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© Copyright 2015 by K&L Gates. All rights reserved.
Michael J Neylan
Partner
The Impact of Port Privatisation:
Challenges and opportunities
Africa Australia Infrastructure Conference, 17 November 2015 - Melbourne
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PRESENTATION HEADINGS
1. Introduction and nature of ports
2. Different port operating models
3. Port privatisation models
4. Africa: Opportunities and challenges
5. Africa: Major private sector port players
6. Conspectus of African port privatisation experience
7. Future of African port privatisation
Acknowledgements
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1. INTRODUCTION AND NATURE OF
PORTS
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Economic geography
of African ports
Ports as:
Local monopolies
Regulated public
utilities
Strategic land and
asset owners
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Port competition paradigms
Inter-port competition
Contestable hinterlands
Intra-port competition (Australian experience)
Combination of functions
Regulator
Landlord
Trade facilitator
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2. DIFFERENT PORT OPERATING
MODELS
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Service Port Model
All infrastructure /
superstructure
owned by Port
Authority (PA)
All services
provided by PA
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Tool Port Model
PA owns
infrastructure /
superstructure
PA contracts out
services delivery
Landlord Port Model
PA owns
infrastructure
Private sector
operator holds
concession and
provides
superstructure and
services
Operating risks
contracted away
AFRICA AUSTRALIA PRIVATISATION
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3. PORT PRIVATISATION MODELS
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• Uncommon
• Port state control issues
• Intrinsic value of port precinct land
• Creation of private monopoly
Outright sale
• Separation of powers
• PA is port owner and leases terminal(s) to lessee/concession holder
• Reversion
• PA continues to perform core regulatory and port state functions
• Private sector operator responsible for all terminal operations (Greenfields / Brownfields)
Landlord
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RATIONALE OF PORT PRIVATISATION
Facilitate trade
Improve port efficiency
Reduce costs for users [query]
Reduce level of public investment
Technology and know how transfer
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PORT PRIVATISATION SPECTRUM*
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Public Sector Operation
Management Contract
Lease
Full Concession: BOT/BOOT Scheme
BOO Scheme
Sale to Private Sector* Sudi Mwasinago (2006)
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4. AFRICA: OPPORTUNITIES AND
CHALLENGES
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Opportunities
High growth economies
Emerging and highly
educated middle class
Resource rich continent
Africa as a BRIC
Strategic geopolitical
location
Challenges
Low concentration of
ports
Scale and number of
ports is low
Lack of physical
infrastructure
Political instability
Low levels of domestic
capital formation
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5. AFRICA: MAJOR PRIVATE SECTOR
PORT PLAYERS
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MAJOR PRIVATE SECTOR PORT PLAYERS
Bolloré (French)
14 concessions
West and North Africa concentration
DP World (UAE)
Senegal clockwise to Mozambique
Signature concessions: Port du Futur, Sokhna, Maputo
APM Terminals (Danish)
9 concessions
West Africa concentration
Signature concessions: Apapa (Lagos), Abidjan and Monrovia
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6. CONSPECTUS OF AFRICAN PORT
PRIVATISATION EXPERIENCE
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MOZAMBIQUE
Port of Maputo
2003: 15 year concession awarded to MPDC (Mersey
Docks)
Full privatisation of role of PA
Competition with Durban / SA play
2010: concession extended and DP World led
consortium takes control
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KENYA
Port of Mombasa
Troubled history: intent vs execution
Tensions with DWU
Second container terminal project: JICA terms
Role of KPA and privatisation agenda
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NIGERIA
Ports of Lagos and Port Harcourt
2005: 25 year concession for Apapa Container
Terminal granted to APM Terminals
2006: Full roll out of 20 long term port concessions
completed
Inter-port competition
2014: New multipurpose terminal at Apapa
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SOUTH AFRICA
Ports of Durban, Richards Bay, etc. (8)
Contrarian view on port privatisation
Ports owned/operated by Transnet – public asset
conglomerate
Separate regulator (TNPA)
Primacy of social goals: full employment, universal service
obligation and public ownership of strategic assets
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7. FUTURE OF AFRICAN PORT
PRIVATISATION
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Long game
Catalyst and evolution
Political risk and priorities
Development of domestic capital markets
Rise of private ports
But PSA as world benchmark!
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ACKNOWLEDGEMENTS
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1. Sudi Amani Mwasinago “An analysis of the trend in concessions and
privatisation in ports: the case of Kenya and
Tanzania”
WMU Dissertation 2006
2. Auriel Edna Newman “Privatisation of Ports”
University of South Africa Dissertation 2013
3. Sheila Farrell “Attracting Private Finance into African Ports” in
Port Infrastructure Finance edited by Meersman,
Van de Voorde and Vanelslander 2014
4. Ashurst Lawyers “Africa: a new port of call for international
operators”
Client Alert 2014
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