Because of the wide-ranging implications of port reform for the national economy, deciding to embark on the path to reform must be an initiative fully supported at the highest levels of government. Once the principle is agreed upon by the council of ministers or cabinet, an effective way to overcome the traditional difficulties inherent with working across several ministerial departments is to set up an interministerial working group (IWG) under the chairmanship of a high level public official, and give it an explicit mandate. Drafting and getting this mandate approved will be the first step to set the reform process in motion.
Due to its interministerial nature, and to the fact that most of its proposed decisions will have a far-reaching impact across a number of ministerial departments, a logical proposition would be for the IWG to report directly to the head of government, prime minister, or council of ministers.
The IWG will have to define the objectives of port reform and draft a new or revised institutional framework for the sector based on these objectives. Its proposals should be included in a port sector policy paper that should be endorsed by the council of ministers. This policy paper then should be distributed for comments from all of the stakeholders within the port and maritime sectors, such as port cities, port authorities, chambers of commerce, port labor unions, shipping and liner agents, and the like. Based on the sector comments, the policy paper should be adapted and submitted to parliament or the concerned parliamentary commission for approval. In particular, this policy paper will propose a preferred choice for the new port management model to be implemented.
The skills of the people appointed to the IWG will be critical. First, IWG members must represent the various ministerial departments directly interested in port sector activities, including transport, external trade, finance, labor, environment, and possibly agriculture, industry, and more. Second, they must collectively hold the required competence in terms of economic, financial, technical, and social aspects of the port industry both domestically and regionally. Third, they must be seen as independent from any interest group, and the key staff must have a recognized reputation in their field of competence. While the IWG may, and should, consult with all interested stakeholders and representatives of the professional port and maritime community, it must be able to view the reform process from a broader economic perspective, focusing on the overall public interest of the country.
Designing and implementing a port sector reform program involving increased private sector participation in port services requires substantial economic, financial, technical, and legal expertise, and the coordination of this expertise. The process requires detailed work, first refining the institutional option to be implemented, then preparing the legal and regulatory measures required to support it, and finally drafting complex documents, such as the necessary enabling laws (port law, competition law, and more), reform policies and procedures, and model concession agreements. Preparing these documents often involves several iterations, as preliminary versions are distributed to the national professional community and to prospective private partners for comment, and then amended in accordance with those comments and with the government’s policy concerns.
Governments often lack the full range of expertise within the civil service to carry out these tasks. Some countries may have few of the necessary skills available locally and will need international advisers. All governments will need to contract out at least some of these tasks to external advisers. Managing these advisers then becomes a primary task of the IWG.
Various kinds of advisers may be helpful. Economic and regulatory consultants can advise on how the market for port services can be structured and how competition can be promoted, depending on domestic and regional contexts; they can also help devise adequate regulatory and monitoring mechanisms when needed. Legal consultants can help prepare draft legislation and regulations as well as model concession agreements if required. In the event that the government develops a national ports master plan, technical consultants can assess port facilities and help prepare technical specifications and requirements for both general regulatory purposes and specific concession contracts. Environmental consultants can prepare environmental studies, baseline surveys of existing conditions at the outset of the reform process, and environmental impact assessments of specific development options. Finally, investment bankers and financial consultants can help prepare financial projections and cost benefit analyses for the sector as a whole. In the event of specific port development projects, they might also assist in determining the bankability from a private investor’s perspective. For more information on how best to select and hire advisers, see Box 1 on the separate World Bank toolkit for hiring and managing advisors for private participation in infrastructure (PPI).
For the sake of efficiency, it is advisable to give explicit deadlines to the IWG. The time frame for conceptualizing and implementing reform, however, must be realistic. Time requirements obviously will vary country by country, depending on the local economic context and on the physical magnitude of the sector; however, a six-month period is likely to be the minimum time required to establish a sector reform strategy and secure agreement on it from various stakeholders. This phase may extend up to 12 months in more complex institutional and operational environments. Implementing the reform itself—including transforming public port authorities, setting up regulatory bodies as needed, preparing transactions with private partners, and closing contracts—may require between one to two years, assuming no political disruptions occur. Altogether, a two- to three-year time frame from the inception of the reform process to when the new sector organization is up and running would seem a reasonable estimate.
The first element of the IWG workplan should be to consider the strategic situation of the port sector, and to review the operational and economic strengths and weaknesses of the domestic port and maritime industry. Organizing effective communications with the national port and maritime community, as well as with important stakeholders (for example, the importers/exporters association, chambers of commerce, and inland transport carriers), and maintaining this interaction throughout the reform design and implementation process, will be a major responsibility of the IWG. The IWG review should include:
The IWG must then decide on the port sector institutional and management model that would best suit the national conditions and strategic economic objectives. Information included in Modules 2 and 3 on evaluating and selecting the appropriate model may be helpful in this process. Once the main organizational principles of the sector are agreed upon within the IWG, the government must firmly endorse and adopt them so that all parties can be assured that the reform program will be seen through to completion.