level playing field & private sector participation in …4 september 2014 bpo conference 11...
TRANSCRIPT
maritime & transport business solutions
Level Playing Field &
Private Sector Participation in ports
BPO Conference - Rønne
Victor van Leengoed 4 September 2014
4 September 2014 BPO Conference 2
MTBS: Maritime & Transport Business Solutions
Leading Port Advisor in EMEA region
Ongoing MTBS Transaction
Successful MTBS Transaction
Completed MTBS Advisory Project
• International Port and maritime Advisory Firm, HQ in Rotterdam, The Netherlands
• Specialised in Port Transactions: Preparation & Implementation
• Global Project Portfolio: EMEA core market
4 September 2014 BPO Conference 3
MTBS: Maritime & Transport Business Solutions
Selection of Closed & Ongoing Transactions
Port of Durban,
South Africa
Transaction Advisor
PPP-scheme Durban
Dig-out port
Concession
Sell Side
Greek Marinas and
Ports, Greece
Transaction Advisor
Privatisation of Greek marinas
and commercial ports
Concessions
Sell Side
4 September 2014 BPO Conference 4
MTBS: Maritime & Transport Business Solutions
From Strategy to Financing
4 September 2014 BPO Conference 5
• Level Playing Field European Port Context:
• Fairness concept: the game must be played by the same
set of rules.
• All Port Costs should be born by port users
Level Playing Field
Ambition or illusion?
4 September 2014 BPO Conference 6
• How relevant are port costs in supply chain?
• Level playing field in hinterland transport?
• Subsidies
• Tolling
• Political projects
Level Playing Field
Port costs in value chain
Sealeg (40%-60%) Handling Rail (20%-40%)
PA Port costs
(2%-5%)
Far
Eas
t Eurpoe
4 September 2014 BPO Conference 7
Level Playing Field
With whom are we competing?
530 Mt*
150
Mt
• Level playing field for European ports?• Or is our industry bigger than just EU?
Recent key shipping
economic developments
Recent key political
developments
390
Mt
4 September 2014 BPO Conference 8
Level Playing Field
SECA - Who will serve what part of Europe?
Main arterial East-West lane
Non-SECA AREA
4 September 2014 BPO Conference 9
Level Playing Field and Private Sector Participation
Multiple terminals in one port – same conditions?
Entrant: Tender
Entrant: Direct
negotiations
Incumbent
4 September 2014 BPO Conference 10
• How to fight tough conditions?
Level Playing Field
Illusion?
4 September 2014 BPO Conference 11
Level Playing Field and Private Sector Participation
Private sector participation strengthens public sector
0
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
3 500 000Containers in Piraeus / TEU
• Piraeus, Greece, Cosco Pacific (Operational)• Since 2007 following privatization: Cosco responsible for quay walls & basin dredging
• They resolved all strikes, Chinese management
4 September 2014 BPO Conference 12
Private Sector Participation
How structure it? Smart compensation structuresFI
NA
NC
IAL
RE
VE
NU
ES
PA
Low
High
CERTAINTY OF REVENUES - PALow
(highly variable)
High
(largely fixed)
Balance sheet
relief
Profit sharing
Revenue sharing
Royalty ($/TEU)
Royalty ($/TEU) plus
volume guarantee
Fixed lease fee
($/m2)
Fixed lease fee plus
financial securities
Fixed lease fee plus financial
securities assigned to
DBFM contractor
Upfront fees
Port management
model
Private
participation Re
gu
lati
on
Infr
a
Su
pe
rstr
uct
ure
Eq
uip
me
nt
Lab
ou
r
Na
uti
cal
serv
ice
s
Public service port Zero Public Public Public Public Public Public
Tool port Very low Public Public Public Public PrivatePublic or
private
Landlord + Public-
private terminalMedium Public Public
Public
Private
JV
Public
Private
JV
Public
Private
JV
Public or
private
Landlord port Medium Public Public Private Private PrivatePublic or
private
Landlord + DBFM High PublicPublic &
Private2)Private Private Private
Public or
private
PDMC Very high Public
Public
Private
JV
Private Private Private Private
Private port MaximumPublic or
privatePrivate Private Private Private Private
4 September 2014 BPO Conference 13
Private Sector Participation
How to structure it?
Smart port management models
4 September 2014 BPO Conference 14
Private Sector Participation
New port management models – From standard landlord …
Private terminal
operator
Private terminal
operator
TO Concession
Agreement
Private terminal
operator
Superstructures &
Equipment
Handling
charges /
Storage feesClient s/
offtakers
Client s/
offtakers
Users:
Shipping linesPublic Port
Authority
Marine
Infrastructure
Port management
Marine services
Port land
Infrastructure
Port Dues
4 September 2014 BPO Conference 15
Private Sector Participation
… to Landlord plus DBFM
Private terminal
operator
Private terminal
operator
TO Concession
Agreement
DBFM
Concession
Agreement
Private terminal
operator
Superstructures &
Equipment
Handling
charges /
Storage feesClient s/
offtakers
Client s/
offtakers
Users:
Shipping linesPublic Port
Authority
Marine
Infrastructure
Port management
Marine services
Port land
Infrastructure
Port Dues
DBFM consortium
(SPC)
Marine
Infrastructure
Marine services
Port land
Infrastructure
4 September 2014 BPO Conference 16
Private Sector Participation
No port Landlord + DBFM example yet, but DBM in Rotterdam
4 September 2014 BPO Conference 17
Private Sector Participation
New port management models – Landlord plus DBFM
Benefits &
disadvantages
Description Realised in
DBM
Life cycle approach Optimise capex vs. Maintenance ����
Integrated
approach
Reduce interfaces����
Accelerated
delivery
”We have succeeded in constructing this phase of
Maasvlakte 2 according to schedule and…. ����
Risk reductionwell inside budget.. (…) approx. €150 million less
expensive than estimated. ����
FlexibilityIn DBFM no flexibility due to disciplinary effect
In DBM relative flexibility due to System engineering ����
Additional
financing costs
Not additional financing costs in DBM
State contribution: EUR 1.25bn ����
(1 400)
(1 200)
(1 000)
(800)
(600)
(400)
(200)
-
15%-20%
Cost savings
(1 400)
(1 200)
(1 000)
(800)
(600)
(400)
(200)
-
What about
financing costs?
4 September 2014 BPO Conference 18
Private Sector Participation
Typical Public Sector Comparator in normal infra DBFM
Port management
model
Private
participation Re
gu
lati
on
Infr
a
Su
pe
rstr
uct
ure
Eq
uip
me
nt
Lab
ou
r
Na
uti
cal
serv
ice
s
Public service port Zero Public Public Public Public Public Public
Tool port Very low Public Public Public Public PrivatePublic or
private
Landlord + Public-
private terminalMedium Public Public
Public
Private
JV
Public
Private
JV
Public
Private
JV
Public or
private
Landlord port Medium Public Public Private Private PrivatePublic or
private
Landlord + DBFM High PublicPublic &
Private2)Private Private Private
Public or
private
PDMC Very high Public
Public
Private
JV
Private Private Private Private
Private port MaximumPublic or
privatePrivate Private Private Private Private
4 September 2014 BPO Conference 19
Private Sector Participation
How to structure it?
Smart port management models
4 September 2014 BPO Conference 20
Private Sector Participation
New port management models
Port Development Management Company (PDMC)
Draft 18m
Capacity 1.2m-3m TEUpa
Quay: 1,050m – 2,000m
Draft 12.5m
Capacity 0.4m TEUpa
Quay: 400m
4 September 2014 BPO Conference 21
Private Sector Participation
New port management models
Capacity development & Volume growth with PDMC
0
100 000
200 000
300 000
400 000
500 000
600 000
700 000
800 000
900 000
2008 2009 2010 2011 2012 2013
TRANSHIPMENT
CAPTIVE/TRANSIT
4 September 2014 BPO Conference 22
Private Sector Participation
PDMC: Government contributed only 23% of in $400m investment
Superstructures &
Equipment
Dolareh Container
Terminal S.A.
Marine
Infrastructure
Port operations, management
and maintenance
(DP World)
Marine services
Port land
Infrastructure
DP World Djibouti
FZCO
$44m
PDSA 2)
$90m
Government of Djibouti
(through DPFZA)
BOTConcession
Islamic Financing
Syndication $160m
DFI Lenders
$103m
MIGA
Loan agreements,
debt contribution
Shareholders
agreements
99% cover1)
1) MIGA provides cover against Currency transfer restriction, expropriation, breach of contract, war and civil disturbance2) PAID is transformed from a public entity into a private company limited by shares and will be renamed as PDSA.
Direct Financing Agreement
Equity
contribution
USD5m cover1)
4 September 2014 BPO Conference 23
Private Sector Participation
Other strategic shareholder entering the structure through direct
negotiations… DPW out? - Competive tender needed
Superstructures &
Equipment
Dolareh Container
Terminal S.A.
Marine
Infrastructure
Port operations, management
and maintenance
(DP World)
Marine services
Port land
Infrastructure
DP World Djibouti
FZCO
PDSA 2)
$90m
Government of Djibouti
(through DPFZA)
BOTConcession
Islamic Financing
Syndication $160m
DFI Lenders
$103m
Loan agreements,
debt contribution
Shareholders
agreements
1) MIGA provides cover against Currency transfer restriction, expropriation, breach of contract, war and civil disturbance2) PAID is transformed from a public entity into a private company limited by shares and will be renamed as PDSA. 3) Shareholders Agreement and Share Purchase Agreement
Direct Financing Agreement
Equity
contribution
SHA &
SPA3)
CMHI
����
����
4 September 2014 BPO Conference 24
Private Sector Participation
How will Pireaus work as PDMC model after tender?
Superstructures &
Equipment
Piraeus Container
Terminal
Marine
Infrastructure
Port land
Infrastructure
COSCO
PIRAEUS
Port Authority
BOT Terminal
Concession
Lenders
Loan agreements,
debt contribution
Equity
contributionTender New Investor
(67%)
Ship repair facility
Future concessions
HELLENIC
REPUBLIC
ATHEX
(26%)
HR FUND
74% → 7%
4 September 2014 BPO Conference 25
• Level playing field is an ambition, but consider:
• Hinterland transport
• New entrant vs. incumbent
• Compensation structure
• Modern Private Sector Participation to strengthen position
• Risk reduction from DBM & system engineering
• Gains from private sector in upcoming PDMC model
• Tailor made deal structure & transaction process
Conclusions
Competitive Port PPP transaction offers best combination of Private
Sector Participation and Level Playing Field
maritime & transport business solutionsmaritime strategy & finance advisors
| +31 10 2865940
| www.mtbs.nl
Wijnhaven 3E
P.O. Box 601
3000 AP Rotterdam
The Netherlands
White House, Rotterdam
t
e
w
4 September 2014 BPO Conference 27
Level Playing Field
Non- EU countries having strong influence on European Ports
Region Impact European Ports impacted
(primary/ non exhaustive)
Maghreb � Transhipment hubs (Tanger) competing on 50% of
transhipment market share in West and central Med
� Maghreb economies direct impact on direct port
demand (e.g. Marseille)
� Algeciras, Gioia Tauro, Cagliari,
Marsaxlokk, Valencia, Barcelona
� Marseille, Valencia, Barcelona
Egypt (&
Libya)
� Suez Canal importance
� Transhipment in East Med
� All
� Piraeus, Limassol, GT, Marsaxlokk
Black Sea
& Turkey
� Transhipment volumes for Russia and Ukraine
through Constantza or Marmara?
� Increasing direct calling to Russia?
� Ukrainian Ports share for Russian cargoes? (bulk and
ferro)
� Turkish privatisation and expansion
� Constantza, Marmara, Piraeus
� Constantza, Marmara, Piraeus
� Odessa, Illichevsk, Yuzhny,
Sebastopol
� All East Med & Black Sea
Baltic � Russian and CIS cargo through Russian Ports (St
Petersburg or Black Sea), or through Baltic States/
Finland
� Transhipment in NW Europe?
� KotkaHamina, Klaipeda, Latvian
and Estonian Ports
� Hamburg, Bremerhaven,
Rotterdam, Antwerp
Arctic � Development of Energy Ports (Sabetta, Teriberka,..)
� North Sea Route impact
� Rotterdam
� All