World Bank Port Reform Toolkit

Module 1Framework for

Port Reform

Module 12World Bank Port Reform Toolkit

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 13World Bank Port Reform Toolkit

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 14World Bank Port Reform Toolkit

Toward a modern service-oriented port…

•Core services :

•Value added services :

MarineTerminalRepairEstate ManagementInformation Management Services

General Logistics services

Value Added Logistics Services

Module 15World Bank Port Reform Toolkit

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 16World Bank Port Reform Toolkit

Public-private roles in Port Management

Module 17World Bank Port Reform Toolkit

Setting Reform Objectives

•Reform is a means to achieve specific and well defined public interest objectives

Risk and return on social capital

Specific conditions of the particular ports to be reformed (size, operating scale, physical constraints, cargo flows, …)

•Those objectives must take into account :

Services/missions to be retained in the public domain

Module 18World Bank Port Reform Toolkit

Decision Tree

Module 19World Bank Port Reform Toolkit

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 110World Bank Port Reform Toolkit

Key Reform Decisions (2/8) : Public Interest Oversight

•What powers and authorities should be retained by a public oversight body after reform ?

•Should that public oversight body be … centralized, decentralized, two-tiered ?

Commercial activities should be carried out by the private sector

Strategic planning, technical regulation and economic regulation should be undertaken by the public sector

Module 111World Bank Port Reform Toolkit

Legal/Institutional setup

Central body (ministerial level)

Port authorities

Private operators

Module 112World Bank Port Reform Toolkit

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 118World Bank Port Reform Toolkit

Pulling it all together

World Bank Port Reform Toolkit

IAME Panama 2002 Track B

“After the Privatizations:

The need for Port Regulation”

Track B20World Bank Port Reform Toolkit

Themes for discussion

1. Is Regulation necessary?

2. Forms of Regulation

3. Institutional location of Regulation

4. Regulation and Investment

5. Regulation and Strategic Development

Track B21World Bank Port Reform Toolkit

Is Regulation necessary?

1. Imperfect contracts

2. Unforeseen circumstances

3. Alternative mechanisms/insitutions

4. Existence of an efficient market

Track B22World Bank Port Reform Toolkit

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 B23World Bank Port Reform Toolkit

Insitutional location of regulation

Ministry of Commerce Ministry of Transport

Regulatory Agency

Port Administration Maritime Administration

Terminal Operators Commons

Track B24World Bank Port Reform Toolkit

Regulation and Investment

1. Forms part of contract

2. Initial works, future investment

3. Voluntary/involuntary

4. Changing circumstances

5. Different bottom lines

Track B25World Bank Port Reform Toolkit

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 B26World Bank Port Reform Toolkit

Finally …….

Does Regulation work?

Are the nation’s ports optimal for national needs?

Who regulates the Regulator?

Role of the Press and Public Opinion