world bank seminar on port reformsiteresources.worldbank.org/pppilp/resources/2.5.pdfworld bank...

Wor

ld B

ank

Sem

inar

on

Port

Ref

orm

LE

GA

L T

OO

LS

FOR

POR

T R

EFO

RM

byC

hris

tiaan

van

Kri

mpe

nL

L.M

.L

egal

Cou

nsel

A

qaba

Dev

elop

men

tCor

pora

tion

Has

hem

iteK

ingd

omof

Jor

dan

Apr

il 2n

d, 2

008

Aqa

ba D

evel

opm

ent C

orpo

ratio

n2

Intro

duct

ion

Port

s rep

rese

nt a

n In

tens

ive

Mix

of P

ublic

an

d Pr

ivat

e In

tere

sts

Ports

are

chi

ldre

n of

thei

r tim

e.M

any

esta

blis

hed

port

man

agem

ent s

truct

ures

be

cam

e ob

sole

te a

fter t

he in

trodu

ctio

n of

mar

ket

orie

nted

eco

nom

ies.

Glo

baliz

atio

n in

tran

spor

t wea

kene

d m

onop

olis

tic

posi

tion

of m

any

ports

.

Aqa

ba D

evel

opm

ent C

orpo

ratio

n3

His

tory D

omin

ance

of P

ublic

Sec

tor

Form

er C

omm

unis

t Blo

c: p

orts

wer

e pa

rt of

M

inis

try o

f Tra

nspo

rt an

d/or

Nat

iona

l Shi

ppin

g Li

ne.

Con

tinen

tal

Wes

tern

Eur

ope:

Lan

dlor

d po

rts

(NW

) and

Too

l Por

ts (M

edite

rran

ean)

UK

: Por

t Tru

sts (

Serv

ice

Ports

)U

SA: P

ort A

utho

ritie

s (La

ndlo

rd)

Aqa

ba D

evel

opm

ent C

orpo

ratio

n4

Mor

e H

isto

ry

Dom

inan

ce o

f Pub

lic S

ecto

rA

sian

and

Afr

ican

por

t stru

ctur

es w

ere

usua

lly

copi

ed fr

om th

e fo

rmer

mot

her c

ount

ries.

UK

-orie

nted

type

s of S

ervi

ce P

orts

dom

inat

ed th

e sc

ene.

In

Sou

th A

mer

ica,

man

y N

atio

nal P

ort A

utho

ritie

s w

ere

crea

ted

as p

art o

f the

Sta

te st

ruct

ure.

Maj

ority

of w

orld

por

ts in

198

0s: e

xpen

sive

, in

effic

ient

, ove

rman

ned

and

poor

ly m

aint

aine

d.

Aqa

ba D

evel

opm

ent C

orpo

ratio

n5

Pres

ent S

ituat

ion

Mai

n Tr

ends

Land

lord

Por

ts b

ecam

e do

min

ant m

odel

Port

Aut

horit

ies e

volv

ed in

to in

fras

truct

ure

oper

ator

sSh

ift o

f inv

estm

ents

from

pub

lic to

priv

ate

sect

or

Port

oper

atio

ns w

ere

priv

atis

edR

ise

of th

e gl

obal

term

inal

ope

rato

rs

Aqa

ba D

evel

opm

ent C

orpo

ratio

n6

Legi

slat

ion Po

rt L

egis

latio

nM

ost c

ount

ries e

nact

ed n

ew p

orts

law

s, cr

eatin

g th

e in

stitu

tiona

l fra

mew

ork

for t

he re

latio

n be

twee

n th

e St

ate,

the

port

city

and

the

Port

Aut

horit

y. M

ain

issu

es a

re:

–Es

tabl

ishm

ent o

f Nat

iona

l or l

ocal

por

t aut

horit

ies

–Le

gal s

tatu

s of P

ort A

utho

ritie

s–

Fina

ncia

l and

fisc

al re

latio

ns b

etw

een

the

gove

rnm

ent

(nat

iona

l and

/or l

ocal

) and

the

Port

Aut

horit

y–

Ow

ners

hip

of p

ort l

and

and

port/

term

inal

infr

astru

ctur

e

Aqa

ba D

evel

opm

ent C

orpo

ratio

n7

Priv

atis

atio

n

Priv

atis

atio

n of

Por

t Aut

hori

ties

Port

auth

oriti

es a

re u

sual

ly p

art o

f the

pub

lic

dom

ain.

Onl

y in

a fe

w c

ount

ries p

ort a

utho

ritie

s ar

e fu

lly p

rivat

ised

(UK

, New

Zea

land

).Pr

ivat

isat

ion

of a

por

t aut

horit

ies m

eans

that

the

port

land

is p

rivat

ely

owne

d.D

isad

vant

ages

:–

Publ

ic se

ctor

lose

s lon

g te

rm d

evel

opm

ent o

ptio

ns.

–Po

rt la

nd su

bjec

t to

spec

ulat

ion

–Po

ssib

le c

reat

ion

of p

rivat

e m

onop

olie

s

Aqa

ba D

evel

opm

ent C

orpo

ratio

n8

The

Cha

ngin

g W

orld

Inst

itutio

nal S

truc

ture

sPo

rt au

thor

ity a

s par

t of n

atio

nal o

r reg

iona

l go

vern

men

t (G

erm

any)

Port

auth

ority

as c

orpo

rate

ent

ity b

y la

w (L

atvi

a,

Sri L

anka

, Guj

arat

, Tan

zani

a)C

orpo

ratis

ed P

ort A

utho

rity

by la

w (A

ustra

lia,

Pola

nd)

Cor

pora

tised

Por

t Aut

horit

y on

the

basi

s of t

he

Com

pani

es A

ct (T

he N

ethe

rland

s)

Aqa

ba D

evel

opm

ent C

orpo

ratio

n9

Obj

ectiv

es

Obj

ectiv

es o

f a P

ort A

utho

rity

The

obje

ctiv

es o

f Por

t Aut

horit

ies d

iffer

ed fr

om

coun

try to

cou

ntry

.In

gen

eral

, a P

ort A

utho

rity

is c

harg

ed w

ith th

e ef

ficie

nt a

nd e

cono

mic

al m

anag

emen

t of t

he p

ort.

It sh

ould

mak

e a

prof

it to

enh

ance

its l

ong

term

de

velo

pmen

t but

shou

ld n

ot m

ake

exce

ssiv

e pr

ofits

!B

UT…

……

……

…..

Aqa

ba D

evel

opm

ent C

orpo

ratio

n10

Para

dox

Vank

rim

pen’

sLaw

The

wor

se th

e Po

rt A

utho

rity,

th

e hi

gher

its p

rofit

s….

Aqa

ba D

evel

opm

ent C

orpo

ratio

n11

The

Pref

erre

d C

hoic

e

Land

lord

Por

t The

Pre

ferr

ed C

hoic

e!

Wor

ld B

ank

enco

urag

es G

over

nmen

ts to

est

ablis

h la

ndlo

rd-ty

pe P

ort A

utho

ritie

s.C

hang

ing

from

a S

ervi

ce to

a L

andl

ord

Port

requ

ires a

fund

amen

tal c

hang

e of

app

licab

le la

ws

and

regu

latio

ns.

Full

priv

atiz

atio

n (in

clud

ing

publ

ic fu

nctio

ns) i

s co

nsid

ered

an

unde

sire

d op

tion.

Aqa

ba D

evel

opm

ent C

orpo

ratio

n12

Trad

ition

al A

ctiv

ities

Trad

ition

al A

ctiv

ities

Lan

dlor

d Po

rtLa

nd d

evel

opm

ent a

nd m

anag

emen

tC

onst

ruct

ion

of p

ort i

nfra

stru

ctur

eR

egul

atio

n of

safe

ty, s

ecur

ity a

nd e

nviro

nmen

tN

autic

al ta

sks (

optio

nal)

Gra

ntin

g an

d m

onito

ring

conc

essi

ons &

leas

esR

epre

sent

ing

the

port

com

mun

ity a

nd

furth

eran

ce o

f ter

min

al o

pera

tors

Aqa

ba D

evel

opm

ent C

orpo

ratio

n13

Non

Tra

ditio

nal A

ctiv

ities

Non

-trad

ition

al a

ctiv

ities

Lan

dlor

d Po

rtD

evel

opm

ent o

f val

ue a

dded

serv

ices

, D

istri

park

s, W

TC, p

ort c

omm

unity

syst

ems.

Trai

ning

of p

ort a

nd te

rmin

al m

anag

ers.

Inte

grat

ion

with

inla

nd tr

ansp

ort s

ervi

ces.

Dev

elop

men

t of i

nlan

d te

rmin

als.

Tran

sfor

mat

ion

into

a G

loba

l Ter

min

al O

pera

tor

(Por

t of S

inga

pore

).

Aqa

ba D

evel

opm

ent C

orpo

ratio

n14

Cor

pora

tisat

ion

Cor

pora

tised

Por

t Aut

hori

ties

Tren

d to

cor

pora

tise

port

auth

oriti

es, e

ither

und

er

Lex

Spec

ialis

or u

nder

the

Com

pani

es A

ct.

The

publ

ic in

tere

st re

quire

s tha

t at l

east

maj

ority

of

the

shar

es a

lway

s be

and

rem

ains

to b

e ow

ned

by th

e pu

blic

sect

or (S

tate

, reg

iona

l gov

ernm

ent

and/

or th

e po

rt ci

ty).

No

shar

e ow

ners

hip

by p

rivat

e po

rt op

erat

ors a

nd

trans

port

rela

ted

firm

s sho

uld

be a

llow

ed.

Aqa

ba D

evel

opm

ent C

orpo

ratio

n15

The

Trad

ition

al W

ay

Mon

ey R

ules

The

Wav

esTr

aditi

onal

Lan

dlor

d Po

rts in

vest

ed in

bas

ic

port

infr

astru

ctur

e an

d po

rt si

tes (

quay

wal

ls

and

land

recl

amat

ion)

mai

nly

from

reta

ined

ea

rnin

gs.

They

der

ived

thei

r inc

ome

from

por

t due

s (f

or v

esse

ls) a

nd la

nd le

ase

(fro

m p

ort

oper

ator

s).

Aqa

ba D

evel

opm

ent C

orpo

ratio

n16

Tran

sitio

n

Tran

sitio

n fr

om S

ervi

ce P

ort t

o La

ndlo

rd P

ort

In th

e 19

80s a

nd 1

990s

the

vast

maj

ority

of

wor

ld p

orts

cha

nged

its m

anag

emen

t st

ruct

ure.

Man

y of

them

requ

ired

mas

sive

inve

stm

ents

fo

r mod

erni

satio

n an

d la

bour

refo

rm.

Whe

re w

ould

they

get

the

nece

ssar

y m

oney

?

Aqa

ba D

evel

opm

ent C

orpo

ratio

n17

The

New

Way

of F

inan

cing

New

Sou

rces

of F

inan

ceTh

e St

ate

(ofte

n di

ffic

ult o

r im

poss

ible

)Th

e In

tern

atio

nal F

inan

ce In

stitu

tes (

Wor

ld

Ban

k, A

sian

Dev

elop

men

t Ban

k, A

mer

ican

D

evel

opm

ent B

ank,

IFI,

Kuw

ait F

und)

The

Priv

ate

Sect

or (P

ort u

sers

, ban

ks)

thro

ugh

PPPs

.

Aqa

ba D

evel

opm

ent C

orpo

ratio

n18

Publ

ic P

rivat

e Pa

rtner

ship

s

Con

cess

ions

Wha

t Con

cess

ions

? Po

rt or

Ter

min

al…

…C

once

ssio

ns a

re a

n al

tern

ativ

e to

pub

lic fi

nanc

ing

of o

pera

tiona

l inf

rast

ruct

ure.

C

once

ssio

ns c

ombi

ned

with

BO

T sc

hem

es

beca

me

an a

ccep

ted

phen

omen

on in

the

indu

stry

.Ti

me

repe

ats i

tsel

f. C

once

ssio

ns w

ere

used

in

Hol

land

as f

ar b

ack

as th

e Se

vent

eent

h C

entu

ry.

Aqa

ba D

evel

opm

ent C

orpo

ratio

n19

Con

cess

ions Wha

t Is T

his T

hing

?Pu

blic

Lic

ense

or r

ight

s gra

nt b

y a

Port

Aut

horit

y to

ope

rate

, mai

ntai

n an

d tra

nsfe

r a p

ort t

erm

inal

fo

r a c

erta

in p

erio

d of

tim

e.B

OT:

Bui

ld, O

pera

te T

rans

fer,

the

right

to

cons

truct

a p

ort t

erm

inal

as p

art o

f the

con

cess

ion.

Site

Lea

se A

gree

men

t for

the

term

inal

are

a.A

num

ber o

f rel

ated

agr

eem

ents

incl

udin

g a

Lend

ers D

irect

Agr

eem

ent,

if re

quire

d.

Aqa

ba D

evel

opm

ent C

orpo

ratio

n20

Mai

n C

hara

cter

istic

s

Mai

n C

hara

cter

istic

sR

ight

/lice

nse

to p

erfo

rm p

ort o

pera

tions

du

ring

som

e 25

-35

yea

rs, d

epen

ding

on

inve

stm

ent p

rofil

e.Si

te L

ease

Agr

eem

ent f

or th

e sa

me

perio

d.Tr

ansf

er o

f ter

min

al a

nd a

sset

s to

Gra

ntor

af

ter t

erm

inat

ion

or e

xpiry

.Pa

ymen

t of r

oyal

ties a

nd le

ase

rent

s.

Aqa

ba D

evel

opm

ent C

orpo

ratio

n21

Con

cess

ion

+ B

OT

Adva

ntag

esLa

nd is

not

sold

and

will

be

retu

rned

to P

ort

Aut

horit

y or

Gov

ernm

ent a

fter c

once

ssio

n pe

riod.

Part

of in

vest

men

t ris

ks tr

ansf

erre

d to

Priv

ate

Sect

or.

Via

agr

eed

perf

orm

ance

crit

eria

por

t ope

ratio

ns

can

be m

onito

red.

Con

cess

iona

ire st

ays i

n th

e po

rt fo

r a lo

ng ti

me

guar

ante

eing

a st

eady

inco

me

for P

ort A

utho

rity.

Aqa

ba D

evel

opm

ent C

orpo

ratio

n22

Mai

n Ta

sks a

nd S

ervi

ces

Con

cess

iona

ire’

s Tas

ks a

nd S

ervi

ces

Empl

oyin

g po

rt w

orke

rs o

n fix

ed c

ontra

cts.

Ber

thin

g ve

ssel

s.St

eved

orin

g.In

tern

al tr

ansp

ort a

nd st

orag

e.M

aint

enan

ce o

f inf

rast

ruct

ure,

supe

rstru

ctur

e,

equi

pmen

t.A

chie

ve a

gree

d pe

rfor

man

ce c

riter

ia.

Aqa

ba D

evel

opm

ent C

orpo

ratio

n23

Roy

altie

s

Alte

rnat

ives

Roy

altie

s can

be

agre

ed:

–as

a fi

xed,

or v

aria

ble

amou

nt p

er u

nit (

TEU

, met

ric

tonn

e) d

epen

ding

on

quan

titie

s;–

as p

erce

ntag

e of

the

Gro

ss R

even

ue o

f the

Ter

min

al

(may

var

y be

twee

n 5%

and

20%

).M

inim

um G

uara

ntee

d Th

roug

hput

–th

is re

pres

ents

the

amou

nt o

f Roy

alty

to b

e pa

id in

any

ev

ent,

irres

pect

ive

of th

e ac

tual

thro

ughp

ut o

f the

te

rmin

al.

Aqa

ba D

evel

opm

ent C

orpo

ratio

n24

Term

inat

ion

Com

pens

atio

n

Prin

cipl

esTh

e Po

rt A

utho

rity

alw

ays p

ays t

erm

inat

ion

com

pens

atio

n at

exp

iry o

r ear

ly te

rmin

atio

n of

the

conc

essi

on.

A te

rmin

al c

once

ssio

n w

ithou

t ter

min

atio

n co

mpe

nsat

ion

is n

ot b

anka

ble.

The

amou

nt o

f ter

min

atio

n co

mpe

nsat

ion

depe

nds

on t

he w

ay th

e co

nces

sion

is te

rmin

ated

and

by

who

m.

Aqa

ba D

evel

opm

ent C

orpo

ratio

n25

Term

inat

ion

Com

pens

atio

n

Wha

t doe

s the

Por

t Aut

hori

ty p

ay?

Term

inat

ion

may

occ

ur a

s a re

sult

of:

–te

rmin

atio

n in

the

natio

nal i

nter

est;

–ex

piry

of t

he c

once

ssio

n;–

a m

ajor

bre

ach

of o

ne o

f the

par

ties;

–Fo

rce

Maj

eure

.C

ompe

nsat

ion

may

be

paid

on

the

basi

s of F

air

Val

ue o

r a p

erce

ntag

e of

the

net b

ook

valu

e of

the

inve

stm

ents

and

mov

able

ass

ets .

Aqa

ba D

evel

opm

ent C

orpo

ratio

n26

Term

inat

ion

Com

pens

atio

n

Hea

lth W

arni

ng

A P

ort A

utho

rity

shou

ld a

void

und

er

all c

ircum

stan

ces t

o pa

y Fa

ir V

alue

in

case

of t

erm

inat

ion

or e

xpiry

.

Exce

ptio

n: te

rmin

atio

n in

the

natio

nal i

nter

est.

Aqa

ba D

evel

opm

ent C

orpo

ratio

n27

Ban

kabi

lity

Inve

stm

ent R

equi

rem

ents

The

owne

rshi

p of

the

port

land

and

term

inal

in

fras

truct

ure

cons

truct

ed b

y a

Con

cess

iona

ire

unde

r a B

OT

rem

ains

with

the

Port

Aut

horit

y.Th

e C

once

ssio

naire

can

not m

ortg

age

the

term

inal

ar

ea o

r inf

rast

ruct

ure.

The

Con

cess

iona

ire n

eeds

secu

rity

for t

he b

ank

to

finan

ce it

s inv

estm

ents

in th

e te

rmin

al.

The

bank

s in

prin

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