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Port sector
Michel Audig Lead Port Specialist ECA region The World Bank
Source ADB
Very wide spectrum, from work and service contracts to full privatization
Pros and Cons of PPP schemes In any case, a long up to 18 months -- and complex [two or three steps] process to ensure success, i.e., resulting from long term win-win deals In each case a tailor-made design is required Size matters, i.e., US$100 million minimum per deal
Cons.
Competitive process Increased transparency Well designed risk allocation Balance sheet consideration Private sector efficiencies and innovation Commercial risk sharing
Complexity High transaction costs Higher borrowing costs than public financing Skill deficit for Administration Structuring risks Public perception and political reactions
Increase in flows of containers; Increase in maximum vessel sizes; Growth of ICT and automation; High performance demands; Major international players; and
700 600
million TEU
Year
Public and transparent tendering process; Optimal risks allocation [2 slides]; Standard timeframe for a well designed PPP; and Two-step vs. Three-step approach [3 slides].
Financial Risks Inconvertibility/Transfer Risk to be insured. Issue of Exchange Risk. Other risks borne by Lenders. World Bank Partial Risk Guarantees.
Legal Review
Info.Memo/ Marketing
1.
Pre-qualification: (Previous experience in port facilities financing and operations, Project finance capacity) Technical Selection: (Essentially on the basis of a detailed Business Plan) using Pass or Fail criteria Financial Selection: (on the basis of unified documentation, i.e., draft lease / concession agreement) Simple selection criterion, e.g., fixed annual fee plus royalty (per container movement) of service provided by Concessionaire to the port users
2.
3.
In any case, PPP can only result from economically and financially justified projects
Size does matter [Transaction costs -> minimum project size of US$100 million and more] Private sector interest in port business [see ADB graphic]:
Cargo handling, especially containers; and Marine services (towage, berthing, etc)
Added Value logistic services Port/City interface redevelopment for urban purposes
past experience in Russia and worldwide
St. Petersburg and Ust Luga railway/ferry services with Kaliningrad; Transshipment facilities for oil, grain and containers in the port of Novorossiisk; Vostochnyy/Vladivostok ports and railways access; Plus logistics services and development of inland waterways: Astrakhan water transport node; the Makhachkala port; and Reconstruction of the Kochetov lock on the Don River.
Advisory Services /1
Institutional Building Capacity:
Loans (Investment & Policy, IBRD, IDA) On-lending facilities Co-financing schemes (A/B Loans, IFC) Guarantees (IBRD, IDA, IFC, MIGA) Insurance (MIGA) Equity and related products (IFC)
PPIAF WSP BNPP (Bank & Netherlands Partner) TAF (PIDG) FIAS
Local Currency:
DEVCO (IFC Advisory Services) GPOBA Cities Alliance PIDG (EAIF, Guarantco, Infraco also includes financing products)
/1 Includes
Assess the level of operational performance, tariffs and shippers degree of satisfaction for the service provided
Assess current and future port capacity (in volume and by type of cargo) Intermodalism and value added logistics Evaluate the prospects for promoting PPP schemes.
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Michel Audig Lead Port Specialist ECA region The World Bank