Volkswagen Transport NAR

1
IAME 2006 MELBOURNE
Port system models and challenges in port
concessions the case of El Salvador
SPECIAL SESSION MARITIME TRANSPORT AND PORT
DEVELOPMENT IN LATIN AMERICA AND THE CARIBBEAN
ISSUES AND PROSPECTS
2
Location of Ports in El Salvador
3
Facilities
Port of Acajutla
Pier B (2 Berth) Length 360 m Width 28
m Depth 12 m
Pier C Length 280 m Width 19 m Depth
14 m
Pier A Length 313 m Width 37
m Depth 10 m
4
First Development Phase
1 CONTAINER TERMINAL Length 340 m Typical Ship
Length 295 m Area 15.565 hectares Depth 14 m.
5

• ACCESS CHANNEL
• INTERIOR CHANNEL
• Length 5.00 Km
• Depth 14.00 m
• Width 140 m
• EXTERIOR CHANNEL
• Length 17.00 Km
• Depth 14.50 m
• Width 140 m
• NAVIGATION AIDS
• 16 Signaling Buoys
• Lighted
• Radio Aids
• GPS
• 1 NAVIGATION LIGHT
• Visibility 15 Nautical Miles

PUERTO DE LA UNION
ISLA ZACATILLO
PUNTA CHIQUIRIN
ISLA CONCHAGUITA
ISLA MEANGUERA
6
DECREE 1014BASIC CONDITIONS FOR THE CONCESSION
OF THE PORT OF ACAJUTLA
M A S T E R C O N C E S S I O N

• Use, maintenance, preservation and development of
  
• port infrastructure, superstructure and
  extra-port areas
• Private operator will be obliged to offer all
  services
• to vessels and cargo

GOAL
REQUISITES FOR BIDDING

• Proof of financial soundness net worth gt US
  20 million
• Minimum experience of 5 years as port operator of
  
• terminals with a minimum traffic of 2.5 million
  tm
• (If the bidder is a consortium, the leader has
  to be the port
• operator, with no less than 51 participation in
  the bid)

PERIOD

• 25 years
• Potential 10-year extension after evaluation

TARIFFS AND OPERATIONAL STANDARDS

• Reduction of present tariffs by at least 25
• Operational efficiency equal or higher than the
  current
• average efficiency

• Variable charge minimum 14 of turnover to CEPA
• and 6 payable to AMP
• Initial down-payment US 12 million.

DOWN-PAYMENT

• Minimum required investment US 18 million, of
  which
• 10.8 million during the first 3 years
• 7.2 million during the first 10 years
• Additionally, the private operator will need to
  invest in
• the necessary equipment

INVESTMENT
7
Why should Decree 1014 not be applied?

• The current situation in 2006 differs
  considerably from 2002

Labour reform in 2001 the Port of Acajutla is
nowadays competitive and profitable

• Outdated financial analysis
• Only one type of concession is allowed master
  concession
• Concessions goal complete privatisation
• Variable charge that the private operator would
  have to pay to the port authority CEPA (14 of
  turnover) has not been sustained on a valid
  simulation of the operators expected internal
  rate of return of the project
• Idem applies to the variable charge payable to
  the maritime port authority AMP (6 of vessel
  tariffs and cargo handling fees)
• Investment plan not justified
• Vessel and cargo tariffs reduction already took
  place in 2002

Evolution from a public monopoly to a private
monopoly
8
Key aspects to take into account in the
concessioning process
The public sector should design an appropriate
strategic plan for the future of the port system,
the concessioning process being only a consequent
section of such a plan
Infrastructure projects should be approved based
on a cost-benefit analysis prior to their
construction
Various regional initiatives should be fostered
as part of the plan for development of a
port-logistics system
The concession scheme finally selected should
satisfy market needs whilst fitting the goals of
El Salvadors port strategic plan
9
Key tasks to carry out as part of the
concessioning process
Obtaining detailed information about the port and
maritime industry at a regional and international
level
Maintaining preliminary contacts with port
operators and shipping lines in order to ask them
about their interest in the concession bid
Defining the profile of the optimal
concessionaire / operator
Analysing and deciding on the segmentation of
port services
Defining the role to be played by each port
inter-competition vs. intra-competition
Designing institutional coordination and roles
10
THANKS FOR YOUR ATTENTION!
11
(No Transcript)
12
Location of Ports in El Salvador
13
Facilities
Port of Acajutla
Pier B (2 Berth) Length 360 m Width 28
m Depth 12 m
Pier C Length 280 m Width 19 m Depth
14 m
Pier A Length 313 m Width 37
m Depth 10 m
14
LAND FACILITIES
PRESENT RECREATIONAL AREA 40,000 m2
CEPAS RESERVED AREAS 43,000 m2
VEHICLES YARD 36,000 m2 1,100 UNITS
ADMINISTRATIVE AREA
CONTAINERS YARD 50,000 m2 2315 TEUS
WAREHOUSE AREA 30,000 m2
PIERS AREA
BULK CARGO AREA SOLID 30,000 MT 49,000 MT
15
Equipment
Equipment
Bulk Handling Crane 25 Metric Tons Capacity
450 Metric Tons per Hour
Conveyor Belt System 450 Metric Tons per Hour
17 Bulk Handling Clam-Shells
16
Equipment
4 tugboats
4 Straddle Carriers 30 Tons 1 Front Loader 42 Tons
17
Cargo
Evolution of traffic by category Port of
Acajutla
18
Evolution of vessel calls and container traffic
4.48
23.06
10.89
19
Evolution of efficiency rates and length of
vessel calls
41.60
136.10
56.73
20
(No Transcript)
21
2,000 TEUS
4,800 TEUS
22
First Development Phase
1 CONTAINER TERMINAL Length 340 m Typical Ship
Length 295 m Area 15.565 hectares Depth 14 m.
23

• ACCESS CHANNEL
• INTERIOR CHANNEL
• Length 5.00 Km
• Depth 14.00 m
• Width 140 m
• EXTERIOR CHANNEL
• Length 17.00 Km
• Depth 14.50 m
• Width 140 m
• NAVIGATION AIDS
• 16 Signaling Buoys
• Lighted
• Radio Aids
• GPS
• 1 NAVIGATION LIGHT
• Visibility 15 Nautical Miles

PUERTO DE LA UNION
ISLA ZACATILLO
PUNTA CHIQUIRIN
ISLA CONCHAGUITA
ISLA MEANGUERA
24
Why should the ports be concessioned?

• El Salvador needs to promote and attract private
  investment to strategic segments such as port
  construction and operations in order to

Modernise existing infrastructure, superstructure
and equipment
Provide services according to international
quality and efficiency standards
Provide services at competitive costs, decreasing
the transport costs that Salvadorean imports and
exports have to pay
Improve connectivity, indirectly decreasing
existing barriers to trade and giving improved
access to external markets to Salvadorean
production
25
DECREE 1014BASIC CONDITIONS FOR THE CONCESSION
OF THE PORT OF ACAJUTLA
M A S T E R C O N C E S S I O N

• Use, maintenance, preservation and development of
  
• port infrastructure, superstructure and
  extra-port areas
• Private operator will be obliged to offer all
  services
• to vessels and cargo

GOAL
REQUISITES FOR BIDDING

• Proof of financial soundness net worth gt US
  20 million
• Minimum experience of 5 years as port operator of
  
• terminals with a minimum traffic of 2.5 million
  tm
• (If the bidder is a consortium, the leader has
  to be the port
• operator, with no less than 51 participation in
  the bid)

PERIOD

• 25 years
• Potential 10-year extension after evaluation

TARIFFS AND OPERATIONAL STANDARDS

• Reduction of present tariffs by at least 25
• Operational efficiency equal or higher than the
  current
• average efficiency

• Variable charge minimum 14 of turnover
• Initial down-payment US 12 millions.

DOWN-PAYMENT

• Minimum required investment US 18 million, of
  which
• 10.8 million during the first 3 years
• 7.2 million during the first 10 years
• Additionally, the private operator will need to
  invest in
• the necessary equipment

INVESTMENT
26
Why should Decreet 1014 not be applied?

• The current situation in 2006 differs
  considerably from 2001

The Port of Acajutla is nowadays competitive and
profitable

• Outdated financial analysis
• Only one type of concession is allowed master
  concession
• Concessions goal complete privatisation
• Variable charge that the private operator would
  have to pay to the port authority CEPA (14 of
  turnover) has not been sustained on a valid
  simulation of the operators expected internal
  rate of return of the project
• Idem applies to the variable charge payable to
  the maritime port authority AMP (6 of vessel
  tariffs and cargo handling fees)
• Investment plan not justified
• Vessel and cargo tariffs reduction already took
  place in 2002

Evolution from a public monopoly to a private
monopoly
27
Key aspects to take into account in the
concessioning process
The public sector should design an appropriate
strategic plan for the future of the port system,
the concessioning process being only a consequent
section of such a plan
Various regional initiatives should be fostered
as part of the plan for development of a
port-logistics system. Infrastructure projects
should be approved based on a cost-benefit
analysis prior to their construction
The concession scheme finally selected should
satisfy market needs whilst fitting the goals of
El Salvadors port strategic plan
28
Key tasks to carry out as part of the
concessioning process
Obtaining detailed information about the port and
maritime industry at a regional and international
level
Maintaining preliminary contacts with port
operators and shipping lines in order to ask them
about their interest in the concession bid
Defining the profile of the optimal
concessionaire / operator
Analysing and deciding on the segmentation of
port services
Defining the role to be played by each port
inter-competition vs. intra-competition
Designing institutional coordination and roles
29

• Motivation for private investments

Goals aimed at by increasing private
participation in the Top 100 container terminals
around the world
Decreasing costs Increasing efficiency Trade
expansion Reducing the need for public
funds Transfer of know-how Others
Source Baird, A. J. (2002)
30

• Types of private participation

Type of private investment in the top 100
container terminals around the world
Concession / leasing BOT Joint venture Land
sale Management contract Others
Source Baird, A. J. (2002)
31

• Financial evaluation of concessions

Port infrastructure, superstructure and access
Port infrastructure, superstructure

Buildings Cranes Yard eq.
Cranes Yard eq.
Yard eq.
Note results published in 1998 are in brackets
Source Drewry Shipping Consultants (2002)