public -private partnership financing
TRANSCRIPT
Report on Caribbean Maritime Port Services Industry
Financing Port Development
Financing Methodologies
Public Private Partnership [PPP] for Development Goals
◦ Definition of PPP
Port Authority of Jamaica’s Experience
◦ Long Term Lease
Falmouth Cruise Terminal
◦ Concession
Kingston Container Terminal
Rational For Concession
The Outcome
Concluding Remarks
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Port Services Industry key sector to economicdevelopment.
Developments in shipping industry – additionalpressure for efficient port sector.
Demands:
◦ Significant capital investment
◦ Improved labour practices
◦ Changes in institutional reporting framework insome countries
Investment in Ports not optional.
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Port Sector - very capital intensive but vital to
economic growth and sustainability.
Investment required substantial.
Concurrently, the revenue flows/ margins are
tight.
Private Sector resources an important source to
tap.
Appropriate financing key to sustained success.
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Port Infrastructure: financed using customary methods ◦ Multilateral funding
◦ Commercial Bank funding
◦ Mix of Multilateral/Commercial Bank
Engagement with the Private Sector [PPP]◦ Can take several forms
Management Contracts
Long term Leases/Concessions
Privatization
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PPP-financing method with additional
benefits
◦ Expertise & Efficiency; lower costs
◦ Secured markets/revenue flows
◦ Risk Sharing
◦ Frees up Government’s resources to support more
basic social needs (education; health; security)
Can be complex, lengthy and sometimes
costly venture.
Select options carefully.
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No universal/legal definition
A public-private partnership (P3) - acontractual arrangement between a publicagency (state or local) and a private sectorentity.
Facilitates the sharing of skills and assets ofeach sector (public and private) in delivery ofa service/facility.
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A long term lease with Royal
Caribbean Cruise Lines (RCCL)
Shared development costs
o PAJ-Pier/Support facilities
o RCCL-Landside
Risks are shared
Common interest in
development asset/location.
Secured market/ revenue
flows
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KCT: INFRASTRUCTUREDraft: 13.0mQuay Length: 1300mYard Space: 43.87haReefer Plugs: 334
Draft: 12.8mQuay Length: 535mYard Space: 21.63haReefer Plugs: 408
Draft: 12.6mQuay Length: 475mPaved Yard Space: 13.53haReefer Plugs:
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High cost to optimize and expand the KCT and dredge
the navigation channel.
Expansion plans by competitors; investment needed to
maintain and grow business.
Other developments in the International Shipping
Industry.
Fiscal Constraints of PAJ and Government of Jamaica.
Improved operational efficiencies at KCT.
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Preparatory
Work
Landlord
Model
2010
Prequalification
Process
2013
Bidding Process
Identification of
Preferred Bidder/
Commence
Negotiation
2014
Conclude
Negotiation/
Sign
Concession
Agreement
2015 - April 7
Securing
Financing for
Phase 1
Development
2015 April 8
to Present
GE – General Election
2011GE
2016GE
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AREA OF EXPERTISE CONSULTANT
Financial Advisor PricewaterhouseCoopers [PwC]
Legal Consultant Dunn Cox [Ja]/ Mayer Brown [US]
Market Assessment Ocean Shipping Consultants
Technical – Port Optimization & Expansion
AECOM
Environmental [EIA] TEMN
Dredging designs Mott MacDonald
Civil Works SMADA Consultant
Guided by Best Practice:
◦ Government’s Public Private Partnership Guideline & Policy Framework & World Bank/PPIAF Template
◦ Internal Experts used extensively
◦ Cabinet Approvals at key stages of the Process
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OBJECTIVES OUTCOME FOR PAJ OUTCOME FORCONCESSIONAIRE
GTO to operate a
Concessionaire to undertake Capital Dredging
a
Global Transhipment Hub/Multi User Port
a a
Expansion based on Market events – Panama Canal
a a
Contractualize net flows fromKCT with uplift potential
a
Acceptable Return on Equity a
Central Location in Region to consolidate and expand business
a
Well established business with good cash flows
a
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Maritime Port Services Industry – key to sustainedeconomic development.
Very capital intensive and very competitive.
Engagement with Private Sector an efficient way ofachieving development.
Such engagement should be tailored to meet thespecific objectives to be achieved.
A Long Term Concession one way of Private Sectorengagement with mutual benefits.
However, usually a lengthy and expensive process.
Choose particular PPP engagement carefully
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