It is not possible to cite universal principles for risk sharing in view of the widely varying characteristics and environments of port projects, but one important area to consider is the public service obligation. The public service dimension of port operations, which the public authority assigns to each port activity, is a core element in the process of defining and sharing risk. However, the notion of public service is by no means universal. While some principles are constant, the definition of public service varies from one country to another, and does not remain constant over time even within a given country.
This variation, consequently, is a major consideration in the preliminary debate on the introduction of private management in ports. The delineation of public services is all the more delicate as the initial situation is frequently one of a stagnant public sector, often with limited capacity for clearly identifying the responsibilities that fall within the public service domain. For example, the activity of a port terminal operator cannot be qualified as a public service in all cases, and is more akin to a purely commercial activity in many instances. At the same time, the activity of the port terminal operator cannot be fully classified as to that of a commercial company, as the notion of partnership with the port authority is still present, although the levels of regulation and guarantees may be considerably reduced.
In a case where the public authority assigns this public service dimension to the activity, it is legitimate for the authority to retain careful oversight of the activity, while being free to delegate its actual implementation. The public authority might regulate the activity of the implementing entity to a greater or lesser degree, while the delegatee must reconcile the right of fair competition with the proper protection of the interests of users (or customers). This has complex implications for risk sharing, for which the procedures must be very carefully adjusted to achieve a fair balance, one that respects the objectives and constraints of the parties involved.
The main objective of this part of this module has been to describe various approaches for identifying risks involved in port reform projects and to suggest ways that these risks might be shared equitably among the interested parties. Part B of this module will introduce analytical tools and risk measurement options available for port authorities contemplating port reform.