Chapter 2 Port and Shipping Management Privatization

8/8/2019 Chapter 2 Port and Shipping Management Privatization

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CHAPTER 2:

PORT AND SHIPPING MANAGEMENT


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2.1 BUILD- OPERATE-TRANSFER (B.O.T)

2.2 BUILT-LEASE-TRANSFER (B.L.T)

2.3 BUILD-OWN-OPERATE-TRANSFER(B.O.O.T)

2.4 PORT MANAGEMENT OBJECTIVES

CHAPTER OUTLINE:


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They build infrastructure and facilities of

public importance, then operate (I.E.Maintain facilities, repair, collect charges, toll,levy etc.)

And when the period terminates, return(transfer) ports/highways/plants/facilities toowner.

2.1 BUILD, OPERATE, TRANSFER

(B.O.T)


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PORT- GIVEN CONCESSION ANDAGREEMENT FOR OPERATION OF i.E., 30years Collect levy (charges)

Transfer to Ministry of Transport/Agriculture and Fisheries.

SHIPS- SET UP SHIPPING LINES UNDER

NATIONAL FLAGSHIP i.E., MISC Operate for 25 years and became

National lines.


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Reality- Nationalized shipping companiesbecame private lines with some percentage of equity belongingto government agencies, or Government-Linked Companies (GLCS).


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STRUCTURE OF B.O.T PROJECTS (SOURCE: UNIDO,1996)


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ADVANTAGES OF B.O.T:

1. Government or owner(i.E., Agencies, government dept.)

Does not need any capital to buildfacilities.

2. Efficient3. Quick/fast-no red tape (no bureaucracy)

4. Encourage private participation innation building.

5. Contract and period of concession.


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ADVANTAGES OF B.O.T:

6. Profitable to both parties.7. You get served you pay

8. Government (agencies) canconcentrate on other things / projects

9. Private borrowings10. Nothing is free.


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DISADVANTAGES OF B.O.T:

1. Consortium does need some capital outlayto build facilities.

2. May not be efficient

3. May be troublesome4. Encourage more power of private

sectors in nation building.5. Contract and period of concession may be

too long.


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DISADVANTAGES OF B.O.T:

6. May bankrupt private bodies.7. The pay (charges or levy) may be costly.8. Government may intervene.9. Government may have to buy

back when problems arise.

10. Everything is expensive.

Happen in many countries.


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Example of country that use the

B.O.T Malaysia

Japan

Taiwan

Croatia

Philippines


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2.2 BUILD, LEASE, TRANSFER

(B.L.T) Definition:

Financing arrangement in which a developer:-

Design and build a complete project or facility ( Such asan airport, power plant, seaport)

Sells it to the government or joint venture partner.

Simultaneously leases it back (10-30 years) to operate itas a business and after the expiry of the lease.

Transfers it to the government or partner at a previouslyagreed upon or market price.


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2.3 BUILD, OWN, OPERATE,

TRANSFER (B.O.O.T)

Definition:

Financing arrangement in which a developer:- Design and Build a complete project or facility at little or no

cost to the government or a joint venture partner.

Owns and operates the facility as a business for a specified

period (10-30 years) after which.

Transfers it to the government or partner at a previously

agreed- upon or market price.


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Example of country that use

B.O.O.T

Canada

New Zealand


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ADVANTAGES OF B.O.O.T:

The majority of construction and long-termoperating risk can be transferred onto the BOOTprovider.

BOOT operator gives the scheme certainty andmakes it more believable for water users. In turnencourages interest in the scheme from an earlystage.

Construction and service delivery is very high giventhat if the performance targets are not met, theoperator stands to lose a portion of capitalexpenditure, capital profit, operating expenditureand operating profit.


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BOOT operators are experienced with managementand operation of infrastructure assets and bring theseskills to the scheme.

Corporate structuring issues and costs are minimalwithin a BOOT model, as project funding, ownershipand operation are the responsibility of the BOOToperator. These costs will however be built into the

BOOT project pricing.


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DISADVANTAGES OF B.O.O.T:

BOOT is likely to result in a higher cost of water for theend user. This is a result of the BOOT provider incurringthe risks associated with 100 percent financing of thescheme and the acceptance of the on-goingmaintenance liabilities. The level of premium (if any) tobe paid for a BOOT operator has not yet beendetermined.

Community and particularly water users may have anegative reaction to private sector involvement in thescheme, particularly if the private sector is an overseasowned company.


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The benefits of economic development may not berealized if the BOOT provider is a sole source entityas local business are not likely to provide materialsand services to the BOOT provider during theconstruction phase.

Local provider has an ability to compete on anindividual component of a scheme, sharing thewhole project margin within the sole source entitywill make it more difficult for local businesses to

complete.


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2.4 PORT MANAGEMENT OBJECTIVES

1. Ways of minimising costs: Minimise payments by users in the port

including ships time at port Minimise users total through transport

costs; and Minimise port costs

2. Maximisation of benefits:

They maximise benefits to the owners of theport; and

They maximise benefits to town, region orcountry

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Chapter 2 Port and Shipping Management Privatization