINANCE

DEVELOPMENT

FINANCE

private sector participation in terminal operation 1
Private Sector Participation in Terminal Operation (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)

private sector participation in terminal operation
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

examples of laws on private investment
Examples of Laws on Private Investment

Malaysia’s Port (Privatization) Act

of 1990 (Act 422)

Build Operate Transfer LawRepublic Act No.7718

of 1994 in Philippines

Korean Act 5654 on Private Participation in Infrastructure of 1998

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

Privatization Movement In Thailand
japanese examples for psp
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
slide16
PFI

Gantry Crane

Transfer Crane

PFI Project Promoter

Yard

Control House

Wharf

P.M.B

Constructed by the public

Public Use

Constructed by the public(State)

→Controlled by P.M.B committed by the State

kitakyshu port hibiki container terminal construction and operation project

Image

Kitakyshu Port Hibiki Container Terminal Construction and Operation Project

25years (after inauguration)

conceptual image of effective port operation
Conceptual Image of Effective Port Operation

(Current)

(Future)

Port Management by Private Sector

Port Management by Public Sector

Company

A

Comprehensive Operation by Private Sector

Company

B

Company

C

Constructed

by Private Sector

Lease from Public Sector

Utilization License from Public Sector

Utilization License (Yard: per 1 year, Wharf: per 12 hours)

Long-term (30 years) Contract (Lease/Concession)

Shipping Company

Z

Shipping Company

Z

Shipping Company

Y

Shipping Company

Y

Contract

Contract

事業者

Contract

Company

A

Company

B

Company

C

Warehouse owned by A

Warehouse owned by B

CFS

owned by B and C

Port Administration Building

CFS

strong and weak points of port management models public service port
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
strong and weak points of port management models fully privatized port
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.
conditions for successful privatization
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
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?

AUTHORITY

COMPANY

Fear and Expectation
which is profitable

$

$

Which is Profitable?

Port authority

Private

operator