CHAPTER 2:

PORT AND SHIPPING MANAGEMENT

CHAPTER OUTLINE:

2.1 BUILD- OPERATE-TRANSFER (B.O.T)

2.2 BUILT-LEASE-TRANSFER (B.L.T)

2.3 BUILD-OWN-OPERATE-TRANSFER
(B.O.O.T)

2.4 PORT MANAGEMENT OBJECTIVES

2.1 BUILD, OPERATE, TRANSFER
(B.O.T)

 They build infrastructure and facilities of

public importance, then operate (I.E.
Maintain facilities, repair, collect charges, toll,
levy etc.)

 And when the period terminates, return

(transfer) ports/highways/plants/facilities to
owner.
PORT- GIVEN CONCESSION AND
AGREEMENT FOR OPERATION OF i.E., 30
years
 Collect levy (charges)
 Transfer to Ministry of Transport/
Agriculture and Fisheries.

SHIPS- SET UP SHIPPING LINES UNDER

NATIONAL FLAGSHIP i.E., MISC
 Operate for 25 years and became
National lines.
Reality- Nationalized shipping companies
became private lines
 with some percentage of equity belonging
to government agencies, or Government-
Linked Companies (GLCS).
STRUCTURE OF B.O.T PROJECTS (SOURCE: UNIDO,1996)
ADVANTAGES OF B.O.T:

1. Government or owner
(i.E., Agencies, government dept.)
Does not need any capital to build
facilities.
2. Efficient
3. Quick/fast-no red tape (no bureaucracy)
4. Encourage private participation in
nation building.
5. Contract and period of concession.
ADVANTAGES OF B.O.T:

6. Profitable to both parties.

7. You get served you pay
8. Government (agencies) can
concentrate on other things / projects
9. Private borrowings
10. Nothing is free.
DISADVANTAGES OF B.O.T:

1. Consortium does need some capital outlay

to build facilities.
2. May not be efficient
3. May be troublesome
4. Encourage more power of private
sectors in nation building.
5. Contract and period of concession may be
too long.
DISADVANTAGES OF B.O.T:

6. May bankrupt private bodies.

7. The pay (charges or levy) may be costly.
8. Government may intervene.
9. Government may have to buy
back when problems arise.
10. Everything is expensive.

Happen in many countries.

Example of country that use the
B.O.T
 Malaysia
 Japan
 Taiwan
 Croatia
 Philippines
 2.2 BUILD, LEASE, TRANSFER
(B.L.T)
 Definition:

 Financing arrangement in which a developer:-

 Design and build a complete project or facility ( Such as

an airport, power plant, seaport)
 Sells it to the government or joint venture partner.
 Simultaneously leases it back (10-30 years) to operate it
as a business and after the expiry of the lease.
 Transfers it to the government or partner at a previously
agreed upon or market price.
 2.3 BUILD, OWN, OPERATE,
TRANSFER (B.O.O.T)
 Definition:

 Financing arrangement in which a developer:-

 Design and Build a complete project or facility at little or no
cost to the government or a joint venture partner.
 Owns and operates the facility as a business for a specified
period (10-30 years) after which.
 Transfers it to the government or partner at a previously
agreed- upon or market price.
Example of country that use
B.O.O.T

 Canada

 New Zealand
ADVANTAGES OF B.O.O.T:
 The majority of construction and long-term
operating risk can be transferred onto the BOOT
provider.

 BOOT operator gives the scheme certainty and

makes it more believable for water users. In turn
encourages interest in the scheme from an early
stage.

 Construction and service delivery is very high given

that if the performance targets are not met, the
operator stands to lose a portion of capital
expenditure, capital profit, operating expenditure
and operating profit.
 BOOT operators are experienced with management
and operation of infrastructure assets and bring these
skills to the scheme.

 Corporate structuring issues and costs are minimal

within a BOOT model, as project funding, ownership
and operation are the responsibility of the BOOT
operator. These costs will however be built into the
BOOT project pricing.
DISADVANTAGES OF B.O.O.T:
 BOOT is likely to result in a higher cost of water for the
end user. This is a result of the BOOT provider incurring
the risks associated with 100 percent financing of the
scheme and the acceptance of the on-going
maintenance liabilities. The level of premium (if any) to
be paid for a BOOT operator has not yet been
determined.

 Community and particularly water users may have a

negative reaction to private sector involvement in the
scheme, particularly if the private sector is an overseas
owned company.
 The benefits of economic development may not be
realized if the BOOT provider is a sole source entity
as local business are not likely to provide materials
and services to the BOOT provider during the
construction phase.

 Local provider has an ability to compete on an

individual component of a scheme, sharing the
whole project margin within the sole source entity
will make it more difficult for local businesses to
complete.
2.4 PORT MANAGEMENT OBJECTIVES
1. Ways of minimising costs:
• Minimise payments by users in the port
including ships’ time at port
• Minimise users’ total through transport
costs; and
• Minimise port costs

2. Maximisation of benefits:
• They maximise benefits to the owners of the
port; and
• They maximise benefits to town, region or
country