Private sector key to future of ports

PUBLISHED : Monday, 29 September, 1997, 12:00am
UPDATED : Monday, 29 September, 1997, 12:00am

A World Bank report says private-sector involvement is important for the future of ports in developing countries, but warns it must be carefully planned and organised.

Although considerable potential existed in port privatisation, recent studies and seminars showed there were complex political, legal, organisational, social and staffing issues that needed to be addressed, the report said.

The report analysed 35 of the 57 major port projects which were completed between 1980 and 1992. It said in today's ports, the traditional statutory company was giving way gradually to the share company.

These companies, which were still 100 per cent government-owned, were expected to open their equity to other public-sector entities in the future.

The report said as privatisation covered so many areas from the simple lease of equipment to the outright sale of facilities, there was no necessary relation between ownership and competition.

'Privatisation of port assets may lead to monopolies that are difficult to control and likely to cause political disputes,' it said.

It proposed that port projects could be modelled on successful US port projects which combined public-owned physical facilities which were leased to private cargo handlers competing with one another.

In many service ports, cargo handling and storage were likely to be more efficient if taken over by the private sector, the report said.

When the institutional environment was favourable - as it had been in Hong Kong, Mexico and Panama - private investors may be persuaded to finance port infrastructure.

'Significantly, in all these cases private investors have insisted on a long-term monopoly on cargo handling and storage - the profitable parts of port operations - so they can cover the costs of infrastructure investments,' the report said.

It proposed that the private sector should be encouraged to invest in port facilities and heavy port equipment so the risks and rewards of financing these massive investments could be shared through build-operate-transfer schemes and concessions.

'Leases of public facilities, and management contracts, may be used as initial steps towards fuller privatisation of port operations and physical assets, existing and planned,' the report said.


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