|
|
|
|
Port Reform
|
|
|
|
 Â Provides policymakers with a practical guide to reforming and privatizing ports. Content includes examples of successful and unsuccessful reforms, tools and methods, and international best practice.
 | | | | 1. Framework for port reform |  | | | What are the benefits of port reform? | Benefits to governments, transport and terminal operators, shippers, exporters/importers, consumers and entrepreneurs are substantial. | | The port business environment | The main drivers for port reform are: external forces of competition and technology from the shipping industry; the financial and operational benefits of private participation in infrastructure and service delivery and the diversification and globalization of investors and operators. Port services vary widely (divided between core and value-added services), and depending on the types of assets and public responsibility needed, alternative options for introducing private sector participation may be used. | | A road map for the port reform process | A decision tree is shown to help reformers go through the steps of port reform. All of these steps are described in more details in subsequent modules |
| | | | | 2. The evolution of ports in a competitive world | | | | Overview of the competitive landscape | International competition between ports around the world has become very acute in recent years. Drivers for this increased competition include: rivalry among existing competitors; the threat of new competition; the potential for global substitutes; the bargaining power of port users and the bargaining power of port service providers. | | Port dynamics in the 21st century | Key trends will also affect the way port operators conduct business: - Globalization of production
- Technological changes (such as containerization of world trade) and the growing role of information technology
- The shifting of bargaining power with consolidation among ocean carriers and emergence of global terminal operators
- Changing distribution patterns, with a shift to a "hub and spoke" pattern
- Increased environmental and safety concerns
| | Challenges and opportunities | These changes provide both challenges and opportunities to port service operators. Governments are under increasing pressure to privatize, and private sector companies have proved their ability to improve operations' efficiency. A key lesson from previous transactions is the need for transparency. A checklist of key questions for negotiating a terminal concession contract is provided. |
| | | | | 3. Alternative port management structures & ownership models | | | | Evolution of port institutional framework | This module provides a conceptual framework for defining the respective roles of the public and private sectors in port management. The public sector acts mainly as planner, facilitator and regulator, whereas the private sector acts as service provider, operator and developer. | | Port functions, services and administration models | This section defines a number of typical management structures used for ports around the globe and describes the roles of public and private actors in each of these models. Four main categories of port administration models are described, with an increasing degree of private participation: service ports; tool ports; landlord ports; and fully privatized or private service ports. | | Port finance overview | Governments and port authorities are typically responsible for funding for infrastructure, particularly for costly and long-lived infrastructure (e.g., breakwaters and locks) for which it is hard to find private investors. Private operators play an increasing role in funding infrastructure development, in addition to paying for superstructure, equipment and systems. | | Port reform modalities | This section describes alternative port reform options, with their relative strengths and weaknesses. Options for port improvement include: modernization, liberalization/de-regulation, commercialization, corporatization, and privatization (comprehensive or partial). | | Reform tools | A variety of contractual tools are available for introducing reform, from outsourcing, management contracts, to lease and rent contracts, full concessions, divestiture by license or by sale, and a full privatization. The toolkit examines the strengths and weaknesses of each of these tools but focuses on partial privatization as this has been used more successfully. | | Marine services and port reform | This section analyzes traditional marine services (to ensure the safe flow of vessel traffic in port approaches and a safe stay at berth) in the context of port reform, and potential for reforming those as well. |
| | | | | 4. Legal tools for port reform | | | | Overview | Transformation of port structures often requires new legislation. This module identifies fundamental points to consider when developing such legislation, with examples from existing legislation. The objectives of a port law are to create the suitable institutional framework for port reform (with one or several Port Authorities); a flexible business framework that enables this PA to compete in national and international markets; and suitable operational conditions for private operators. | | Port authority and terminal operations | A port authority should not be directly involved in terminal operations but it should exercise licensing and regulatory functions with respect to marine and port services via a variety of contractual arrangements. The financial powers of a port authority should be regulated and a national ports commission may have a role to play. | | Full concession agreements | Concession agreements are a relatively new development in ports. They are most successfully applied within a landlord port structure, although they were originally developed for service ports. The differences between concession agreements and leaseholds are described. A model structure for concession agreements is provided with reference clauses. | | Port regulations | Port regulations (port by-laws) are usually issued by a public port authority and have a legal basis in port law, municipal law or a maritime code. They provide detailed regulations relating to the conduct of vessels, safety and order in the port area, the protection of the environment, documentation handling or crisis management. General elements of port regulations are considered with reference clauses. |
| | | | | 5. Financial implications of port reform | | | | Overview | This module presents an analytical framework for assessing the risks confronting port operators, in order to identify principles for equitable sharing of risk between public and private sector parties. Two fundamental risks, cost risk and revenue risk, are discussed. | | PPA in ports: risk analysis, sharing and management | This section focuses on issues of "financial engineering" and the effort to secure the best financing terms for the project based on a risk analysis and financial constraints. An example of a public "landlord port" that has decided to privatize is used. Particular attention is paid to the identification of project risks (including country risk or regulatory risk), their allocation and how they can be managed in contract design and through corporate structure. | | Principles of financial modeling, engineering and analysis | This section presents the most commonly used analytical tools and measures of economic performance and risk that are used to evaluate the feasibility of projects. Indicators of both financial and economic profitability, a framework for conducting a cost-benefit analysis, and risk rating systems are presented. A comprehensive discussion of financial project engineering issues and guidelines for financial modeling (with a mock financial model provided) provide a very good basis for understanding such issues. A risk checklist is provided to identify the principal risks in a port project, including country risk, traffic risk, project risks and contractual risks. |
| | | | | 6. Port regulation | | | | Overview | Economic regulation may be required to ensure the efficient and competitive functioning of a port. This typically involves intervention in the functioning of markets; setting or controlling tariffs, revenues or profits in case of weak competition; controlling market entry or exit; and ensuring fair and competitive behavior and practices. Issues of technical oversight (e.g., navigation and safety services); environmental oversight (e.g., contingency planning for environmental and safety incidents and coastal protection); and social/administrative oversight (e.g., the equitable treatment of port workers, working conditions etc) are touched upon, but not discussed in detail. | | Regulatory concerns when formulating a port reform strategy | This section concentrates on key concerns, such as determining the conditions in which anti-competitive behavior may exist and estimating the costs of an inadequate regulatory framework. | | Strategies to enhance port sector competition | This section discusses port restructuring strategies to enhance competition within the port sector and sets out a decision framework for selecting port competition enhancement strategies and remedies. | | Designing a port regulatory system | An easy-to-follow eight-step approach to regulatory system design is proposed. The specification of tariff rules and performance obligations is further developed in an annex on port tariffs: general structure, items and flow of charges. |
| | | | | 7. Labor reform and related social issues | | | | Context for labor reform | This module addresses the labor-related issues associated with port ownership and operations to help governments evaluate alternative ways of approaching labor reform. | | What are the key labor issues? | There are many aspects of working conditions that may be affected by port reform and it is important to involve labor constructively and early in the reform process to discuss those issues. | | Adopting a task force approach | Since the issues associated with labor reform are complex, many governments have established a labor reform Task Force to consult with port stakeholders. The composition and activities of example task forces are discussed. | | Institutional frameworks for labor reform | Guidance is provided on defining the relationships between governments, ports and labor whilst fostering competition and redefining the concept of social equity. The adequate timeframe for labor reform is also discussed. | | Developing the workforce rationalization plan | The design of a port labor rationalization plan is one of the most important phases of the overall reform process. It must consider a range of alternatives to dismissals, such as part time employment, flexible working hours or job hiring freezes. Case study data is provided to describe different approaches, and the main pitfalls relating to severance packages are outlined. Useful data on port staffing benchmarking is provided in addition to a "downsizing" decision tree to identify ways to "shrink smartly". | | International support for labor adjustment | The World Bank has supported labor adjustment in privatization and enterprise restructuring since 1990. This has included technical assistance (e.g., in identifying staffing needs), direct financing for severance payments, training support and poverty alleviation programs. An annex provides examples of World Bank support for labor reform in different countries. | | Post reform labor-management relations | Once reform is implemented, port management and labor must continue to cooperate if reform is to achieve its objectives. |
| | | | | 8. Implementing port reform | | | | Strategic preparation | Implementing port reform consists of "pulling it all together". This module describes how to undertake each task in a practical and effective manner. A typical sequence of actions associated with port reform and the timeframes associated with each key task is provided. The setting up of an Interministerial Working Group (IWG) is suggested as a first step, to overcome the difficulties of working across several ministerial departments. Guidance is provided on the mandate and composition of an IWG, on the hiring of advisors and on preparing an IWG work plan. | | Redefinition of authorities and powers | The next step consists of defining the regulatory principles applicable to the sector, which may include the establishment of public entities responsible for regulating the sector. | | Legal adaptation | If port reform requires changes in legislation, the necessary legal works should be undertaken at an early stage. This might include the following elements: legal due diligence, legal review of all aspects of port reform, the drafting of new port sector legislative frameworks, by-laws or port regulations, legislation governing contractual arrangements, drafting of bidding documents, and preparation of briefing documents. | | Transaction preparation | A number of key documents and analyses are required: a financial model, due diligence, contractual documents and bidding documents. A critical path for carrying out these actions is provided. |
| | | | | 9. Annexes | | | | Glossary | Glossary of port and shipping terms. |
| | |
|
|
|
|
|
RSS