PortEconomics co-director Thanos Pallis presented his latest research on Foreign Direct Investments (FDI) in seaports: The case of Nigeria, during the annual conference of the International Association of Maritime Economists - IAME 2012, that was held in Taipei, Taiwan.
Policy reforms and subsequent entry of private port terminal operators in Nigeria ports provides an interesting case study of port policy practices to attract and benefit from foreign direct investment (FDI). FDI in port infrastructure is an attractive policy option for many countries, with concessions of terminals to international terminal operators (ITOs), being the most prominent form of FDI in ports. Yet, the policy challenges associated with introducing private investment should not be underestimated. These challenges include, among others, establishing the necessary legal and institutional framework, restructuring port entities, managing the bidding process, negotiating with ITOs, and providing effective regulation throughout the life of the project. Nigeria's experience is particularly impressive when compared with the challenges faced by other developing countries that have traditionally been slow to involve ITOs.
The study - benefited by research conducted as part of a special UNCTAD Division on Investment and Enterprise report - examines key determinants of success in terms of formulating and implementing port policy framework. It also discusses the ways that industry dynamics and policy context for FDI have also contributed to the positive result. Drawing on this experience, lessons are distilled for other economies that might seek to adopt port policy reforms in the future.
You might read - and freely download - the full study & its presentation @PortEconomics:
- The study: 2012-IAME-FDI in seaports-Pallis
- The presentation: 2012-IAME-FDI in seaports-Pallis-Presentation
The annual conference of the International Association of Marime Economists - IAME 2012, held in Taipei, Taiwan, provided the PortEconomics team the opportunity to present 16 different port or port related studies that progressed over the course of the most resent months - read more & reach the studies: PortEconomics team@IAME2012
During the pre-bidding phase of a terminal awarding procedure, landlord port authorities are sometimes confronted with the decision whether to split an available port site into two or more sections to be concessioned separately. The strategic decision behind is the concessioning of the terminal to the same terminal operator or to different ones. A recent case includes the port of Brisbane in Australia.
The port authority of Valparaiso in Chile is now facing a similar challenge. The port authority of Valparaiso concessioned terminal 1 to a private operator and is considering whether it should concession the second site to the same terminal operator or, alternatively, opt for a competitive bidding procedure to attract another terminal operator, thereby promoting intra-port competition. The port is already facing inter-port competition from neighbouring port San Antonio which handles about the same container volume as port of Valparaiso.
PortEconomics members Vicky Kasselimi, Theo Notteboom, in collaboration with N. Saeed, discuss the issue in the study "Should we concession one large container terminal or two smaller ones?": a game theoretical approach with application to Valparaiso port, that was presented in the recent Asian Logistics Round Table conference which took place at the Sauder Business School of University of British Columbia (UBC) in Vancouver, Canada.
In this study the researchers develop a game theoretical modelin order to shed light on the best option for the port authority of Valparaiso. For this purpose, a non-cooperative two-stage game is developed that models intra-port in and inter-port competition between the port of Valparaiso and San Antonio.
In the first stage, the port authority of Valparaiso decides on the way it is going to subdivide its respective port infrastructure. In the second stage, competition between the terminals of the two ports is modelled as a Bertrand game. The game is solved backwards. The study builds further on earlier work of the authors with respect to the application of game theory to inter-port and intra-port competition by providing a real-life application to Chilean ports.
You might download the paper via PortEconomics: 2012-Should we concession one large or two small terminals?-(Kaselimi-Notteboom-Shaeed)
In many countries around the world, governments and public port authorities have retreated from port operations in the belief that enterprise-based port services and operations would allow for greater flexibility and efficiency in the market (through more competition) and a better response to consumers' demands. In this new environment, the awarding of port terminals to private operators has become common practice. This can takes different forms ranging from management contracts/leases to BOT arrangements, with each type having specific modalities with regard to the spread of investments and of risks. In particular, concession policy has become a powerful governance tool to port managers. Through concession policy, port authorities can retain some control on the organization and structure of the supply side of the port market. The issue of terminal awarding processes has not received a lot of attention in academic circles, while it has become a key issue in port governance.
This special issue adds value to the existing knowledged by deepening and broadening the discussion on the award of terminals to private terminal operators. In particular it contains seven port studies address key issues in terminal awarding processes combining theoretical insights with empirical case studies:
- The ownership and management structure of container terminal concessions, by Sheila Farrell;
- Concession of the Piraeus container terminal: turbulent times and the quest for competitiveness, by Harilaos N. Psaraftis & PortEconomics co-director Thanos Pallis;
- Managing port concessions: evidence from Italy, by PortEconomics associate member Francesco Parola along with Alessio Tei & Claudio Ferrari;
- Awarding of Port PPP contracts: the added value of a competitive dialogue procedure, by Hidde Siemonsma, Wouter Van Nus & Patrick Uyttendaele;
- A new approach to granting terminal concessions: the case of the Rotterdam World Gateway terminal, by PortEconomics co-director Peter W. De Langen, along with Roy Van Den Berg & Aernoud Willeumier
- A new lease charging system for Busan container terminals: a historical case study, by Paul T.-W. Lee & Tsung-Chen Lee; and
- Current practices in European ports on the awarding of seaport terminals to private operators: towards an industry good practice guide, by PortEconomics co-director Theo Notteboom, the PortEconomics associate member Patrick Verhoeven & Martina Fontanet
- The guest editorial Terminal concessions in seaports revisited by Theo Notteboom, Thanos Pallis & Sheila Farrell
These port studies have been completed through discussions in the working group on concessions of the Port Performance Research Network (PPRN), that has put the concession issue on the research agenda of maritime economists.
The special Maritime Policy & Management issue (vol 39, issue 1) is now available online @ Taylor & Francis Online.
Download the authors' version of the guest editorial @ PortEconomics:
Terminal Concessions in Seaports revisited (2012)
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