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AL NITAK FOR MARITIME STUDIES Established 2003 JUBAIL INDUSTRIAL CITY بسم الله الرحمن الرحيم.

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Presentation on theme: "AL NITAK FOR MARITIME STUDIES Established 2003 JUBAIL INDUSTRIAL CITY بسم الله الرحمن الرحيم."— Presentation transcript:

1 AL NITAK FOR MARITIME STUDIES Established 2003 JUBAIL INDUSTRIAL CITY بسم الله الرحمن الرحيم

2 AL NITAK FOR MARITIME STUDIES OPERATION OF THE SAUDI PORTS. IS THERE A BETTER WAY ?

3 AL NITAK FOR MARITIME STUDIES TO THE SAUDI ECONOMY AND NATIONAL SECURITY. SAUDI PORTS ARE AND SHALL REMAIN OF OUTMOST IMPORTANCE LACK OF ALTERNATIVE SEA ACCESS AND THE LOCATION OF THE KINGDOM IN THE HOTEST POLITICAL ARENA GIVES OUR PORTS ITS IMPORTANCE.

4 COMPARISON BETWEEN ANY EUROPEAN COUNTRY AND SAUDI ARABIA IN REGARD TO ALTERNATIVE ACCESS TO PORTS

5 AL NITAK FOR MARITIME STUDIES DESPITE THE IMPORTANCE OF OUR PORTS, WE HAVE UNFORTUNATLY ADOPTED OPERATION SCHEMES WHICH ARE BASED ON PROFIT ORIENTED OPERATORS,LOWEST BIDDER AND TEMPORARY CONTRACTS. NOT ENSURING : UNITY OF AIMS AND INTRESTS OF THE NATIONAL ECONOMY AND THE PORTS OPERATORS. BEST QUALITY OF OPERATORS THE VERY MUCH NEEDED CONTINUITY.

6 AL NITAK FOR MARITIME STUDIES OPERATION SCHEMES ADOPTED BY THE SAUDI SEA PORTS

7 Contract CriteriaOld Contracts ISNAD (PRIVITIZATION) Duration3 years10 to 20 years AwardLowest bidderDitto PaymentsMonthly installments Contractors levy revenue and retain their share Equipments To be supplied according to contract Ditto LaborSpecifiedNot specified SaudizationContractor must achieve a percentage Ditto Scope of workSpecifiedDitto Spare parts Lump sum under the control of the port management It was left to the contractor

8 AL NITAK FOR MARITIME STUDIES Disadvantages of both schemes : Conflicting goals of contractors and the national economy. Duration of 3, 10 or even 20 years does not provide the required continuity. Awarding the contract to the lowest bidder, where Ports are exposed to the dangers of a contractor having misjudged expenses and revenue. Saudization is expensive and it meets some resistance.

9 AL NITAK FOR MARITIME STUDIES Additional Disadvantages of the ISNAD (Privatization) scheme : Contractors concentrate on those activities which generate revenue and neglect other activities such as maintenance and safety. Delegating to the contractors critical decisions, such as reducing the labor force. Delegating to the contractors the management of spare parts.

10 Advantages of the ISNAD(Privatization) : Longer contracts periods (10 to 20 years) Faster payment to the contractors. Incentive to the contractors for higher productivity (higher productivity means more revenue to the contractor and treasury ). Larger amounts for investment in equipments

11 AL NITAK FOR MARITIME STUDIES AS SOON AS ANY OF THOSE CONTRACTS IS SIGNED, WE FACE : DIFFERENCES OF INTERPRETATIONS. THIS LED TO MANY CASES AT THE GRIEVIANCE BOARD, EXHAUSTING THE PORTS MANAGEMENT WHO SHOULD DEVOTE ITS TIME ON IMPROVING SERVICES.

12 AL NITAK FOR MARITIME STUDIES THE CONTRACTS (NEW AND OLD) GIVES THE PORTS AUTHORITY THE RIGHT TO IMPOSE FINES, BUT THAT OCCURES WHEN THE HARM IS DONE, SOME ONE COMMENTED ON THAT BY SAYING: THE OPERATION WAS SUCCESSFUL BUT THE PATIENT DIED THE PATIENT HERE IS EITHER EXPORTER, IMPORTER, AGENT OR CARIER WHO TRANSFERS THE HARM (LOSSES) TO THE SAUDI ECONOMY AND THE SAUDI CONSUMER IN THE FORM OF HIGHER PRICES

13 Al NITAK FOR MARITIME STUDIES UNFORTUNATELY WE ARE STILL LOOKING AT OUR PORTS AS ANOTHER SOURCE OF REVENUE TO THE TREASURY. THE WORLD BANK WARNED AGAINST THIS,PORTS IN SAUDI ARABIA HAVE A MUCH BIGGER ROLL TO PLAY. (THEY SHOULD AND THEY CAN ) STIMULATE THE ENTIRE ECONOMY AND THEY ARE IN A POSITION TO GENERATE MUCH MORE REVENUE IN THE FORM OF TAXES, DUES AND JOBS ON TOP OF DIRECT REVENUES.

14 AL NITAK FOR MARITIME STUDIES FOR EXAMPLE,THE INVESTMENT FIELDS OF THE PORTS AUTHORITY OF NEW YORK AND NEW JERSEY INCLUDE :- SEAPORTS, FREE TRADE ZONES,BRIDGES, TUNNELS,BUS, RAIL, AIR PORTS, & REAL ESTATE. WE ARE NOT SUGGESTING TO COPY, BUT TO EXPLORE OUR OPPORTUNITIES AND NEEDS..

15 AL NITAK FOR MARITIME STUDIES THE GEOGRAPHICAL LOCATIONS OF OUR PORTS LEND THEM SELVES TO BECOME MAJOR HUB PORTS AND PLAY A LEADING ROLE IN THE OPERATION OF FREE ZONES, PROVIDING SERVICES TO SHIPS, CONSIGNEES, SHIPPERS, INDUSTRY AND AGRACULTURE. THE SAUDI LAND BRIDGE BY ROAD AND RAIL, IS AN OTHER OPPORTUNITY FOR THE TRANSIT TRADE,RELATED ACTIVITIES AND MUCH MORE

16 SUEZ TO KUWAIT BY SEA 201 Hrs SUEZ TO YANBU BY SEA 29 Hrs. YANBU TO KUWAIT BY ROAD 25 Hrs SAVINGS 3900 KM OR 147 Hrs AL NITAK FOR MARITIME STUDIES

17 IN 1993 A PROPOSAL WAS MADE FROM WITHIN THE SAUDI SEA PORTS AUTHORITY TO ESTABLISH A PUBLIC SHARE HOLDERS COMPANY TO OPERATE AND DEVELOP ALL SAUDI PORTS ON COST PLUS BASIS. THIS WAS WELCOMED BY H.E. DR. FAYES BADR, HE APPROACHED THE (MINISTRY OF FINANCE), WHO ASKED FOR MORE INFORMATION. BUT LIKE MANY OTHER GOOD IDEAS, THIS WORLD OVER, IT IS STILL WAITING TO BE IMPLEMENTED

18 AL NITAK FOR MARITIME STUDIES THE PROPOSED COMPANY WAS MEANT TO TAKE THE DECISSIONS EFFECTING OUR PORTS IN FAVOR OF THE ENTIRE NATIONAL ECONOMY EVEN IF CONTRADICTING WITH THE STRATEGY OF MAKING THE MOST REVENUE IN THE SHORTEST POSSIBLE TIME

19 AL NITAK FOR MARITIME STUDIES PORTS OPERATION IS NOT CONSTANT WE HAVE PEAK AND SLACK PERIODS,IF WE EMPLOY ENOUGH LABOR FOR THE PEAK THEN WE SHALL HAVE SURPLUS LABOR DURING THE SLACK PERIODS. WHERE SHOULD THE NUMBER OF THE LABOR FORCE BE ? THIS QUESTION WAS RAISED IN 1981AND THE SAUDI SEA PORTS AUTHORITY DECIDED TO CONTINUE EMPLOYING ENOUGH LABOR FOR THE PEAK KNOWING IT SHALL HAVE SURPLUS LABOR DURING THE SLACK PERIODS, A GOOD DECISSION BUT AN EXPENSIVE ONE. CAN PROFIT ORIENTED OPERATORS TAKE SUCH A DECISSION ? IS IT FAIR TO ASK THEM TO DO SO ?

20 AL NITAK FOR MARITIME STUDIES THE PROPOSED COMPANY SHALL GIVE US THE CHANCE TO LEAVE THE LOWEST BIDDERS TRAP FOR GOOD AND TO AVOID CHANGING HANDS EVERY 3,10 OR 20 YEARS AND TO OPERATE OUR PORTS BY OUR SELVES AND EVEN TO COMPETE TO RENDER OUR SERVICES TO OTHERS PORTS ABROAD ( IF WE WISH TO DO SO ) WE SHALL BE CONVINCED VERY SOON THAT THE PROFIT AND LOSS CALCULATIONS OF OUR PORTS MUST BE IN PROSPECTIVE TO WHAT THEY ACHIEVE IN RELATION TO THE ENTIRE ECONOMY, AND NOT TO THE SIZE OF THE REVENUE THEY GENERATE TO THE TREASUREY OR TO A SMALL NUMBER OF CONTRACTORS

21 UNITY OF AIMS. CONTINUITY. FLEXIBILITY. SAFER PORTS AND BETTER PORTS SECURITY. BETTER EQUIPPED TO DEAL WITH CRISIS. AN INVESTMENT BODY IN PORTS AND RELATED ACTIVITIES. EFFECIENCY. TAKE PORTS PRIVATIZATION TO A WIDER SPECTRUM. SPARE OUR PORTS FROM REMAINING THE BATTLE GROUND OF CONFLICTING INTRESSTS. BETTER INTERNATIONAL REPUTATION. WHAT ARE WE GOING TO GAIN FROM THE NEW PUBLIC SHARE HOLDERS COMPANY ?

22 AL NITAK FOR MARITIME STUDIES HAVING CRITISIZED THE ISNAD (PRIVITIZATION) SCHEME WE HAVE IMPLEMENTED SO FAR I WOULD LIKE TO EMPHEZIESE THAT THE ONLY WAY TO OPERATE PORTS IN AN EFFICIENT MANNER IS THROUGH THE PRIVATE SECTOR AND THE COMPANY WE ARE SUGGETING HERE SHALL BE AFTER ALL PRIVATE SECTOR. SOME THINK WE HAVE PRIVITIZED THE SAUDI PORTS RECENTLY, AS IF IT IS SOMETHING NEW. IN FACT OUR PORTS OPERATION HAS ALLWAYS BEEN ENTRUSTED TO THE PRIVATE SECTOR, EVEN CENTURIES BEFORE THE ESTABLISHMENT OF THE SAUDI SEA PORTS AUTHORITY. THE PRIVITIZATION OF OUR PORTS WITNESSED THREE PHASES

23 AL NITAK FOR MARITIME STUDIES Phase one : From the beginning of time until the creation of the Saudi Sea Ports Authority in 1976, ports were operated by the private sector, this era was marked by lack of centralized planning and led to the famous crippling ports congestion of the seventies.

24 AL NITAK FOR MARITIME STUDIES Phase Two : From 1976 until 1997, i.e. since the establishment of the Saudi Ports Authority, through better management, unified Rules and Regulations, the unified tariff and ports modernization in addition to better contracts with the private sector and with sharp discipline the Saudi Ports ended the congestion within six months. It also witnessed huge development and rendered a better services to the national economy..

25 Phase Three: from 1997 until now : witnessed the introduction of the ISNAD (privatization) scheme in marine operations and cargo handling and retained the three years contracts of phase two in the fields of safety and maintenance

26 AL NITAK FOR MARITIME STUDIES HAVING GONE THROUGH THREE PHASES OF PRIVITIZATION. WHEN ARE WE GOING TO SEE PHASE FOUR ? BY CREATING OUR NATIONAL PORTS OPERATION COMPANY WHICH SHALL TAKE US TO NEW HORIZONS.

27 AL NITAK FOR MARITIME STUDIES SHUKRAN, THANK YOU


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