1. Framework for Port Reform
Module 1
Framework for Port Reform
The World Bank Port Reform Toolkit - Module 1

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
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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
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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
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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
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6. Public-private roles in Port Management
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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
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8. Decision Tree
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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?
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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 ?
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11. Legal/Institutional setup
Central body
(ministerial level)
Port authorities
Private operators
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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)
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13. Key Reform Decisions (4/8) :
Legal Framework
Legal documentation to be reviewed and possibly modified and/or completed :
Sector laws
Concession laws and contracts
Port regulations
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14. Key Reform Decisions (5/8) :
Labor Adjustment
Addressing the overstaffing issue…
How ?
Transition of port labor to other sectors
Social protection programs
Broad sphere of participation and responsibility
Labor markets opened to competition
Social sustainability critical to economic sustainability of the reform process
When?
Preferably before private sector involvement in port services and infrastructure
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15. Key Reform Decisions (6/8) : Responsibility for implementing reform
Where within government should responsibility reside for port sector reform ?
In a temporary agency of government especially created to reform the port Or
In a standing agency of the government
What skills and competencies are required to implement a port sector reform program successfully ?
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16. Key Reform Decisions (7/8) : Transaction Preparation
Should transaction preparation be outsourced or completed by in-house government staff ?
Financial advisors can be very useful but have to be selected with care, using a competitive process.
What kind of technical assistance and training will be required to build-up Public Sector capacity ?
The public sector may need training to adjust to its new tasks of monitor and regulator.
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The World Bank Port Reform Toolkit - Module 1

17. Key Reform Decisions (8/8) : Sequencing of transactions
In which order will the transactions be undertaken ?
- Most valuable assets first
- Big Bang approach
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18. Pulling it all together
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19. “After the Privatizations: The need for Port Regulation”
IAME Panama Track B
“After the Privatizations:
The need for Port Regulation”

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

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

22. 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

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

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

25. 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

26. 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