MEMORANDUM OF UNDERSTANDING BETWEEN THE SECRETARIAT OF THE PACIFIC COMMUNITY (SPC)

Transcription

1 MEMORANDUM OF UNDERSTANDING BETWEEN THE SECRETARIAT OF THE PACIFIC COMMUNITY (SPC) (Economic Development Division, Transport Programme) and the PACIFIC ISLANDS SHIPOWNERS ASSOCIATION (PISA) ARTICLE I PURPOSE AND SCOPE This Memorandum of Understanding sets out the roles and responsibilities and expresses the commitment of SPC and PISA to work together so as to promote the innovative self-help mechanism of Pacific Island shipping personnel skilled in shipping management, shipping operations and other associated shipping sectors such as freight forwarding who are willing to provide advice and assistance to the shipping sector throughout the region.

2 SPC and PISA envisage that the PISA network will grow, strengthening the expertise and capacity of Pacific Island shipping personnel to manage, administer, regulate, control and work in the shipping transshipping sector in a socially responsible manner. The association will be the principal interactive forum and key advisory body for national government agencies responsible for shipping affairs and the shipping sector within the region. The Association will become a united voice for the shipping sector in the Pacific and will: 1.Serve as a focal point for the discussion of partnerships that promote a safe, secure, clean and sustainable shipping sector; 2.Establish a network of skilled resource people willing to provide advice and support to the shipping sector; 3.Provide a forum for the better integration of policies affecting the shipping sector; 4.Review issues related to financial assistance and the transfer of technology for sustainable development, capacity building and the full use of existing resources; 5.Continue to promote co-operation between shipping training institutions, shipping authorities and the shipping sector in the implementation of international uniform standards throughout the region; and 6.Provide quality advice, in consultation with the Transshipping Programme, to the national government agencies responsible for shipping affairs within the region on all matters that concern the shipping sector.

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4 Driving forces for Port Reforms 1. EXTERNAL FORCES OF COMPETITION AND TECHNOLOGY FROM SHIPPING COMPANY The latest generation of container ships make considerable demands on terminals and ports in the form of additional infrastructure, cranes, depth in ports, productivity, etc 2. FINANCIAL AND OPERATIONAL BENEFITS OF PRIVATE PARTICIPATION IN INFRASTRUCTURE DEVELOPMENT AND SERVICE DELIVERY National and regional seaports are realizing that they cannot compete effectively without the efficiencies offered by private operators and equally important, without access to capital provided by private investors; 3. DIVERSIFICATION AND GLOBALIZATION OF INVESTORS AND OPERATORS IN THE PORT INDUSTRY Consist of four group of operators a. Global stevedores (expanding their operations internationally from a strong home base) b. Regional operators entering the international market c. Shipping lines investing in terminals d. Niche investors looking at small to medium scale facilities

5 1. General Reasons 2. Admin/Managerial Reasons Improve port efficiency Diminish the political influence on public port administration Decrease costs and prices Reduce bureaucracy Improve service quality Introduce performance based management Increase competitive power Avoid government monopolies Change the attitude with respect to port clients 2. Financial Reasons 3. Employment reasons for change Reduce public expenditure Reduce the size of public administration Attract foreign investment Restructure and retain the port labour force (skilled labours) Reduce commercial risks ( investments) for the public sector Increase the private sector participation in the regional and national economy Eliminate restrictive labour practices Increase private sector employment

6 1. GOVERNMENTS Improvement of external trade competitiveness Reducing transport costs particularly port services costs Improving port efficiency Easing financial burden on national budget thus transfer investment and operating costs to the private sector; 2. TRANSPORT AND TERMINAL OPERATORS More cost effective port operations and services; Efficient use of transport assets & better competitive positions in transport markets 3. SHIPPERS, EXPORTERS AND IMPORTERS Reduced port costs which will lower freight rates; Low cost of imported goods/intermediate products enhance competitiveness for exports 4. CONSUMER Lower prices for consumer goods; Better access to wider range of products Improve competition between suppliers

7 1. MODERNIZATION OF PORT ADMINISTRATION AND MANAGEMENT PORT enhancement of port performance with the introduction of more efficient working practices and tools (this can be made without the requirement to change laws or national policy e.g. adoption of corporate planning) 2. LIBERALISATION (DE REGULATION ) OF PORT SERVICES allows private companies to operate in areas previously reserved to the public sector by the reduction and loosening of government rules and regulations. 3. COMMERCIALIZTION ports being made more autonomous and accountable for its decisions and performance and be financially independent (own their assets, establish their own budgets, and make their own investment decisions). 4. CORPORATIZATION ports being given the legal status of a private company even of the public sector still remains the sole/majority owner a complete separation of the public management and regulatory functions from the commercial activities that are being corporatized. 5. PRIVATIZATION expansion of the private sector role towards ownership and operations of port facilities and services as well as the development of new facilities/assets e.g.removal of trade barriers

8 The provision of port services entails large fixed costs and low marginal costs and the marginal benefits associated with using port services exceed the marginal costs of providing these services. A relatively large, minimum initial capacity of basic infrastructure is required for technical reasons. The infrastructure is frequently indivisible and, as a result, increases in infrastructure capacity can only be realized in quantum chunks. Both initial construction and port expansion require large amounts of capital. As a result, the need to develop basic port infrastructure (eg, sea locks, breakwaters, quay walls, and main roads) all at one time creates large capital operating losses and foregone investment opportunities as a result of underused capacity during the earlier phases of a project s life cycle. The life span of port infrastructure projects often exceeds the time horizon acceptable for private investors and commercial banks. Basic port infrastructure is immobile and has few alternative uses.

9 1. SERVICE PORT (PUBLICLY OWNED) Public sector owns land, infrastructure and equipment Public sector provides services ; 2. TOOL PORT Public sector owns land, infrastructure and equipment Equipment and space are rented out on a short term basis to the private sector, which then provides services; 3. LANDLORD PORT Public sector owns land and the infrastructure Services are provided by the private sector on a long term basis, e,g, using concession agreement or Build Operate Transfer (BOT) contracts; 4. SERVICE PORT (PRIVATELY OWNED) All land, infrastructure and equipment is owned and operated by the private sector

10 1. BASIC PORT INFRASTRUCTURE 2. OPERATIONAL PORT INFRASTRUCTURE Maritime access channels Terminals Port entrance Qual walls, jetties and finger piers; Protective works incl breakwaters & shore protection Access to the port for inland transport (roads, tunnels etc) Inner port channels and turning basins roads, tunnels and bridges in the port areas 3. PORT SUPERSTRUCTURE 4. PORT EQUIPMENT Paving, surfacing Tugs Terminal lighting Line handling vessels Parking areas Dredging equipment Sheds, warehouses, stacking areas and tank farms Ship/Shore handling equipment Offices and repair shops Cargo handling equipment Other buildings required for terminal operations Aids to navigation, buoys and beacons; Docks Inland waterways within the port area Access roads to general road infrastructure

11 SOURCES OF FUNDING 1. GOVERNMENT AVAILABLE 2. ODA TECHNICAL ASSISTANCE 3. LOAN FROM INTERNATIONAL FINANCIAL INSTITUTION/COMMERCIAL & DEVELOPMENT BANKS 4. PRIVATE SECTOR PARTICIPATION

12 The critical element in any effort to promote PSP is the potential for competition and this can be provided through direct competition between private sector service providers, between public and private service providers or between bidders in the case of an activity that does not allow competition; The landlord model is the best structure for promoting PSP because it accommodates different form of public private partnership while recognizing that the only fixed responsibility of the public port is the ownership of the site; Continued public investment will be required, as it is difficult to recover the costs for basic infrastructure in a time period reasonable to the private sector. The best form of tariff regulation is market regulation; the second is through the terms of the contract that identify the non competitive services requiring regulation; and third is the establishment of a regulatory agency outside of the port which will apply a pricing formula related to cost recovery; The private sector should assume all commercial risks, other risks should be negotiated based on which party has the capability to mitigate the risk.

13 My views on government spending can be summarized by the following parable: If you spend your own money on yourself, you are very concerned about how much is spent and how it is spent. If you spend your own money on someone else, you are still very much concerned about how much is spent, but somewhat less concerned about how it is spent. If you spend someone else's money on yourself, you are not too concerned about how much is spent, but you are very concerned about how it is spent. However, if you spend someone else's money on someone else, you are not very concerned about how much is spent, or how it is spent. Milton Friedman, at White House ceremony in his honour, May 9, 2002.

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