PPA GM CUSI PRESENTS POTENTIAL

PORT INVESTMENT OPPORTUNITIES

In the Cargo Economics Conference held on 23 October at the Hyatt Regency Manila and attended by various port sectors’ representatives, Philippine Ports Authority (PPA) General Manager Alfonso G. Cusi made a presentation on the potential investment opportunities in port development and port facilities and operations in the Philippines.

With water transport playing a key role in the country’s trade and commerce and the ports being the most economical means of moving people and merchandise in the archipelago, investments in port facilities and infrastructure have become very attractive, the GM stressed. Some of the potential investment opportunities and investment schemes include the build-operate-transfer (BOT), joint venture (JV), facility leasing and cargo handling operations, he added.

Under the BOT, projects included in the government’s Medium-Term Public Investment Program (MTPIP) are given priority for implementation, and “unsolicited proposal” may also be considered. Under the scheme, fiscal incentives are provided in the form of tax holidays, exemption or relief under the Local government Code and government support in the form of cost sharing or credit enhancement. The Manila North Harbor Modernization Project, phase I of which is now nearing completion, was cited as an example,

The JV, the GM explained, is an alternative scheme for a project that has insufficient capital or where the project can be best implemented in partnership with the government. As in BOT, incentives are also provided that include PPA’s putting into of an equity of up to a maximum 49 percent of the project cost and non-intervention in the operation of the joint venture except for policy formulation, among other inducements. Investment opportunities are available in such areas as construction/operation of government piers, wharves, special cargo terminals; warehouses, container yards, container freight stations, special handling equipment; terminal operation and cargo handling services; and, installation/operation of communication facilities, the GM added.

Investors may also avail of the whole-port or partial-port facility leasing investment opportunity. Under the first scheme, a contractor-operator is usually given a long-term lease over the port for its management, development and operation under a privatized setup. The GM cited, as example, the 25-year management contract with the International Container Terminal Services, Inc. (ICTSI) for the management and operation of the Manila International Container Terminal (MICT) by ICTSI. Partial-port facility leasing, on the other hand, is undertaken when a port is not yet ready for privatization, and it usually covers leasing of areas not directly involved in port operations, such as support facility and commercial areas.

Cargo handling operations is also another undertaking where investment could be put into by a private sector operator who has been issued long-term or short-term contract in public ports, the GM added. A typical example cited is the Asian Terminals Inc. (ATI) who is the exclusive operator of the Container, General Stevedoring and Domestic terminals at the south harbor of the Port of Manila.

Investors may also develop, construct and operate privately-owned non-commercial ports to service their own requirements or of private commercial ports that offer port services to the public. With PPA’s liberalized policy, investors would be looking at attractive incentives and benefits that include a fifty percent (50%) reduction in port charges for wharfage, berthing and usage fees, and payment of a one-time annual privilege fee instead of a percentage share of the revenue from cargo handling operations. Registered private ports are also automatically allowed to undertake either on their own or by contract cargo handling operations with complete independence.

The PPA also offers opportunities in the Road Roll-On Roll-Off Terminal System (RRTS) wherein investors may invest as RRTS shipping service providers or terminal operators. PPA offers these opportunities in support of the Strong Republic Nautical Highway (SRNH) flagship project of the government.

In his closing remarks, the PPA General Manager stressed that with the responsibility for future facility development shifted to the private sector, the country’s strategic infrastructure assets will continue to grow and meet market demands. Toward this, private sector investments must continue to be encouraged, the GM concluded.