Ipdf Jun 2007 Ntcip Session Ppp Azd

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National Trade Corridor:

PPP Opportunities

Public Private Partnerships in Transport & Logistics

Day 2, Session - 1, Jun 26, 2007

Amer Z. DurraniSouth Asia Sustainable Development Unit

The World Bank



NTCIP and PPP in Transport & Logistics: achallenge or an opportunity?

By definition a L&T initiativeHuge Financing Needs—therefore imperative that PPPGOP a demonstrated willing partner—port terminals, current civil

aviation policyMany options to choose from both in terms of range and type of PPP—outright ring-fenced services operation concessions, trickyinfra BOT, even trickier ICT services concessions for public

revenue collectionBeyond the ‘comfort zone’ but many unconventional PPP fruitsthere for the picking—e.g., PACCS

Provides a programmatic reform cover to within-NTCIP PPPtransactions



NTCIP hasprivate-enterprise mindset —cutting cost and gaining efficiencies

Reduce overall trade-related transport and logistics coststherebydecreasing the cost of doing businesslowering the indirect losses being incurred

resulting intrade competitiveness and industrialization

Estimated Savings: Rs200-250bil/yr (>2% of GDP)—including Rs115-145bil/yr in Highways, Trucking, and Railways; Rs27bil/yr in Ports; and,

Rs75bil/yr Trade Logistics



NTCIP covers the wide trade-supporting-

logistics domain..….

Ports and Shipping

Highways

Aviation

Railways

Trucking/Road FreightIndustry

Energy Logistics

Customs and overallTrade Processes

NTC



NTCIP players as numerous as links in thetrade-logistics-services-chain…..



…… just look at theRoad Freight Industry

alone!

Enforcement

M/o IP&SI

M/o Comm.

M/o Defense

CBR

EnvironmentProtection Agency

(EPA)

Provincial Governments

Truck Body Builders Associations

Old & Used partsDealers Association

Local Manufacturers

NADRA

Truck & Bus Owners Assoc.

M/o Petroleum

EDB

NHA

NLC

MVRDE

MVE

M/s Hino Pak

M/s GhandharaNissan

M/s Ghandhara

Industries

Sind Engg.

PACO (Yasoob)

Masters Motors

M/s Adam Motors

M/s Afzal Motors

BOIPlanning

Commission

M/o Commerce

Salvage Sale of Bedford Trucks

M/o S&T.

RFI

PSQCA



…..but broader coverage also means layers

and layers of issues and distortions…sort of like peeling an onion

Adapted from Finnroads’ Pakistan WCM Study 2005





Distribution of Savings due to In-House Logitics*

Savings

WarehousingTransport -Shipping

Capital CostInventory Adminstration USD mil

Procurement 4 5 1 980Production Planning 5 1 1 785

Sales Order Processing 1 3 392Receiving 1 98Warehouse 15 2 2 1,868Production 1 1 1 1 392

Pick & Pack 5 1 589

Shipment and Export (seeabove) 470

Procedures, Management& Quality (total) loss 4 1 2 4 1,083TOTAL 6,657

Potential Change in Index (division of savings per activi ty group)

T2T holds the key to USD 6.7 bil in savings vs.the USD 0.5 bil through improved G2T…



Basically, through the 90s GOP was

catching-up, to understand the trade….Read private sector



…now picture reversed —trade has to gear-up to take advantage of the NTCIP efforts…

PakPakBusinessBusiness

PakPakGovernmentGovernment

Read private sector



…need new T2T and T2G partnership for

reducing T&L costs from 29 % to 9% by 2012!

NTCIP Business Plan =

TransportPolicy

Industrial Policy

Agriculture Policy Trade Policy

Energy Policy Education Policy

ICT Policy

STRATEGIC PLAN FOR

TRADE SUPPORTING INFRASTRUCTURE & SERVICES

And all this hasto be achieved

throughappropriatelydesigned and

delivered Public

–PrivatePartnerships



Logistics Logistics

Supply Supply

Logistics Logistics Broker Broker

Logistics Logistics Agents Agents

Logitics Logitics Demand Demand

Direct Contract

OperatorsContract

LogisticContract

MarketStructure

….if the private sector can handle this, NTCIP

offers a range of opportunities for PPP……….. C u s

t o m s

S t a n d

a r d s

M V I, M V T, M V

R

T r a d e B o

d i e s a n d

R e g u l a t

i o n s

A i r S e r v

i c e

A g r e e m

e n t s

……………….

E l e c t r o n i c T

r a d i n g

P l a t f o r m s



Pakistan’s Maritime and Ports’ sector offer an

established track-record in PPP……

◙

Terminal Concessions—KICT, QICT, PICT, …and othersemerging including green-field ones such as Kemari

◙ Cargo handling companies

◙ Development of port facilities including modal-exchangeterminals

◙ Maintenance of port facilities—dredging, piloting and tugs,shipyards

◙ New Shipping Policy for re-emergence of Pakistan based private

Merchant Fleet



…the Aviation sector’s opening and

progressive consolidation is imminent……

◙ PAX Air services already been through first cycle (Shaheen, Aero-Asia, Bhoja, Safe Air, Air Blue)—despite PIA and a poorlystructured CAA (infra and ground services + ATC + regulator)

◙ Private owning of airfields allowed◙ SIAL experience—learning and not failure◙ Ground services and handling progressively outsourced◙

Medium size A/Ps’ development an emerging PPP opportunity◙ …leading to local capacity for operational concessions of already

developed larger A/P facilities

◙ Scores of other opportunities…including peripheral infrastructureand services for both airports and air-services



…track access is only the beginning in

Pakistan Railways (Corporation)……

◙

First PR Business plan approved-in-principle puts a public ownedbut privately operated policy at its center

◙ PR already playing with ‘wooden’ concessions using PRACs—

experience gained here will create a better regulator ◙ PR off-dock terminals, PAX and freight stations

◙ Port-Rail-Road vertical integration in freight operations

◙ Just see results of first EOI on track access—British Model bestsuited

◙ PR land-management and development



…..it’s no longer just ‘toll roads’ but somethingto fit everybody—take trucking and

customs……

◙ New Trucking Policy on the Anvil:◙ Transit Freight Stations

◙ Out-sourcing MVT and MVE

◙

National Vehicle Registration Database and VR Operations◙ Improved regulation of totally de-regulated freight sector

◙ Pakistan Automated Customs Community System (PACCS)◙ Customs

◙ Finance and Insurance

◙

Logistics………………………..



…..where PACCS is leading the way for

PPP……



…but, what’s missing is the awareness and

transaction development……

◙

Not traditional target of PPP crowd in Pakistan◙ Little experience in such transaction—and hence little

appetite—in the private financial services sector

◙ GOP increasing NTCIP’s visibility

◙

‘Demanding’ PS to step-up and partner…..and partner better

◙ An eventuality whose time has come!.......THANK YOU.



SPORT GOODS TO GERMANY

Accumulated Cost Index Pakistan Turkey Inida China ItalyBasic Price 85 111 98 64 140Transport Costs 89 112 102 70 141Transport risk costs 89 112 102 70 141

Duty 89 112 102 72 141Inventory capital costs 100 121 112 83 143Inventory costs 102 123 114 85 143Obsolete costs 110 136 125 99 144

Delay costs 116 138 129 102 145Sub-total I 116 138 129 102 145Mark-up Wholesaler 156 187 173 138 196Sub-total II 156 187 173 138 196VAT 181 217 201 160 227Sales price to retailer 181 217 201 160 227Retailer mark up 391 467 434 344 489Sales price excl. VAT 391 467 434 344 489VAT 453 542 503 399 568

Consumer price 453 542 503 399 568

Sports Goods to Germany



LEATHER PRODUCTS TO DENMARK

Accumulated Cost Index Pakistan Turkey India China ItalyBasic Price 88 114 101 66 132Transport Costs 89 115 103 68 132Transport risk costs 90 115 103 69 132Duty 93 115 107 71 132Inventory capital costs 107 124 118 82 134Inventory costs 109 125 120 84 134Obsolete costs 137 139 131 98 135

Delay costs 14 141 135 101 136Sub-total I 141 141 135 101 136Mark-up Wholesaler 190 191 182 136 184Sub-total II 190 191 182 136 184VAT 238 238 227 170 229Sales price to retailer 238 238 227 170 229Retailer mark up 447 448 427 320 431Sales price excl. VAT 447 448 427 320 431VAT 558 560 534 399 539

Consumer price 558 560 534 399 539

Leather Products to Denmark

Documents

Ipdf Jun 2007 Ntcip Session Ppp Azd