Port Terminal Concession
Model: Management Contract
The shipping lines calling at the port of Banjul and their terminal operating divisions have, at various times, expressed interest in operating the container terminal through a concession agreement. This would allow them to invest directly in the upgrading of the handling equipment (presently a responsibility of the Gambia Ports Authority) and increase the productivity of the terminal. This arrangement would convert the port of Banjul into a landlord port, a model that has proven its effectiveness and efficiency elsewhere in the world. The Gambia Ports Authority has at this point no concrete intention to grant a concession for the operation of the container terminal. This is why not yet having reached the inception stage. Consequently, the next step is to verify the willingness of the public sector (in particular GPA) to consider a PPP for the operation of the container terminal and, if the answer is affirmative, to formally notify the project as a PPP.
In 2011 (the most recent year for which statistics are available) the port of Banjul handled about 1.7 million tonnes of cargo, of which about 2/3 in the form of containers (72,000 TEU).The import of petroleum products is not included in this volume, since it does not fall within the scope of the Gambia Ports Authority (GPA). The port of Banjul is reputed to be an efficient port, which is why it has attracted a significant transit function for the nearby region. The terminal handling charges are at the low end of the region, and quay productivity is relatively high. The port scores especially high on the speed of custom clearance owing to the close cooperation between the port and customs. However, these advantages are offset by a disadvantage in available freight rates between Europe and West Africa. The Banjul rate, factoring in the limited maritime access and the small volumes, is invariably higher. Present operational model of the port of Banjul can be halfway between a tool port and a service port.
GPA is engaged in three types of port activities:
- it provides the basic infrastructure and manages the port land;
- it makes cargo handling equipment (cranes, forklift trucks,...) available to private stevedoring firms;
- it carries out stevedoring services, in competition with private firms.
The landlord port model is generally regarded as the most efficient model for the organization of port operations, combining high productivity with a balance between public and private interests. In the landlord port model the port authority is the landowner and responsible for the provision of general port infrastructure and the management of the port area. All terminal operations (including supply of handling equipment) are delegated to private operators through concession agreements. While generally characterized by a good performance the landlord port model is not a necessary condition for well-managed and productive port operations. As pointed out above the efficiency of the port of Banjul is already relatively high. However, further efficiency gains are needed to preserve the competitive edge of the port of Banjul and to increase its throughput capacity. To achieve these gains substantial investments must be made in the rehabilitation of the port and in the upgrading of the handling equipment. The present operational model of the port slows down the needed investments, because they depend on the limited financing capacity of the GPA. To overcome this bottleneck GPA has approached the shipping lines several times in the last few years for the financing of port investments.
A more structural solution would be to give the container terminal in concession to one or more private operators. This would entail the conversion of GPA to a landlord port. The use of operating concessions would mobilize private financial resources for the rehabilitation of the port and the upgrading of the handling equipment and yield additional efficiency gains (for instance a better coordination between handling equipment and stevedoring labour). The government, through GPA, would still be the owner of the port and retain control through the terms of the concession agreements.
Private sector stakeholders (shipping lines calling at the port of Banjul and their terminal operating divisions) has submitted several proposals to the government of the Gambia to this effect. To date the government has not formally reacted to these proposals.
If the government decides to consider a giving the container terminal in concession to one or more private operators, the next steps are:
- formal notification of the project as a candidate PPP project;
- undertaking of a feasibility study to define the heads of terms of the concession agreement (scope, service specifications, tariff structure,…) and to assess the commercial and financial viability of the concession.