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Framework for Port Reform

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Presentation on theme: "Framework for Port Reform"— Presentation transcript:

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 Module 1

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 Module 1

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 Module 1

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 Module 1

6 Public-private roles in Port Management
Module 1

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 Module 1

8 Decision Tree Module 1

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? Module 1

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 ? Module 1

11 Legal/Institutional setup
Central body (ministerial level) Port authorities Private operators Module 1

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) Module 1

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 Module 1

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 Module 1

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 ? Module 1

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. Module 1 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 Module 1

18 Pulling it all together
Module 1

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

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