With the majority of global trade carried by sea, developing strong, well-functioning maritime transport infrastructure is a key element of economic growth for many developing and emerging countries. Public-private partnerships (PPPs) in ports have become a means to manage port operations more effectively, traditionally an exclusively government function. Different port management structures are used worldwide but in the majority of large and medium sized ports the landlord port model is used. In this model management responsibilities are delegated to the private sector, while the title in the land and assets remains with the government.
What is a "landlord" port?
In the landlord port model, the public sector is responsible for port planning, acts as regulatory body, and owns port-related land and basic infrastructure. The infrastructure is typically leased to the private operating companies or to industries such as refineries, tank terminals, and chemical plants. The private port operators provide and maintain their own superstructure (i.e. terminals) including buildings. They also purchase and install their own equipment on the terminal grounds and are responsible for the terminal operations.
The contractual relationships are explained in the landlord port graphic.
Another type of port PPP is in river navigability and ports. Colombia (below) is one example.
Latin America and the Caribbean
Costa Rica: Concession Agreement for Moin Container Terminal - Concession agreement for the design, planning, financing, building, exploitation and maintenance of the new Puerto Moín Container Terminal in Costa Rica, located within the existing seaport complex of Limon and Moín. The project involves the Government of Costa Rica, APM Terminals Moín S.A. and APM Terminals Central America B.V. and is governed by the Federal Concessions Act of Public Works with Public Services. The link above highlights salient clauses. Civil law jurisdiction (Spanish).
Honduras: Puerto Cortés Container and Cargo Terminal: Contrato de Fideicomiso para la Estructuración, Desarollo y Financiamiento de la Operación de la Terminal Especializada de Contenidores y Carga General de Puerto Cortés
Management Trust Agreement for the Structuring, Development and Financing of the Operation of the Puerto Cortés Container and Cargo Terminal between the Comisión para la Promoción de Alianzas Públicas-Privadas (COALIANZA), Empresa Nacional Portuaria (National Port Company) and Banco Financiera Comercial Hondurena S.A. (FICOHSA BANK) (Spanish).
Honduras: Puerto Cortés Bulk Cargo Terminal - Contrato de Fideicomiso para la Estructuración, Desarollo y Financiamiento de la Operación de la Terminal des Graneles de Puerto Cortés
Management Trust Agreement for the Structuring, Development and Financing of the Operation of the Puerto Cortés Container and Cargo Terminal between the Comisión para la Promoción de Alianzas Públicas-Privadas (COALIANZA), Empresa Nacional Portuaria (National Port Company) and Banco Atlantida S.A. (Spanish).
India: Model Concession Agreement (MCA) for Ports- Model Concession Agreement for Private Sector Projects in Major Ports developed by the Shipping Department of the Government of India with annotations. For key features of a MCA for State Ports see also the Overview of the Framework provided by the Planning Commission of the Government of India.
India, Province of Gujarat Model Port Concession (Draft) - Draft concession agreement between the Gujarat Maritime Board and a private company. The concession agreement was developed in particular for smaller ports. Some areas in the draft might benefit from updating: Issues such as financial leases for equipment and what happens to new structures constructed late into the concession period need to be considered as well as providing for continuing business on termination. For further information on Ports in Gujarat, go to the Gujarat Infrastructure Development Board website. There is also useful information on the website of the Gujarat Maritime Board, including links to the Build-Own-Operate-Transfer (BOOT) law and policy applicable for private sector participation in Gujarat.
Sample Concession Agreement for Port - Sample concession agreement together with definitions schedule, implementation agreement and port services agreement. Drafted for common law jurisdiction but could be adapted to civil law jurisdiction. Relevant where the State wishes to improve port services by introduction of private sector expertise and funding. This is a useful document to form the basis of a port concession agreement, with appropriate adaptation to the specific circumstances.
Sample Concession Agreement for Port - Agreement relating to the concessioning of a port between a port authority and a special purpose company (the Concessionaire). This is a simplified agreement seeking to improve an existing port through private sector involvement. Prepared for civil law jurisdicion and not easily adaptable to a common law jurisdiction.
River Navigability PPPs
- This is a public-private partnership to recover the navigability of Magdalena River under a Design, Build, Finance, Operation and Maintenance contract. The parties to the contract are Cormagdalena (special public entity of the national order) and Navelena S.A.S (single purpose corporation.) Term of the contract is 162 months, or 13.5 years, signed on September 13, 2014. Value of the Contract: Around $45 million dollars. Navelena will receive a periodic and variable remuneration depending on the fulfillment of the established service levels.
- Esta es una alianza público-privada para la recuperación de la navegabilidad del Río Magdalena bajo la modalidad contractual de diseño, construcción, operación y mantenimiento. Las partes del contrato son Cormagdalena (entidad pública especial del orden nacional) y Navelena S.A.S (sociedad de objeto social único). El término del contrato es de 162 meses, o 13.5 años, el cual fue celebrado el 13 de septiembre de 2014. El valor del contrato es de alrededor de los $45 millones de dólares estadounidenses. Navelena recibirá una remuneración periódica y variable dependiendo del cumplimiento de los niveles de servicio establecidos.
Further Reading and Resources
A Framework to Approach Shared Use of Mining-Related Infrastructure by Perrine Toledano, Sophie Thomashausen, Nicolas Maennling, and Alpa Shah, Vale Columbia Center on Sustainable International Investment, Columbia University, 2014. The publication presents an economically, legally and operationally rational framework to enable shared use of mining-related infrastructure, including rail, ports, power, water, and internet and telecommunications (ICT).
La experiencia española en concessiones y APPs: Puertos y Aeropuertos, by Andrés Rebollo Fuente, Programa para el Impulso de Asociaciones Publico-Privadas en Estados Mexicanos (PIAPPEM) and Multilateral Investment Fund (MIF) of the Inter-American Development Bank (IADB), 2009 (Spanish).
Beyond the Bottlenecks: Ports in Africa, Africa Infrastructure Country Diagnostic, Background Paper 8, World Bank 2009.
United Nations Conference on Trade and Development (UNCTAD) Guidelines for Port Authorities and Governments on the privatization of port facilities, UNCTAD, September 1998 - This report looks at different forms of privatization schemes for ports. It contains sample clauses for leases, concessions and Build-Operate-Transfer (BOT) arrangements together with procedures for tendering, and contents of bidding documents, performance measures to establish true financial value of bids as well as operational performance measures.
Port Reform Toolkit: Effective Support for Policymakers and Practitioners - World Bank and Public-Private Infrastructure Advisory Facility (PPIAF), second (2nd edition), 2007: The toolkit aims to provide policy makers and practitioners with effective decision-making support in undertaking sustainable and well-considered reforms of public institutions that provide, direct, and regulate port services in developing countries. Module 4 (Legal Tools for Port Reform) includes sample clauses for port concessions and a short list of the important topics usually treated in a concession agreement and related documents. It also contains information on ports laws and ports regulation. Annex I to Module 4 presents a comprehensive checklist of concession/Build-Operate-Transfer (BOT) agreement provisions. The checklist relates to a concession for the management and operation of an existing terminal and a possible extension.
Developing Best Practices for Promoting Private Sector Investments in Infrastructure - Ports, Asian Development Bank (ADB) 2000 - This volume of a five-volume set reviews the various arrangements used throughout the world to transfer public port activities and assets to the private sector. It examines the trend toward terminal concessions and the transition from operating ports to landlord ports, and considers best practice. Appendix 5 includes useful summaries of six basic contractual relationships that can be used to increase private sector participation in the port sector and the related objectives.