Developing a Framework for Privatization of the Ports in Suriname

Transcription

Developing a Framework for Privatization of the Ports in Suriname:
Focus on PPP options
Thesis Master of Business Administration 2009 – 2011
(MBA Intake 6)
DAVID MENDEZ
PARAMARIBO, December 2011
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Acknowledgement
This thesis is the result of (the completion of) my Business Administration study at the FHR Lim
A Po Institute. It has been very hectic and not easy to gather data for this research. Some of the
data was based on ground breaking work, while other existed, but not in a form that was suitable
for my thesis. This is the reason why I had to analyze, translate and even shape the data that is
presented in this thesis. To study and work fulltime has taught me time management and how to
use time to its full potential. It has also put an enormous pressure on my social life. For this
reason I first want to thank my mother, wife and kids, family and friends whom have supported
me during these past eighteen months. I have not always had the time I would have liked to spent
with them, but I will make it up soon.
Next, I would like to thank Stephen D‟Alessandro who has been my supervisor for this thesis. He
has helped me structure my thoughts, especially during the process of writing the first proposal.
Stephen has been to Suriname and also knows much about the country. This has led to
interesting discussions about Suriname which I have enjoyed very much. Our discussions about
reality and believes were very inspiring.
My special thanks go out to Mr. R. Vijzelman who was one of the most valuable interviewees
to take part in my research. Without his help, my work would have been incomplete.
Furthermore I thank all other interviewees for taking part in this research, and I hope that
the information I have gathered can be used by them in order to improve their scope on their
business.
Last but not least I would like to thank the institute and especially Mr. Hans Lim A Po for giving
me the opportunity to study and for his dedicated support over the past two years to ensure a
successful ending. Without this support I would never have come this far.
David Mendez, December 2012
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Abbreviations
ABS General Bureau of Statistics
MAS Maritime Authority of Suriname
IPS Integra Port Services
SPS Suriname Ports Services
BOO Build-Own-Operate-.
DBO Design-Build-OperateDBFO Design-Build-Finance-OperateDBB Design-Bid-Build-.
DB Design-BuildBOT Build Operate Transfer
IMF International Monetary Fund
DP World Dubai Ports World
PPP Public Private Partnership
HBS Port Management Company (Havenbeheer Suriname)
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Table of Contents
Acknowledgement ........................................................................................................................................ 2
Abbreviations ................................................................................................................................................ 3
Abstract ......................................................................................................................................................... 6
Chapter 1: Introduction ................................................................................................................................. 7
1.1 An Overview ....................................................................................................................................... 7
1.2 Problem Definition.............................................................................................................................. 7
1.3 Research Objective ............................................................................................................................. 8
1.4 Theoretical Framework Assumptions ................................................................................................. 8
1.5 Research Questions ............................................................................................................................. 9
1.5.1 Major Research Questions ........................................................................................................... 9
1.5.2 Minor Research Questions ........................................................................................................... 9
1.6 Research Methodology ..................................................................................................................... 10
1.7 Limitations ........................................................................................................................................ 10
1.7.1 Budgetary Constraints ................................................................................................................ 10
1.7.2 Time Constraints ........................................................................................................................ 11
1.7.3 Data Reliability .......................................................................................................................... 11
Chapter 2: Literature Review ...................................................................................................................... 13
2.1 Introduction and Background............................................................................................................ 13
2.1.1 Concessions Model .................................................................................................................... 15
2.1.2 Build-Operate-Transfer, Turnkey and Related Arrangements ................................................... 16
2.1.3 Service Contract ......................................................................................................................... 17
2.1.4 Management Contract ................................................................................................................ 18
2.1.5 Lease or Affermage Contracts ................................................................................................... 19
2.1.6 Government objectives for the PPP process .............................................................................. 20
2.1.7 Prerequisites to implementing a particular form of PPP ............................................................ 20
2.2 The Ports Sector and Suriname ......................................................................................................... 21
2.3 The Development of the Suriname Ports .......................................................................................... 27
2.3.1 Modern Management Theory and Practices .............................................................................. 29
2.4 Overview on Privatization ................................................................................................................ 30
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2.4.1 Public-Private Partnership.......................................................................................................... 31
2.4.2 Examples of Best Practices ........................................................................................................ 32
Chapter 3: Methodology ............................................................................................................................. 48
3.1 Introduction ....................................................................................................................................... 48
3.1.1 Main tasks of NV Havenbeheer ................................................................................................. 48
3.1.2 Service of NV Havenbeheer ...................................................................................................... 49
3.1.3 Function of private port service companies ............................................................................... 49
3.2 Application........................................................................................................................................ 52
3.2.1 The landlord model .................................................................................................................... 52
3.3 Research Strategy.............................................................................................................................. 54
3.4 Research Methodology ..................................................................................................................... 55
3.5 Data ................................................................................................................................................... 56
3.5.1 Questionnaire Design ................................................................................................................. 58
3.5.2 Respondents ............................................................................................................................... 60
Chapter 4: Developing A Framework For Privatization of The Ports In Suriname .................................... 61
4.1 Relevant Privatization models .......................................................................................................... 61
4.2 Findings............................................................................................................................................. 62
Chapter 5: Conclusion and Recommendation ............................................................................................. 68
References ................................................................................................................................................... 71
Appendices.................................................................................................................................................. 74
Appendix 1 .............................................................................................................................................. 74
Appendix 2 .............................................................................................................................................. 85
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Abstract
Port management is not something new to the world, and also not to Suriname. For decades now,
Suriname has been part of a strategic route with a flourishing import and export possibility for
investors. With the increase of industry in Suriname, also comes an increase of transport by sea,
since in many cases this proves to be more economically sound than transport by air. In this
regard it has become important to develop a correct strategy of port management that will bring
in more profits to the economy of Suriname and at the same time create a sustainable path of
activities for ports of Suriname. The success of the privatization process is solely dependent on
the relationship that has been forged between two stakeholders, the public and the private sector.
The port of Suriname uses the landlord model. In this research I will argue that another
framework within the public-private-partnership (PPP) can also provide benefits for Suriname.
The practical development of port management is an important aspect of current development of
our major controlled ports. This means that the development of any port strategy, if there is any,
should bear in mind the land mass and general access that Suriname has to the Caribbean in the
North, Guyana in the West, French Guyana in the East and even Brazil in the South. Since these
are the countries surrounding Suriname, no port development program should merely look at the
development of a port in Paramaribo, the capital, alone nor regard this as the only route of goods
transports to and from Suriname.
The focus of this research, however, is not to develop a framework for monopolism of transport,
but to emphasize the use of the private capital influx to Suriname. This development has close
links with the current development of port infrastructure and brings in the new era of port
authority and port management for Suriname. A BOT model makes provisions of port incentives
for most port operators who allow innovation. The successes from this form of model seem to be
numerous. The model usually attracts the private sector in financing, developing and renovating
the infrastructure at the port. The commercial risks that are affiliated to the private company tend
to be reduced as compared to the landlord model. The BOT model gives the government
opportunities and also enables the aspect of additional revenue and development.
My contribution to this line of development is merely to establish a basic framework.
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Chapter 1: Introduction
1.1 An Overview
Privatization involves transferring the ownership of an enterprise, business, public service or an
agency from the public to the private sector (Filipovic, 2005). The process engages the transfer
of any function of the government to private sectors including law enforcement and revenue
collection. Various developed and developing countries apply the process of privatization to
improve their economic performances according to Parker and Kirkpatrick (Parker &
Kirkpatrick, 2005). The authors also noted that both developed and developing nations have been
promoting this process back from the 1980s. Although the latest reviews indicate that the
impacts of privatization have been positive so far, consideration for the variances between its
effects in both developed and developing economies has been minimal. My study therefore will
focus on assessing the privatization of the Suriname Ports. In essence, the report will entail the
requirements needed for each stakeholder (i.e. private and government) to facilitate this
partnership process. The report will furthermore develop a framework that will guide the
government in prioritizing the most suitable Public Private Partnership (PPP) option based on its
objectives and goals. Through this structure, the government will assess the advantages and
disadvantages of each Public Private Partnership (PPP) option, consequently choosing that
option that fits best to their objectives and goals accordingly.
1.2 Problem Definition
Privatization can be broadly applied as a strategy for improving the economic performance in
developed and less developed countries (LDC‟s). The most suitable policies applicable to
facilitate this process remain controversial particularly in the LDC‟s with the promotion of
economic performance of such regions. The success of any privatization process in Surinamese
ports will depend on the government choosing the best policy or strategy of PPP to enhance
competition plus effective state control as suggested by Hardcastle and his colleagues
(Hardcastle et al, 2003, p.23). This does not only suggest that both strategy and policy need to be
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in sink, but also that the failure of a chosen strategy for PPP can be the result of inadequate or
insufficient policies. In their studies they have elaborated the relation between PPP and policy;
hence it has become imperative for the government of Suriname to choose right.
1.3 Research Objective
The objective of this research is to develop a basic framework under which the Suriname
government can identify the most appropriate public-private partnership (PPP) option to satisfy
the needs of port management in Suriname. This framework should be further developed through
more in-depth research and analysis in the future. This framework is thus the initialization of
such a process and helps establish the scope of issues, considerations and current trends in the
development of port management for Suriname.
This research was done by initially establishing the requirements from each stakeholder from the
private and public domain and then a structure was developed to guide the government in setting
and prioritizing the goals and objectives of the PPP options proposed. Schaeffer and Loveridge
would agree that this approach is an essential requirement to determine the best PPP system
applicable to every respective geographical contingency of port management (Schaeffer &
Loveridge, 2002, p.169).
1.4 Theoretical Framework Assumptions
Since port developments are part and parcel of the economic development in Suriname the
research provides a snapshot of the development of port management in Suriname. As such it
has become imperative to indicate the factors and conditions that should be considered while
following the arguments proposed in this thesis. This research was based on the following
assumptions.

That the government has a long term vision and approach for privatization of national
assets.

That the perspective in development of these port management assets is to generate profit
and re-invest in maintenance and upgrade of port infrastructure.
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
That political parties can agree on the long term approach to the privatization of national
port management assets.

PPP is perceived as the most strategic option that is accepted and promoted by all key
stakeholders.

That all other factors are kept constant so that the selected PPP option will meet the setout objectives and goals

That the study participants provide relevant, unbiased, accurate information.
1.5 Research Questions
In identifying the suitable PPP framework to facilitate the privatization of the Suriname ports,
the regional government should have access to the diversity of options available to facilitate
strategic public-private partnership. Policy makers must also know and understand the required
policies and controls in establishing the agreement between private and government agencies.
The following research questions therefore were applied in providing a comprehensive
understanding of this research work and the issues involved:
1.5.1 Major Research Questions

What are the short, medium and long-term requirements from each of the partnership
stakeholders (i.e. private and government)?

What are the public-private partnership options available?

What are the advantages and disadvantages from each PPP option?
1.5.2 Minor Research Questions

How do the Suriname ports operate and how will this PP partnership benefit the
stakeholders?

What are the success factors for this PP partnership process?

Are there factors/issues that can constrain this public-private partnership process in
Suriname?
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1.6 Research Methodology
Comprehensive and adequate information was required in seeking the solution to the problem of
this research. This research has therefore applied qualitative research methods to facilitate the
information needed. Diverse data collection methods were applied in gathering data to generate
both international and local information concerning PPP. Data was generated from primary and
secondary sources. Surveys were used in order to collect the primary data, with interviews and
questionnaires as the major data collection tools. Secondary data was generated from library and
internet: materials included books, articles and academic journals, among others. Research
experts were solicited to apply such mixed data collection techniques to derive crucial and
sufficient information. Hence the tools and methodology used were based on scientific
investigation of the subject matter. Thus the approach for this research was also used as a tool to
establish a fresh perspective on port authority in Suriname.
1.7 Limitations
Just like all other studies, this research was liable to a number of constraints that if not properly
managed could have been very damaging to the effectiveness of the results. Understanding the
probable limitations in advance therefore helped the researchers to be adequately prepared on
how to tackle such challenges once they arose. Accurate and up-to-date data gathered by
researchers moreover was very helpful in finding the solutions to the said research problem.
1.7.1 Budgetary Constraints
Gathering and processing research information can be extremely expensive. In order to equip the
researchers with adequate expertise on this topic, skills and knowledge of conducting extensive
surveys needed for collecting the primary data, comprehensive training was be essential. Beiske
admits that such activities in addition to acquiring the research materials plus other relevant
expenses required considerable amounts of funds (Beiske, 2007, p.33). Suriname does not have
the funds for such research.
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The specialized knowledge regarding PPP options for ports, and sufficient data is lacking. To
add to this problem: if there is data, unwillingness prevails to share the data.
1.7.2 Time Constraints
Pressures to develop an effective privatization strategy may affect the balancing between that
objective and client satisfaction at the Suriname ports. This may impact the need to make quick
decisions in order to improve the performance levels of the ports. Sometimes the researchers
may feel the allocated time to conduct the research, especially as it regards fieldwork to gather
the primary data, is limited. According to Beiske (2007, p.33), this may lead to working under
pressure and conducting surveys hurriedly to meet the research deadline, consequently leading to
gathering unreliable data. In greater context the validity of the data may become misconstrued
and therefore less sensitive to real live patterns.
1.7.3 Data Reliability
Valuable data for any research results is highly dependent on the critical accuracy of data
gathered. Data compromises could affect the ability for data to provide relevant solutions. The
accuracy level could suffer due to such factors as using leading questions, conducting biased
interviews and applying unrepresentative samples in addition to receiving wrong or inappropriate
answers. According to Beiske,
„although efforts of ensuring the data accuracy by employing
representative samples and objective interviews will require additional costs for the research
project, such expenses are worthwhile to avoid making poor decisions/conclusions and the
probable costly mistakes‟ (Beiske, 2007, p.35). This indicates the importance of the integrity of
all data that is gathered for research purposes.
Researchers can employ the triangulation methods to increase research validity. In general
researchers take their account, themes and descriptions back to study participants to verify
whether it represents their reality. This will involves asking the members to verify whether their
descriptions are realist, complete and accurate. The individuals could similarly ascertain whether
the interpretations and themes provided by the data are representative and fair. Triangulation
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may further involve conducting an external audit in validating the research design and the data
collection techniques and plans.
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Chapter 2: Literature Review
2.1 Introduction and Background
This Chapter deals with some theoretical background information on the research topic. First, the
theoretical information on Public-private partnership (PPP) was dealt with. I described the PPP
and the discussions among authors. Then, background information was given on different models
of PPP with regards to ports. The existing strategy of the port management in Suriname is also
addressed.
According to some authors, public-private partnership involves an arrangement between the
private sector and government to allow public services to be under the obligation of the private
sector, traditionally or partially (Bennet, 2007; Filipovic, 2005; Cook & Yuichiro, 2003). This
process can also occur through vouchers or contracts (Bennet, 2004). The popularity of PPPs‟
application has been increasing as the governing model for public goods or services delivery. In
addition, PPPs have increasingly emerged as the default solution to the governmental challenges
and needs particular for the infrastructure. The trend might accelerate as the governments face
fiscal deficits and seek alternative means of financing and delivering government services
(Forrer et al, 2008, p.475).
This because the PPP system can only increase so far and will
stretch thin as discussed below.
Governmental leaders consider PPPs as the means for securing unique technical expertise,
innovation, management and funding from the private sector in addressing the challenging public
policy problems (Forrer et al, 2008). This is obvious when one relates it to the public and private
partnership that this system generates. The expanding domain relating to services and goods
offered by PPPs, for example, comprise the private hospitals, schools, roads and infrastructure,
wastewater treatment, security services and emergency response. Thus, creation of effective
PPPs may face structural and technical challenges. As the PPPs‟ application continues to develop
over time, one thing that has become critical among the policy makers revolves around the value
of accountability. This type of accountability is transferred from private to public sector. For
example: the involvement of the private sector has been evident in infrastructure projects that
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occur through the help of a contract, build and design facilities, while the government takes over
later to run and maintain such structures. In structuring the PPP, the government must select an
option since its implementation should occur under an entire reform strategy (Booth & Skilling,
2007, p.46).
Choosing an effective PPP option therefore will require the following considerations:

The applicability of the PPP

Technical limitations and the sector goals

Institutional challenges and issues

Regulatory and legal limitations

Financial, commercial and the financing requirements or constraints

The market‟s local and international interest

The ability to get stakeholders to align and agree

Special sector requirements based on the characteristics of a population or system
After putting all such considerations to mind, the government should compare the reform
objectives list with such consideration. It will also be critical to compare the objectives with the
features of every contract in addition to the advantages and disadvantages, probable outcomes
and the prerequisites. Such an analysis will be essential in enabling the government to determine
the most effective PPP option that will most likely succeed in satisfying the most fundamental
project objectives (Schaeffer & Loveridge, 2002, p.169). The effectiveness of the PPP may also
be a result a lack of considering these issues.
The government should prioritize that option that has an increased coverage, efficiency
improvements, improved services plus a reduction of the government subsidy and increased
client satisfaction (Schaeffer & Loveridge, 2002). Conducting a cost-benefit assessment will be
critical through consulting several potential partners to secure insight into the lack of appeal or
having an appeal of options under consideration. Governments select various PPP options to
facilitate services in diverse projects or sectors based on their successes and failures elsewhere.
The PPP models classify in four broad forms based on the increased private sector engagement
and risk assumption involving supply/management contracts, turnkey projects, concessions, lease
and the private asset ownership.
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2.1.1 Concessions Model
The government will award the concessions to the private company through franchise or BOT
(i.e. Build-Operate-Transfer) contractual arrangement. The private sector will be fully
responsible in delivering the port services in particular areas inclusive of maintenance, operation,
management, collection and construction. All the capital investments will be the private
company‟s obligation, providing all assets required but they will be under the government
ownership during the period of concession. The government will take the role of developing the
performance standards while ensuring the private firm‟s compliance. The government will seize
from the port service provision to price and service quality regulation. The private body will
collect tariff directly from customers. In some exceptional cases, the government will be required
to provide financial support to the private company in funding its expenditures. All capital
investments to upgrade, build and expand the project will be the responsibility of the private
entity using its resources and paid-tariffs. The concession project period will be between 25 to 30
years to enable the operator to have adequate time for recovering the invested capital and
generate appropriate returns (Felsinger, 2005, p.34). This model has been applied in other
contexts and countries such as in the México (Baird, 2000). For example in Mexico the Rosario
Waterway concession (Taley 2009, p.128).
Successes
Failures

Attract private financing

Complex contract

Provide incentives to port operators

Government must upgrade its regulatory

for improved efficiency &
capacity in terms of performance and tariff
effectiveness
monitoring
Private company had power to

prioritize and innovate effectively
Long-term contract complicating the
bidding process and design of the contract

Politically controversial & difficult to
organize

Limited competition

High risk-operator invest on new contracts
only
Source: A. Baird and P. Kent (2001).
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2.1.2 Build-Operate-Transfer, Turnkey and Related Arrangements
Build-Operate-Transfer, Turnkey and related arrangements will operate as a specialized
concession where the private company will fund and develop the new port project based on the
performance standard established by the government. The government will select from the
Build-Operate-Transfer (i.e. BOT) contractual options including design-bid-build, design-build,
design-build-finance-operate (i.e. DBFO), build-transfer-operate (i.e. BTO) and build-ownoperate (i.e. BOO). The private company will have the ownership of the port assets. On
completion of the contract however, the government will assume the port ownership (Felsinger,
2005, 37).
This categorization suggests the following:

Build-Own-Operate-The developer/private firm will build and operate the Suriname
ports without transferring ownership to the government.

Design-Build-Operate- Ownership will never transfer to the private company but a single
contract will be let-out for designing, constructing and operating the port project.

Design-Build-Finance-Operate- Designing, financing, building and operational roles
combine and transfer to the private company.

Design-Bid-Build- The private contractor will make bids based on the specifications
proposed whereby the winning bid contractor will take charge of the port project until
completion after which the government will be responsible for managing and maintaining
the project.

Design-Build- The government will take the ownership of the infrastructure while
bearing the role of maintaining, operating and financing the process (Felsinger, 2005, 37).
These elements of BOT have their own risk to public and private enterprise and seem to be
linked to another by contrast. Public risk, for example, seems to be the lowest when there are
Build Own Operate concessions, but high for private concessions. A schematic evaluation of
this system of operation is as follows:
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Successes
Failures


Attract the private financing in
developing and renovating the
Limited effect on the overall project
performance
port/infrastructure

Reduce commercial risks affiliated to

the private company
Difficult to link production increases
generating from BOT with the
commensurate demand improvements

Only a single customer-the government

Private debt a costly substitute for the
government funding where pay or take
agreement is operational

Direct user fee-common source of

revenue

Additional revenue sources-shadow
Competition benefit restricts to the
initial/first bidding process

tolls, vehicle registration fee & lease
Contracts are re-negotiable during their
life-cycle
payments

Financed partly/fully by debts

Tender processes and documents need
adequate time and sufficient time
2.1.3 Service Contract
In this PPP option, the government is required to hire a private firm/entity to conduct one or
more task as specifically agreed. The project should take between 1-3 years. In the case of
Suriname, the government will primarily provide the infrastructure service/contract while
offering just a portion of the port operation to its private partner. The private company will have
to perform the required service under the agreed cost. The government will use the competitive
bidding guidelines in awarding the contract to the firm. The government will pay the
predetermined charge to the private company to compensate for the service based on unit cost or
one-time fee. It is recommended that a system cost spreading is used, since some investors may
not have the capital upfront to participate.
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In this system, the private company will not interact with the port consumers. The government
will fund any form of capital investment needed in expanding or improving the system (Booth &
Skilling, 2007, p.46; Felsinger, 2005, 38). Likewise, the advantages and disadvantages of this
system can be listed as follows:
Successes
Failures


Clearly defined service/s
Unstable if the primary objective is
attracting investment

Easy monitoring of performance

Contractor has no obligation to finance

Demand level reasonably certain

Contractor effectiveness compromised
if other fund-sources fail

Low risk in expanding the private

firm‟s role
No deeper effects on system operations
but only limited and discrete
improvements

Quick and substantial effect on system
efficiency & operation


Government remains responsible for
tariff setting
Vehicle for managerial capacity
development & technology transfer

Short-term contracts-allows repeat
competition at the port sector

Low entry-barriers to the sector

Low costs

Promotes competition
2.1.4 Management Contract
Using this option, the government will expand the contracted services to incorporate part or all
the management and operations of the port sector. The ultimate service provision responsibility
will remain under the government but the management regulation and authority will be the
private company‟s obligation. The private firm will provide the working capital while fund
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investment remains the government‟s responsibility. As such, the private company will receive a
certain predetermined labor rate plus other anticipated costs for operation. Private entity will be
free to interact with the port clients while the government sets the tariffs (Felsinger, 2005, p.31).
This model has it strengths and weaknesses as is seen below:
Successes
Failures


Multiple gains secured with no asset
transfer to the private firm
Tricky-splits between service
&management responsibility and
expansion& financing planning

Less challenging when developing

High risk-private firm has no
authority/autonomy to institute broad&
long-term change

Less controversial

Incentive/profit sharing given to private
firm-may increase inflation

Low-cost-requires limited workforce
from private company

Interim arrangements-for improvements

Increased private firm participation
2.1.5 Lease or Affermage Contracts
This option will operate in conduction with the build-rehabilitate-operate-transfer. The private
company will entirely be responsible for the port sector service and quality standard while
availing the services at own expense and risk. Only the replaceable or new investments will be
the responsibility of the government. The operation period will be 10 years but the period can
undergo renewal for up-to 20 years. The private company will be responsible for all the customer
debts and losses. In the initial stages however, the government will finance the project while the
private firm will operate and maintain the ports. A portion of the tariff will transfer to the
government for servicing loans that will help in funding the port system expansion (Felsinger,
2005, p. 33). Overviewing this, shows us the following comparative detail:
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Successes
Failures


Private firm‟s profits based on utility
costs and sales-incentives for higher
Revenues generated from customer
payments
efficiency and sales levels

Private company offered a fee to cover

Tariff levels were highly sensitive-
asset-cost usage but not capital
demand for restructuring & revision of
investment
the complex tariff arrangements

No mobilization of private capital
investment
Source: A. Baird and P. Kent (2001)
2.1.6 Government objectives for the PPP process
For selecting a public private partnership option the governments‟ specific objectives are
influenced. For example, is it the government‟s priority to reduce the costs of service? Or is the
priority to expand coverage? It all depends on the objectives, this also counts for Suriname. For
selecting a public private partnership option the governments‟ specific objectives are influenced.
For example, is it the government‟s priority to reduce the costs of service? Or is the priority to
expand coverage? It all depends on the objectives, this also counts for Suriname. In Suriname in
particular, the best fit model may require project to be subsidized by the government through
donations outside of their budget capacity. Fiscal loans are often secured to finance projects of
this grandeur.
2.1.7 Prerequisites to implementing a particular form of PPP
An analysis will determine the status of the sector undergoing reform, whereas each form of PPP
has a set of prerequisites for successful implementation. For example the deeper the forms of
PPP (BOT) that transfer greater risk to the private sector the more sophisticated legal and
regulatory structures, as well as availability of local skills to implement and monitor the
21
transactions. Skills that are lacking or not properly developed in port sector of Suriname
especially in the port management company, because of high political influence .
Reports from Skilling and Booth confirm this perspective from a study they did in 2007 on port
authority.
Source: Heather Skilling and Kathleen Booth. 2007
PPP Option
Political
Cost
Regulatory
Information
Government
Commitment
Recovery
Framework
Base
Capacity in
Tariffs
Contracting,
Managing &
Analyzing
Service Contract Low
Low
Low
Low
Moderate
Management
Moderate
Moderate
Moderate
Low
Moderate
Lease
Moderate
High
High
High
High
Concessions
High
High
High
High
High
Build-Operate-
High
Variable
High
High
High
Contract
Transfer &
Variations
2.2 The Ports Sector and Suriname
Ports connect one region of the world to the other such that every product we come across daily
travel to and from the many deep-draft ports that accommodate the ocean-going vessels (Brooks
& Baltazar, 2001, p.1). Ports are located within the coastal areas, great lakes and over the river
systems. They involve dynamic and busy transportation hubs that consistently adapt to satisfy the
global trade demands, acting as the nexus of the business transactions relating to imported and
exported products. The majority of economies rely on ports in promoting international trade,
strengthening the national and local economies, providing the higher-paying jobs and increasing
the living standards of its citizens. Ports spend huge amounts of funds annually to minimize the
22
effects of the port developments and operations within their surrounding natural resources and
communities.
There are two main multipurpose ports are operated by HBS (port management company) in
Suriname, respectively in:

Paramaribo

Nickerie (under rehabilitation)
HBS is a limited liability company a public agency under the Ministry of Transport. Its
institutional framework is:

It has regulatory function

And it manages and develops the land infrastructure
Suriname lies in a South-American region that comprises of diverse ports.. The workforce
consist of employees and employs both on permanent and temporary basis (managing director)
around 175 persons (currently 134 men and 41 women, source: http://havenbeheer.com).
It is expected that the workforce will increase over the next 10 years, as a result of the expected
yearly growth of 6% GDP of the Surinamese economy (Government Development Plan 20122016), and a projection made in an
interview with the managing director of the Port
management company, Mr. Roy Defares. The ports in Suriname are in Paramaribo, Paranam,
Moengo, Smalkelden (private wharf), Wageningen and Nieuw Nickerie.
Appendix 1 provides a comprehensive table that demonstrates the specific attributes of each port,
such as total area, docking area, port facilities, employees, investment, traffic volume, types of
cargo that are handled, operations specifics as well as restrictions. In spite of increasing
international commodity prices within 2008, Suriname‟s economy retained a 5.2% economic
growth in that year which was slightly lower than the previous year of about 5.3% (Pura&
Guttierrez, 2008, p.257). The economic growth was facilitated by the mining, construction,
restaurants, hotels, and wholesale/retail commerce. Suriname‟s government has continued
focusing on the fiscal policy in enhancing growth while the monetary policy has been targeting
inflation. The economy of this region has therefore been growing averagely at 3.9% between
23
2005 and 2010, consistently following the number of vessels constantly getting to the main port
plus the quantity of shipped cargo.
Over the last few years, Suriname‟s economy has indicated a developing trend that predicts the
ports‟ success and sustainability in the future.
Suriname has a small economy, with public service activities, mining and the supporting service
activities as the largest contributors. Economic activities amassed a crude USD 1.3 billion in
2005 and increased to USD 3.6 billion in 2010. The Suriname economy is showing a steady
growth over the last years. In the period 2005-2009, the average Gross Domestic Product was
4.2% per annum (General Bureau of Statistics, ABS 2010). It is assumed that the long-term
growth rate will be 4.4% on average between 2011 and 2025 (IMF). This primarily based on
projected exploration of our natural resources in mining.
The future GDP structure can be characterized by the following main tendencies:
•
Exploitation mining sector (gold, oil, other minerals) as quick as possible. In particular
the interest of investors in our natural resources.
•
Main focus on agriculture for the long-term development of the economy
•
Development of the energy sector due to expected increased economic activities
•
Development of the service sector including tourism, ICT, finance
Such trends have the capacity of accommodating the diverse changes resulting from the society
and trading policies. The high adaptability and viable strategies for port management are offering
a considerable trade environment that can greatly help in minimizing risks to increase the
performance level of the ports (Brooks & Baltazar, 2001, p.11). The adjustments nevertheless
cannot effectively take effect without consulting the port‟s framework under which the
discussion of processes and policies occurs. Regardless of the prevailing economic challenges
globally, the Suriname economy has been developing steadily. In this respect however, there are
still lingering questions regarding the best strategies of advancing the Suriname ports
management to facilitate long-term port success. As the following table indicates, the
increasing/growing trend of Suriname economy between 2005 and 2010 implied that
sustainability and efficiency of this sector in the future is possible. Although there are potential
changes in the future, the trends demonstrate a capacity to accommodate such changes
accordingly in relation to societal and trading-policy change. There are important economic
indicators resulting from an analysis of the activities in the ports of Suriname over a period of 6
years. These figures were used to develop a premise to support the argument of privatization of
ports in Suriname. The first analysis is based on the increase of Gross Domestic Product,
calculated for ports in Suriname as shown in the figures from the General Bureau of Statistics
(ABS).
Chart of Real GDP Growth Port Suriname (%)
8
Individual Value
U C L=7.125
6
_
X=3.933
4
2
LC L=0.742
0
2005
2006
2007
2008
20009
2010
Y ear
4
Moving Range
24
U C L=3.921
3
2
__
M R=1.2
1
0
LC L=0
2005
2006
2007
2008
20009
2010
Y ear
Source: Developed from ABS Documentation of National Planning Office and Central Bank of Suriname (2010)
It is important to note that from 2006 – 2010 there has been an increase in the Gross Domestic
Product of Ports in Suriname (HBS). This cumulative increase is averaged at 3.9% and shows a
normal distribution of increase. What this confirms is the fact that the current pattern of GDP
growth indicates that return of investments in ports in Suriname are sure, if all circumstances
remain the same.
Even more distinctly is the relation between GDP and the number of ships that entered Suriname,
respectively;
Source: Integra marine
Number of Ships Entering Suriname vs Real GDP Growth
(Response is Number of vessels enterin Suriname 2006 - 2010)
99
95
90
80
Percent
25
70
60
50
40
30
20
10
5
1
-200
-100
0
Residual
100
200
Clearly, the number of ships entering Suriname determines the growth of GDP. Needless to say
that the growth of GDP has strong ties with the commercial approach, employed to achieve this
growth.
It therefore becomes eminent to target a commercial system of management that
generates the most lucrative investment, but also one that facilitates the needs of all stakeholders,
while creating a best fit model between profit and risk.
Competitiveness of an economy is divided in microeconomic and macroeconomic
competitiveness. The World Economic Forum compiles a yearly competitiveness index.
Suriname has been ranked at 103rd on average out of 134 countries. Suriname is in the
competitive index behind other CARICOM member states such as Trinidad & Tobago, Barbados
and Jamaica. The average score of Suriname is 3.6 out of a maximum of 7.
Table Comparable CARICOM economies
Regional Ports GCI Index2008- 2009 (134)
120
110
100
GCI Score
26
90
80
70
60
50
40
Suriname
Jamaica
Trinidad &Tobago
Country
Barbados
Guyana *
Source: GCI, 2008-2009
This proves that Suriname needs to make urgent adjustments to its ports in order to be able to
satisfy international competitive rating.
Below are the selected economic indicators over the period 2005-2010 and comparable ports of
Caricom nations. Furthermore a global competiveness index of Surinam and Caribbean nations.
Table Comparable type CARICOM economies
Regional Ports GCI Index2008- 2009 (134)
120
110
100
GCI Score
27
90
80
70
60
50
40
Suriname
Jamaica
Trinidad &Tobago
Country
Barbados
Guyana *
Global Competitiveness Index
Suriname
GCI 2008 - 2009 ( 134)
Jamaica Trinidad & Barbados
Guyana*
103
86
92
47
115
73
97
65
33
115
Efficciency enhancers
127
86
80
56
112
Innovation and sophistication factors
117
72
79
51
111
Population (millions), 2007
0.5
2.7
1.3
0.3
0.8
4577
4172
15904
13605
1365
Basic requirements
GDP per capita (US$), 2007
* Stage 1 economy
Source: GCI, 2008-2009
2.3 The Development of the Suriname Ports
The developments of these ports have been occurring hand in hand with considerable
investments from the government, public and private sectors. The investments aim to facilitate
the expansion of the psychical infrastructure, cargo modernization in terms of storage and
handling, major port rehabilitation, port-operators certification, improving the management of
risks, legislation renewal and creating awareness. Investing in all such projects plus other
relevant developmental activities/processes is effective in offering financial support to the ports
sector. The investments further assist in expanding the infrastructure linked to the ports including
roads, bridges and waterways to ensure the ports are easily accessible. Establishing a formal
entity to manage and guide the relevant activities while coordinating and managing the trade
facilitation policies effectively however are quit challenging (Pura & Guttierrez, 2008, p.257).
The following graph indicates the growth trend, in terms of freight handing in Suriname ports
between the years 2004 and 2008. “The Port Nieuwe Haven, one of the major ports of HBS, has
the potential to double its capacity to meet demand as growth in the local economy, together with
improved road links into French Guiana and off-shore oil exploration are set to increase trade
volumes in the future” this according to DP World CEO Mohammed Sharaf.
Source: Integra Marine
Time Series Plot of Paranam, Paramaribo and Nickerie, Average Growth
50
Variable
Paranam
Paramaribo and Nick erie
A v erage Growth
40
30
Percentage
28
20
10
0
-10
-20
2004
2005
2006
Year
2007
2008
29
2.3.1 Modern Management Theory and Practices
Management involves the science or art of achieving organizational goals through people. The
concept can similarly incorporate the supervisory function to ensure all the operations carried out
within the organization or company work towards the setout goals or objectives. It is the
responsibility of managers to ensure increased productivity, efficiency and continuous
improvement. The new management theory recommends a process that designs and maintains an
environment where the human capital works in teams to attain the selected goals. Managers are
thus obligated with carrying out managerial roles of organizing, planning, leading, staffing and
controlling the company or sector activities. The management process occurs to any form or
organization while also applying to all the managers within all organizational levels. The
individuals work towards creating surplus and increasing productivity for effectiveness and
efficiency (Olum, 2004, p.2).
According to this theory, management will engage in the development of bureaucracy deriving
its significance necessitated by strategic coordination, planning, controlling and directing of the
huge and complex processes of decision-making. This subsequently implies that managers
should devote to acquiring managerial effectiveness and competence in such areas as human
resource management, problem solving, administration and the organizational leadership. The
management theory aims towards three major management objectives including ensuring the
meeting of targets and goals of an organization, staff health and welfare and the protection of
resources and machinery of a company. This theory can guide the PPP process in Suriname in
performing five prime functions including planning, staffing, organizing, leading and controlling
(Olum, 2004, p.3). In Suriname, where the political influence is high, it is common that the staff,
the key personnel in the organization and the management are all appointed by the politicians in
charge, this means that the devotion, passion of bringing the organization to the next level as the
theory suggest is often missing.
30
2.4 Overview on Privatization
Privatization of businesses for the past decades has moved from the novelty act to the global
orthodoxy. Besides overselling the benefits of privatization, there have also been exaggerations
of its shortcomings (Ross & Bettignies, 2004, p.135). In this regard therefore, the question arises
as to how state companies should transfer to the private firms. Privatization represents the
symbolic and ideological break that has a history of control by the state over the nation‟s
productive assets. This symbolism has been more dominant within the Eastern Europe
economies and former Soviet Union. For Suriname privatization is viewed as handing over the
business by the government to the private sector for proper management and also to break the
political influence in these companies. The majority of the government owned companies in
Suriname are operating at a loss, while by privatization the companies will become profitable
and the government will be able to receive more income tax.
In these regions, state-owned enterprises (i.e. SOEs) privatization occurs to symbolize a
country‟s transition from the communism to democratic capitalism (Megginson, 2000, p.14).
Governments pursue privatization aiming to enhance increased efficiency, expose the SOEs to
the market discipline, introduce competition, generate state revenue and foster broader share
ownership. In 1984 for example, British Telecom privatization took place through the sale of
51% share of the company to the private investors. The government transferred this company to
British Telecommunications Plc. aiming to enable this company to resend to competition within
UK and expand its operations internationally.
Another example of privatized sectors in the UK is the electricity generating companies. Since
inception in 1948 up to the early 1990s, electricity generation was operated by the Central
Electricity Generating Board, on a statutory monopoly basis, which included both generation and
transmission. In 1989, the company was divided into four different companies with most shares
being sold to the public (Green & McDaniel 1998, p. 275). This removed the previous
monopolistic hold, and both private and public power generators were required to sell their
electricity in the wholesale market. Other examples of privatization in the UK include the
conversion of regional water authorities in to public limited companies (Plcs). This privatization
31
act was formulated as a 25 year concession for water supply and sanitation (Hall, Lethbridg,
Lobina, Thomas & Davies, 2003, p.3-4). UK waste management has also been increasingly
opened up to the private sector breaking it up into smaller but efficient companies. Support
services in local government and health such as catering and cleaning and laundry has also been
subjected to tendering, where private providers of the services are required to tender for the
services.
2.4.1 Public-Private Partnership
PPP is the continuous or progressive agreements between a specific government and the firms
within the private sector. The private companies participate in production of the public
goods/services and decision-making processes provided by the public sector. The private sector
shares risks linking to such production activities. Three fundamental conditions characterize the
PPPs emergence (Patterson & Becker, 2005, p.125). To begin with, the relationship between
private and public sector firms is long-term. Private sector also cooperates in decision-making
regarding the most suitable way of providing goods or services plus the production and the
delivery of such products. The relationship between these two parties incorporates the negotiated
risk allocation between public and private sectors releasing the government from bearing the
largest portion of the risk. PPPs take various forms that reflect diverse degrees of the private
involvement inclusive of design-build-operate, build-own-operate-transfer and design-buildfinance-operate (Forrer et al, 2008, p.476). An analysis of the port management models that are
used is highlighted in a table below.
To give a quick glance at the strong and weak points of Port Management Models
in the public service port:
Strength: the Superstructure development and cargo handling operations are the responsibility of
the same organization (unity of command).
32
Weakness: There is no or only a limited role for the private sector in cargo handling operations
There is less problem-solving capability and flexibility in case of labor problems, since the port
administration also is the major employer of port labor
The potential lack of internal competition, which leads to inefficiency
Wasteful use of resources and under-investment as a result of government interference and
dependence on government budget Operations are not user-oriented or market-oriented
lack of innovation.
A quick glance at the Landlord Port:
Strength: A single entity (the private sector) executes cargo-handling operations and owns and
operates cargo-handling equipment. The terminal operators are more loyal to the port and more
likely to make needed investments as a consequence of their long-term contracts.
Weakness: the risk of over-capacity as a result of pressure from various private operators, also
the risk of misjudging the exact timing of additions in capacity. Source: 2007 The International
Bank of Reconstruction and Development/The World Bank
2.4.2 Examples of Best Practices
Governments in diverse regions have been having a challenging task in safeguarding the interest
of the public through satisfying the various needs of their citizens. The expectations of the
citizens have continued to increase in their yearning for more and improved services from the
government at reduced costs (Slack & Comtois, 2006, p.1). Citizens‟ confidence in their
government hinge on the service quality they receive. One of the best practices that modern
governments are employing involves the PPP processes in their efforts to facilitate cheaper and
faster services for social progress and prosperity of their citizens. Some examples of such
practices in various sectors are:
33
2.4.2.1 Sphere Project in West, North and South Europe
These were projects financed by European Communities Commission applying the BuildOperate-Transfer (i.e. BOTs)/Turnkey model. BOT and similar arrangements are a kind of
specialized concession in which a private firm or consortium finances and develops a new
infrastructure project or a major component according to performance standards set by the
government. Figure below illustrates the BOT contract structure. The project employed the
„generic, customizable PC-based simulation system‟ for the management of the small &
medium-sized (i.e. SMEs) ports.
The success and failures of the projects were as follows:
Successes: Developed a framework under which the principles of business processes reengineering could apply in investigations and re-designing of the logistics Port processes. This
was in relation to flow of vehicles, commodities, people and information through the port. This
took place under the facilitation of developing the multi-attribute system of evaluation that
accounted for the institutional, topographical, technical and stochastic characteristics of the ports
and processes linked to the flow of vehicles goods, people and information (Schaeffer
&Loveridge, 2002, p.169). The BOTs have been used to attract private financing to construct or
34
renovate the infrastructure. In a BOT scheme agreements tend to reduce commercial risk for the
private partner because there is often only one customer, the government. The private partner
must be confident however that the purchase agreement will be honored by the government.
Failures: Effectiveness of this framework however required non-interrupted processes,
involving series of interrelated activities that collaboratively create customer value. The
individual activities in this regard therefore were less important and accorded limited value to
port customers. The simple application of this advanced technology to the presently fragmented
processes therefore did not generate the anticipated re-engineering benefits (Schaeffer &
Loveridge, 2002, p.169). BOTs have a project-specific application so they are potentially very
good for a specific investment, but the overall performance is missing, again every project is not
the same.
2.4.2.1 Privatization in Greece-Using Concessions
The privatization that Greek government has been pursuing has implied positive results in
transforming its stale economy through the concession model (Lewis &Grimsey, 2007, p.41).
The process also aims to rejuvenate a number of sectors while developing increasingly
sustainable financial landscape. Structure of concession contract
Successes: Privatization of railways, casinos, water firms, real estate, marinas plus other
infrastructures has been doing beyond boosting the revenue target shortfalls hit by recession. It
35
triggered the perception change among investors about Greece while kicking-off additional
development of the privatized sectors. This consequently was important for regaining the capital
markets trust to return to the bond-market borrowing (Lewis & Grimsey, 2007, p.41).
Concessions are a way to attract private finance to fund new construction or rehabilitate existing
facilities. An advantage of the concession arrangement is that it provides incentives to the
operator and effectiveness since the gains in efficiency will translate into increased profits.
Failures: The government had trouble in attracting the private capital and injecting the
expertise into the state-regulated assets. Civil servants held the freedom to capture the publicassets for personal benefits at the economy‟s expense upgrading of the Governments capacity in
relation to their tariffs and performance monitoring. Further, the long term of the contracts
(necessary to recover the Key drawbacks include the complexity of the contract required to
define the operator's activities substantial investment costs) complicates the bidding process and
contract design, given the difficulty in anticipating events over a 25-year period. This drawback
may be countered by allowing a periodic review of certain contract terms in the context of the
evolving environment. There is additional risk that the operator will only invest in new assets
where it expects payback within the remaining period of the contract unless provisions for these
events are set out in the contract. Because of the long-term of the contracts, there is room for
political controversy.
2.4.2.3 Privatization Projects in Argentina, Chile, Peru and Brazil
Successes: Power privatization revealed a complex relationship performance changes and
the private investment. Following the PPP process, these developing nations experienced fewer
blackouts, reduced electricity losses and higher labor productivity. Increased productivity
consequently resulted to reduced consumer prices by about 40% in a period of 5years in
Argentina‟s electricity sector and approximately by 25% within 10years in Chile (Parker &
Kirkpatrick, 2005.p.524).
Failures: Although the private power projects greatly financed the public/state power
industries, the sector suffered from under-investment plus difficulties of introducing competition
in this sector resulting in costly disputes. This confirms the challenges that can result in
36
establishing and maintaining an attractive environment for private investment (Parker &
Kirkpatrick, 2005. p.524).
2.4.2.4 Affermage or Lease Contracts
Under a lease contract, the private partner is responsible for the service in its entirety and
undertakes obligations relating to quality and service standards. Except for new and replacement
investments, which remain the responsibility of the public authority, the operator provides the
service at his expense and risk. The duration of the leasing contract is typically for 10 years and
may be renewed for up to 20 years. Responsibility for service provision is transferred from the
public sector to the private sector and the financial risk for operation and maintenance is borne
entirely by the private sector operator. In particular, the operator is responsible for losses and for
unpaid consumers' debts. Leases do not involve any sale of assets to the private sector. Figure
below shows the lease contract‟s typical structure.
Successes: Under lease and affermage contracts, the private partner‟s profits depend on
the utility‟s sales and costs. An advantage of this option is that it provides incentives for the
operator to achieve higher levels of efficiency and higher sales. A drawback is the risk of
management reducing the level of maintenance on long-lived assets in order to increase profits.
37
Failures: The key issue in moving from service and management contracts to a lease is
that the contractor‟s revenues are derived from customer payments and, the question of tariff
levels becomes a sensitive matter. This may require structuring and revising complex tariff
arrangements. This leads in the responsibility to seek for capital investment by the government
whereas the private investment capital is not mobilized.
2.4.2.5 Local Case Business
Privatization in Suriname is bound to face a number of challenges that may limit the government
or the private sector in meeting its goals. One of the major factor that may affect this process
relate to labor challenges. Since privatization will occur within this changing global
environment, the process affects national economies and businesses. Most of the stakeholders
agree which are VSH shipping, Integra marine and the Port management company. At stake is
the control of the port in its total. The terminal currently has a container throughput capacity in
excess of 100,000 TEU per year, with the potential to double its capacity to meet demand as
growth in the local economy, together with improved road links into French Guiana and offshore oil exploration are set to increase trade volumes in the future this statement is approved by
the managing director of the Port management company and the CEO of Integra marine. Integra
Marine has sold a “substantial part of his shares” quoting the CEO of Integra marine, to DP
world. “Integra marine has the lion share of cargo handling (90%) and break bulk handling
(87%) in port of nieuwe haven”, again quoting the CEO of Integra Marine. One of the reasons
that DP world got interest in Integra Marine. “In April 2010, IPS was awarded a 15 year
concession, with an option to extend for a further 15 years, to manage and operate its terminal
within Nieuwe Haven. IPS is the largest terminal operator at the port” quoting the managing
director of the port management company.
Suriname Port Services (also owned by Integra marine) is a freehold break-bulk facility about 20
miles upstream from Paramaribo specializing in the handling of mining and logging equipment,
off-shore supply and cement. DP World will have a management services agreement for both
terminals. The transaction is expected to close in the third quarter of 2011. The price was not
disclosed. The labor wages at Integra marine are better their workforce is bigger and more
38
skilled, whereas the other terminal competitors is working with contractors (job security is less
“sure”).
Furthermore the government via PPP generates benefits at macro-levels yet raising concerns
among consumers concerning the effects such sector reforms will have on workers and their
families and within the surrounding communities. Although the private and public stakeholders
may be aiming to improve the port‟s efficiency and the financial performance, negative effects
are evident in terms of distributing income, political power for example change of management
and supervisory board by the ruling coalition. To improve the port the infrastructure towards the
port must be modernized and adapted to the demands of the market. No data is available for this
matter. The port management company has plans to do a feasibility study to construct a flyover
and a “turbo” roundabout . Feasibility of this plan has to assume that the problem of the drain
and loading of the landward side of the river will be resolved. Discussions with the Ministry of
Public Works on this subject will be resumed soon.(annual report of 2009
of the port
management company p.10). Despite all these wishes the port management hired extra people.
At the terminal operators certainly the number of employees did not increase, the managing
director of the port management company says. That is because in recent years the terminal
operator invested in better technology and superstructures such as port cranes, thus reducing
work
force
needs
and
so
employee
costs
(source:
http://lib.ugent.be/fulltxt/RUG01/001/491/026/RUG01-001491026_2011_0001_AC.pdf)
2.4.2.6 The Privatization Framework:
The framework for privatization presents the various requisites for each PPP option to enable the
government select that which will meet its needs satisfactorily. Through this framework, the
government will know the requisites for each PPP option by examining the advantages and
disadvantages of each. Every PPP option provides different benefits, diverse limitations and the
contractual period. Suriname government will thus select that which best suits their needs within
the government‟s capacity.
39
Source: Heather Skilling and Kathleen Booth. 2007
CONCESSIONS
BUILD-OPERATE-
SERVICE CONTRACT
TRANSFER/ TURNKEY
OPTION
Contract Period: 25-30years Contract Period: 20-30 years
Contract Period: 1-3 years
Pros
Cons
Pros
Pros
Cons
Attract
private
financing
Complex
contract
Attract the private Clearly
financing in
defined
developing and
service/s
renovating the
port/infrastructure
Clearly
defined
service/s
Unstable if the
primary
objective is
attracting
investment
Reduce
commercial risks
affiliated to the
private company
Easy
monitoring of
performance
Easy
monitoring
of
performance
Contractor has
no obligation to
finance
Has only a single
customer (i.e. the
government)
Demand level
reasonably
certain
Demand
level
reasonably
certain
Contractor
effectiveness
compromised if
other fundsources fail
Direct user feecommon source
of revenue
Low risk in
expanding the
private firm‟s
role
Low risk in
expanding
the private
firm‟s role
Additional
revenue sources
e.g. shadow tolls,
vehicle
registration fee &
lease payments
Quick and
substantial
effect on
system
efficiency &
operation
Quick and
substantial
effect on
system
efficiency &
operation
No deeper
effects on
system
operations but
only limited and
discrete
improvements
Government
remains
responsible for
tariff setting
Provide
incentives to
port
operators for
improved
efficiency &
effectiveness
Government
must
upgrade its
regulatory
capacity in
terms of
performance
and tariff
monitoring
Private
Long-term
company
contract
has power to complicating
prioritize
the bidding
and innovate process and
effectively
design of the
contract
Politically
controversial
& difficult
to organize
Limited
competition
Cons
40
High riskoperator
invest on
new
contracts
only
Financed
partly/fully by
debts
Vehicle for
managerial
capacity
development
& technology
transfer
Vehicle for
managerial
capacity
development
& technology
transfer
Short-term
contractsallows repeat
competition at
the port sector
Short-term
contractsallows repeat
competition
at the port
sector
Low entrybarriers to the
sector
Low entrybarriers to
the sector
Low costs
Low costs
Promotes
competition
Promotes
competition
41
Framework ContinuedSource: Heather Skilling and Kathleen Booth. 2007
MANAGEMENT CONTRACT
LEASE/AFFERMAGE CONTRACTS
OPTION
Contract Period-3-5years
Contract Period: 8-15years
Pros
Cons
Pros
Cons
Multiple
gains secured
with no asset
transfer to the
private firm
Tricky-splits
between service
&management
responsibility and
expansion&
financing planning
High risk-private
firm has no
authority/autonomy
to institute broad&
long-term change
Private firm‟s
profits based on
utility costs and
sales-incentives for
higher efficiency
and sales levels
Private company
offered a fee to
cover asset-cost
usage but not
capital investment
Revenues generated
from customer
payments
Incentive/profit
sharing given to
private firm-may
increase inflation
Private firm‟s
profits based on
utility costs and
sales-incentives for
higher efficiency
and sales levels
Less
challenging
when
developing
Less
controversial
Low-costrequires
limited
workforce
from private
company
Interim
arrangementsfor
improvements
Increased
private firm
participation
Tariff levels were
highly sensitivedemand for
restructuring &
revision of the
complex tariff
arrangements
No mobilization of
private capital
investment
42
The table below demonstrates various port management models and their various characteristics.
The pros and the cons of these PPP options are discussed, through literature research and best
practices over various projects in world the positive and negative effects have been highlighted.
It is needless to say that the specific situation is of great importance. Suriname port use the
landlord port model, with 15 year contracts with variable rent per square meter with each square
meter being leased for USD56. When using the landlord model, basic port infrastructure such as
wharves, berths and roads is maintained by the port management company. As a landlord, the
port management company, has the responsibility for economic exploitation, maintenance of port
infrastructure as well as the long-term development of Port-land (Ronty, Nokkala & Finnila,
2011, p. 20). On their part, the private companies (3 terminal operators) which have leased land
from the port authority have the responsibility of maintaining their own superstructure and
equipment. Labor at the port is characteristically supplied by the private companies. Some of the
advantages of using this management model include the fact that when cargo handling
equipment and operations activities are owned by an entity, it is becomes much easier to plan
and better alignment with prevailing market conditions. One main disadvantage is that more
coordination of planning and marketing activities is required due to the possibility of duplication
these efforts by both the private company and port authority (Ronty, Nokkala & Finnila, 2011, p.
20).
Different types of Port Models
Source: Ronty, Nokkala & Finnila, 2011).
In Suriname, one of the companies that is private but the government is a major shareholder is
the N.V. Havenbeheer Suriname, which was founded in 1971. The company is tasked with the
43
maintenance of basic port infrastructure, provision of sufficient space and installing new
infrastructure. Its main tasks include: providing high quality services, creating a conducive
environment for business, ensuring that all port activities are smooth and environmentally
responsible. The company also manages transportation of cargo inside the port area. Services
include renting the port premises and office space, supplying water to ships, processing wasted
generated from ships, availing the public Quay, and providing facilities from connecting reefer
containers.
Based on these managerial practices, the figure below demonstrates the performance of the port
45000
40000
35000
30000
25000
IMP.
20000
EXP.
15000
10000
5000
0
of Paramaribo.
2004
2005
2006
2007
2008
2009
2010
Source: Ricky Ritfeld, personal interview, 16 juli 2010.
The chart above shows that the total import and export quantities from 2004 to 2010. There is a
significant difference between imports and exports, which leads to the observation that Suriname
has an consumptive economy. Though this may be an interesting observation it also suggests
that one of our important routes for import is through the Porst of Suriname (HBS). It is expected
that these numbers will increase further in the future, since the port has been expanded and the
Terminal Operator has invested in more equipment (3 cranes etc). Furthermore the port is more
efficient and turnaround time has been doubled in the past.
Of even greater interest is the development of export through our ports as part of economic
development. The forecasted trend, based on the current pattern of exports is clearly seen in the
following graph:
Source: integra marine
Trend Analysis Export Through Port Suriname
Linear Trend Model
Yt = 4699 + 1822* t
Variable
A ctual
F its
F orecasts
30000
25000
EXP.
44
A ccuracy Measures
MA PE
6
MA D
699
MSD
673994
20000
15000
10000
04
05 006 007 008 009 010
20 20
2
2
2
2
2
Year
It is clear that the current trend of growth in our exports extrapolated over a period of seven years
indicates that there is surge that will occur in the economy of Suriname. This analysis is
compounded by the fact that there is a steady growth of the GDP as mentioned before. This
parallel provides a reasonable stable and low risk environment for investors to finance port
developments, once all conditions remain the same.
The following table provides a summary of the landlord model as it is applied to Suriname.
We can of course ask whether Suriname benefits from a port which is mostly imported, but note
that the total export exceeds the imports. The intention of the Nieuwe Haven Port is, moreover,
that it can be used as a transit to Guyana and French Guiana. The infrastructure of the port will
create new opportunities to export more (oktober 2011, managing director port management
company s; EC, 2006). The technical assistance that coordinates the reforms (economic and
managing and technical) at the Port Management Company was Dutch Amsterdam Port
Consultants (Arie Mol, communication, September 2011). This was commissioned by the
European Commission. We saw earlier that port managing director Mr. Defares (personal
communication, oktober, 2011) was not enthusiastic about this expensive and two-year technical
assistance. According to him the reforms are more efficiently if the port itself had selected the
consultant. It‟s part of ownership of the project and as landlord. If that is right or not, we'll never
know and leave it in the middle. The price of USD 56 needs to have a breakdown, because the
terminal operators (VSH Shipping and Integra marine both argue it is not competitive).
45
The port management company states that the actual price was higher, USD 103 per m2. Both
terminal operators argue that the price is to maintain the enormous workforce and at least one of
them states that the port management company is not able to justify the 56 USD.
The Landlord Model
Stakeholder responsibilities
Analysis
Port management
company
Terminal operator
Pros
Cons
- Rent per Square
meter over an
extended period i. e.
15 years.
- Maintenance of basic
port infrastructure is
by the port authority.
- Economic
exploitation and long
term development is
the responsibility of
the port authority
- The management of
the Port management
company has stated
that a return of the
investments of 12%
is required
- Maintaining own
super structure and
- Installation and
maintenance of
equipment.
- - Provision of Port
labor.
- Easy planning and
- More coordination
enhanced efficiency
required to avoid
since equipment is
duplication of roles
owned by one
between private
entity.
company and port
- Better alignment of
authority.
processes with
- the terminal pricee
existing market
per square meter
conditions.
that must be paid to
the port
management
company is U$ 56,
makes the port of
Suriname one of the
most expensive
ports in the world
and such price is not
in competitiveness
interest for
Terminal Operators
- depreciation of
capital investments
of the physical
rehabilitation
Nieuwe Haven in 25
years
46
The present landlord model used for Suriname ports charges USD56 per square meter to the
terminal operators, which is regarded as among the most expensive in the world. In a BOT model
companies would pay less per square meter annually and can provide better results for both the
private company and the public this according a face to face interview with the CEO of VSH
shipping. The proposed model for Suriname is the Build Operate Transfer (BOT). The following
table highlights the key strengths that make the model suitable for the country and well as some
weaknesses that may impede its effectiveness if not suitably addressed.
The Build Operate Transfer Model
Pros
-
-
The private sector is responsible for the
design and construction of terminal and
its operations.
Infrastructure and superstructure is
owned by the private company.
Creation of synergies to ownership of
terminal and processes by one entity.
Quality of services due since payment
is usually based on predefined
standards.
Cons
-
Transfer of some risks from public to
the -private sector.
Costs of construction of infrastructure
and superstructure.
A fact is that the framework for implementation a BOT is to start MCA with thoroughly
requirements must be spelt out in a Model Concession Agreement (MCA) This framework
addresses the issues which are typically important for limited recourse financing of infrastructure
projects; allocation of risks and rewards
The new company is responsible for developing the new facility such as infrastructural
development and superstructure using own funds.

The private company operates the terminal

Income is used to get return in investment.
47

Private company hands over the port terminal to the public sector once the agreed period
is over.

A different approach to BOT involves

An operation period lasting at least 15 years.

The handover is usually at written down value

There are more chances of success if the operator is liked to a major shipping line.
By reviewing the different models the reasons to come to a basic framework that can suit the port
in Suriname the framework must consist first of all: the general reasons such as and how this will
influence your methodology.
• a cost decrease
• Improvement of service quality and port efficiency
For managerial the reasons are :
• De-politize the port management company
• decrease of bureaucracy
• Avoid government monopolies
For financial reasons:
• Reduce public expenditure and attract foreign investment
• Reduce commercial risks (investments) for the public sector
In summary there are numerous suitable privatization models that can be used in Suriname ports
to achieve a balance between both the private and the public sector. Among the most important
factors to consider are the interests of both parties. It is obvious that privatization is necessary in
Suriname to improve performance and promote competition however; models such as BOT that
incorporate various logistical/operational necessities need to be considered first, a concern that
will be addressed later.
48
Chapter 3: Methodology
3.1 Introduction
The N.V. Havenbeheer Suriname (HBS) is the port management company of the Government of
Suriname and was founded for port management on July, 9th, 1971. The main purpose of the port
management company is to stimulate economic activity and to create employment within the
port area. The primary activity is guarding the process of on and offloading at the port. This
activity has been awarded to private entrepreneurs, since 2006 formally.
The N.V Havenbeheer operates as port management in the field of the ' dry ' port infrastructure.
It has ensured that sufficient space is provided, physically or otherwise, to this and to other
entrepreneurs who are part of the activities at the harbor. It has invested in the construction of
new infrastructure and improvement of existing infrastructure. The shareholder is the State of
Suriname, represented by the Government of Suriname. Workforce per January 1st, 2011: 175
persons (134 men and 41 women).
3.1.1 Main tasks of NV Havenbeheer
The NV Havenbeheer, or Port Management Company of the Government of Suriname has as its
main tasks:
•
Delivering high-quality services and creation of a business-friendly environment within
the port area.
•
Ensuring the construction, replacement and maintenance of port infrastructure.
•
Ensuring a safe, smooth and environmentally responsible management of the transport of
cargo within the port area through establishing and maintaining regulation.
49
3.1.2 Service of NV Havenbeheer
The services of NV Havenbeheer, the port management company of the Government of
Suriname consist of:
•
Making available the public Quay
•
The rental of premises and office space
•
Water supply to ships
•
Processing of ship-generated waste
•
Facilities for connecting of reefer containers (96 connection points).
De terminal at the Nieuwe Haven port handles origin and destination cargo for Suriname. “The
terminal currently has a container throughput capacity in excess of 100,000 TEU per year, with
the potential to double its capacity to meet future demands; growth in the local economy,
together with improved road links into French Guiana and off-shore oil exploration are set to
increase trade volumes in the future (http://www.dredgingtoday.com/2011/07/22/dp-worldexpands-into-suriname).
3.1.3 Function of private port service companies
In April 2010, Integra Ports Services (IPS), which is part of Integra Marine Services, the biggest
private port company in Suriname, was awarded a 15 year concession, with an option to extend
this for a consecutive 15 years, in order to manage and operate its terminal at the Nieuwe Haven
port.
IPS
is
the
largest
terminal
operator
at
the
port
(http://www.dredgingtoday.com/2011/07/22/dp-world-expands-into-suriname).
Suriname Port Services (SPS), which is also a subsidiary of Integra Marine Services, is a
freehold break-bulk facility at the Smalkalden port about 20 miles upstream from Paramaribo
and specializes in the handling of mining and logging equipment, off-shore supply and cement.
Through the provision of proper and well-grounded hemispherical groupings, the organization
represents the Suriname ports and shipping industry. Together with the government, IPS and SPS
50
although private companies have the sense of responsibility that comes with years of experience
in the field, and they fulfill the role of remaining a constant observer in the running of the ports.
VSH shipping company, on the other hand, is a player within the region, providing agency
related services for shipping vessels visiting the Suriname ports. According to the views that are
held by these private organizations, governmental organizations within the Suriname ports
should be run on a PPP strategic basis. An alternative they see is the construction of new
companies that are run as partnerships between the two parties, the government on one side and
the organization on the other. I retrieved this information from face-to-face interviews with the
CEO of VSH shipping and the managing director of the NV Havenbeheer, the port management
company. The organizations would be given sole autonomy to run the port authorities and
agencies as they wish, investing their capital into projects and reaping either the benefits or
losses. The government would only play the part of ensuring that the responsibility of the port
organizations is met, guaranteeing that consumer services are provided without fail and in the
best possible way.
According to the managing director of the Port management company, the rehabilitation of the
Nieuwe Haven port project has arguably been qualified one of the biggest Surinamese project of
the decade, receiving cooperation from not only the Surinamese government, but also the
European Union in cooperation with private investors. This has been done for the purposes of
restoring the ports industry to a better position of offering services, as well as facilitating the
management of the ports in order to increase the economic benefits within the industry. For this
reason, a tender has been created by the Port management company for the companies willing to
bid- the tenants- allowing them to operate part of the ports and shipping region in a responsible
and accountable way. To quote, Manager Corporate Strategy and Development at the Port
management Company, personal communication December 12 2011, “the bidding occurred and
only serious interested parties which were already active on the port have responded. The price
was USD 2,500 for buying the bidding document. And till now it is NOT available for the public.
Thee three tenderer were: Integra Marine, VSH and CSA. Only 1 terminal operator met the
requirement score. That was Integra marine Thus the bidding failed according to the port
management company. The intent of Port Management was for a minimum 3, maximum 4
terminal operators. Just to add the tender document was not a public document, it was a closed
51
tender. Also according to the manager is that the Port Management Company as an organization
was not ready to implement or “understand” the concept of the PPP that was about to be used.
Now the organization has developed and understands the concepts of PPP option better”.
Although one terminal operator met the requirements it was “enforced” (by the politics) that
there should be two other Terminal Operators.
These Public Private Partnership firms can each operate and utilize a 65,000 square plot of port
land, being responsible for the sourcing of clients, processing of their incoming and outgoing
cargo, as well as the handling of consumer related complaints and requirements. Other activities,
such as the maintenance of the ports premises together with the provision of utilities are solely
the responsibility of the Port Management Suriname.
With the proposition of an international solution to eliminate the obstacles that are faced by the
idea of economic development, it thus becomes unavoidable to realize the benefits that could be
reaped from the implementation of the PPP strategies, offering support to not only the
management of the ports authority, but also a management structure that is not only accountable
but also economically capable. In this context, the study was carried out within the context of the
Port management company in their endeavor to create a PPP structure that is answerable to the
government as well as the ports and shipping industries. Questions have to be raised with regards
to the preparations that have to be made in order to implement the system, as well as the level of
participation that is offered by the government and the private companies within formation of the
partnerships. An investigation of the funding that is involved in the creation of the partnership is
also investigated together with the opportunities and advantages that are inherent within the
created system, and how this is beneficial to not only the organizations that run within the
Suriname Ports but also the consumers on the ground.
The framework for implementing a BOT needs to start with:
•
A comprehensive framework as a pre-requisite for PPP
•
Technical parameters on the level of service for the users
•
A concession period of thirty years
52
•
A concession fee, which will be a fixed sum in USD per annum for the concession period
(currently this is USD56 which is very high according to the terminal operators VSH and
IMS compared to the region).
•
Construction
•
Lenders who will have the right of substitution
•
A Concessionaire who will be protected against political actions
•
Service quality must be ensured
•
Operation and Maintenance standards must be enforced strictly
•
Private participation to improve efficiency and reduce costs
3.2 Application
Together with the Schedules, the proposed contractual framework will highlight the issue that is
to arise (probably) in financing of port projects on BOT scheme. It is essential to attract private
investment and the need for regulatory and policy framework to accelerate growth is essential as
well. This will also lead to lower cost. These requirements must be spelt out in a Model
Concession Agreement (MCA) This framework addresses the issues which are typically
important for limited recourse financing of infrastructure projects; allocation of risks and rewards
3.2.1 The landlord model
According to the model (landlord) that is adopted in the Surinam Port, the private investors
wishing to finance the implementation of PPPs in the region have to supply the services. While
the government, through the port authorities, retains ownership of the infrastructures therein,
private investors have the chance to lease the properties and resources, operating under the
partnership agreements that are agreed upon the signing of the lease. The government in this case
has the responsibility of economically maintaining the resources that are located within the
53
leased region, together with guaranteeing the long-term development and maintenance of the
infrastructural and land assets in its domain. The private investors, on the other hand, are under
the obligation to continue offering basic and personalized services to their clients, as well as
maintaining their own superstructures, ensuring that there are within the required standards of the
port authorities (Brooks, 2004). As is the case with some private investors in Suriname, are
reluctant to make large investments in terms of infrastructural outputs to the creation and
development of the ports, as they feel that it is the duty of the port authorities to increase the
aesthetic appeal that is experienced within these regions.
The strength that is inherent within the use of this model is that the partners within the
agreement-the investors and the government in this case-are at liberty to execute operations
within the ports, with both of them retaining ownership of the resources that each has invested in.
in this regards, it becomes easier to make investment plans for the future, often resulting in better
offer of services as well as the creation and nurturing of better responsiveness within the market.
However, the model stands the risk of over-capacity since there are no restrictions in terms of the
number of private investors who are free to invest in the industry. In this regards, the investors
face stiff competition from one another in terms of expansion and resources, creating a scenario
where the resources that are available sometimes get misused or end up with only one partnering
company.
54
3.3 Research Strategy
Through the use of face-to-face interviews with four industry players, a questionnaire was
developed that was aimed at collecting information about the nature of the progress, funding and
privatization challenges that are realized within the Suriname ports industry. The assumptions
that were made in this regards were to elicit direct findings from the field of inception of the
program, creating an ideal situation where data can be collected which is both free of the context
in which the program is developed as well as being universally applicable in other industries.. A
qualitative, questionnaire-based, interview survey was thence developed as the main domain of
collecting positivistic data about the success of the implementation of the strategy as well as
accountability issues that are entwined with the guarantee that private companies will offer the
services required by the consumers and that all contract requirements by the government will be
ensured.
The choice for this type of research strategy was based on the fact that it allowed for the chance
to create networking links across the implementation platform, with the respondents, literature
reviews, and other consultants in the field offering a different look into the means through which
resources can be shared across the industry. Through the use and implementation of this
qualitative questionnaire-based research strategy, the researchers were offered the opportunity to
share experiences with the respondents, giving a one-on-one familiarity of not only the nature
through which the program was implemented, but also other inherent design issues that require
attention. The research strategy offered the chance for the researchers to seek support and
assistance from the dissertation supervisor, where required, like for example in the securing of
interviews and access to confidential research materials.
From past experience as well as studies that have been carried out by others in the field, it is
clear that the best way to undertake a study of the privatization of the ports, and any other
industry, in the field has to be undertaken using the questionnaire-based strategy. Through
creating a good communication rapport with the research respondents as well as those that are
players within the field, a clear means of data collection straight from the field is realized with
resource allocation being based on the necessity and importance of the information.
55
3.4 Research Methodology
In the course of undertaking the research study on the application of Public Private Partnerships
in the Ports and shipping industry, two primary approaches were applied:
•
Desk-based study that is based on previously published literature on the topic of common
practices with regards to PPPs
•
Interviews, the issuing of questionnaires as well as consultations with the key
representatives of the sector
The investigation of the implementation of the public private partnerships in Suriname was
carried out through the use of a qualitative content analysis methodology, with the major sources
of data being interviews and questionnaires sent to the major players of the field. In order to
develop a suitable data output of the possible public private partnership implementations in the
shipping and ports industry in Suriname, the current together with prospected implementations of
the program were sourced from governmental websites together with retrospective
correspondence with governmental departments
In order to carry out a trace to the private sector partner investing in the implementation of the
PPPs in the Suriname ports and shipping industry, a review of the Publicized PPP Forum website
was analyzed, with the following results being raked up (Publicized PPP Forum, 2011):
The Forum comprises members from all States, Territories and the Federal government.
Members are working together to reduce bid costs, increase the level of consistency across
jurisdictions and to share lessons learned to increase skills and knowledge in the public sector.
Content analysis of the projects undertaken by the public and private sectors together with the
implementation strategies within the Suriname ports and shipping industry revealed the major
players, creating the opportunity to carry out interviewing, correspondence and other active
communication practices. A possible range of PPP undertakings were identified within the
shipping and ports industry on the basis of their costs and implementation scope criteria, with a
suitable spread being determined on the basis of the diverse undertakings within the Suriname
ports industry.
56
After the identification of the industry players within the ports and shipping industry application,
a combination of questionnaires, case studies of the implementation regions, background checks
on the companies implementing the strategy, as well as face-to-face interviews were
implemented for the purposes of collecting data from the focus group. Three CEOs of terminal
operators within the ports and shipping industries in the Suriname shipping industry together
with the Managing Director of the Port Management Company were identified as the most likely
and quantifiable candidates for interviewing because of their relative experience and exposure to
the implementation of the strategy, with a sample of the interview questionnaire being attached
to this paper (See Appendix 1).
Research Framework
In order to create a better understanding of the undertakings of the practice of implementation of
PPP in the Suriname ports and shipping industry, expectations and experiences were reviewed,
with documentation of these occurrences being used as the basis of formulating the interview
questions.
3.5 Data
As the research questionnaire reveals, a starting point for the identification of probable research
questionnaire questions that could be used with regards to the formulation of the interview
questions can be done on the basis of accounting and financial principles. Practical orientation
features were implemented while carrying out the study, with the first area being investigated
being the business case of the organization. The purpose of the investigation of the business case
questions in the questionnaire is to investigate the project applicability with regards to the
implementation of the project, examining how the project works in correspondence with
governmental policies.
•
Public Sector Comparator: These were questions within the interview that were aimed at
creating a hypothetical model of the costs that were involved in the implementation of the
strategy within the organization, together with the infrastructural assets that were required within
the course of this implementation. This was then compared with the value-for-money benefits
that are reaped from the implementation of the strategy, with the interviewees being allowed to
57
speculate on whether the program has been successful or not. Within the questionnaire, this was
highlighted by the question:
In your own opinion, is privatization the best advancement in improving the modernization
process of all Suriname ports? Please select appropriate option
And
Kindly explain your opinion or idea of Suriname ports improvement in terms of effectiveness,
efficiency and accountability benefits in the Ports operations and strategic management:
•
Risk Sharing: With the implementation of PPPs in the region, the government is normally
at discretion of implementing design and construction. With the notion of risk being at the front
line, financial statements that are received from the private sector reveal a risk in the
implementation and incorporation of private partners within the industry. For this reason,
questions within the questionnaire were directed towards the identification of the risk areas,
together with how these potential risks can be mitigated.
Do the Public private partnership for port privatization studies and action frameworks reflect
government local capital empowerment strategies? (Tick the most relevant).
While this reflects on the governments commitments towards their investment in the
implementation of the PPP strategies within the ports industry in Suriname, it also elicits a form
of risk sharing parameter where if the respondents feel that they have governmental backing even
when the partnership goes wrong, then their own commitment to the investment is enhanced,
presumably coupled with improved service delivery.
58
3.5.1 Questionnaire Design
Multiple choice closed questions:
The design of the questionnaire that was used within the study was implemented with the use of
the following criteria:
•
Qualitative and explorative criteria on the basis of seeking to find the extent of the
success of the program as well as the „why‟ and „how‟ the program can be more useful to the
people. The interview questions involved an analysis of the extent to which the major players of
the ports and shipping industry perceive the successes, and/or failures of the implementation of
the program, paying even closer attention to the accountability as well as administration.
•
A qualitative study of all the secondary sources of data, such as journals and other literary
materials published on the subject matter, with the main basis of consideration being the PPP
database and its implications within Suriname Ports Industry.
•
The questionnaire consisted of five questions, each with a given number of subsections
and inferred implications that required the input of statistical data about the participant and their
respective organizations. Sections within this questionnaire included:
I.
An offer of the definition of the elemental components of PPPs
II.
The general issues that is pertinent to the implementation of PPPs in Suriname
ports industry
III.
The legal framework of the implementation of PPPs within Suriname
IV.
Risk and uncertainty allocation procedures within the region as well as manners
through which this is handled by the different respondents and their organizations
V.
Statistical data about the preparedness and responsiveness of systems within the
ports industry in Suriname
59
Open questions:
1.
National Level Regulation:
This part of the questionnaire inherently gives a description of the current state of affairs with
regards to the implementation of PPPs in the ports industry in Suriname, seeking to find out
whether there have been any amendments within the constitution that allows, or at least fosters,
the success of the program and how this is done. While calling onto the selective opinion of the
respondents, this part of the questionnaire did not necessarily collect statistical inferences from
the field, but created a rapport between the respondents, the interviewers and the very idea of the
program.
2.
The Privatization Process and PPP option(s)
This part of the questionnaire creates specifications about any concessions that have been
executed within the region, allowing the respondents to record statistical data about the progress
of the implementation of the program. Additional statistical data was collected in this part of the
questionnaire through inferring to the best options chosen by the respondents as being the most
successful, creating shifting balances with regards to the feelings and understandings of the
respondents towards the program.
3.
Private and Public Participation
These are organizations within the industry that are tasked with the responsibility of supplying
goods and services to the private industry, under standards and specifications that are defined by
the public operations authorities. Questions within part of the questionnaire sought to create an
understanding of the creation of private partnerships from public organizations, with the
Suriname ports sector being the main point of interest. Calling on the personal emotions of the
respondents, the questionnaire collected statistical data on the opinions and ideas of Suriname
ports improvement in terms of effectiveness, together with proposed management considerations
that might require some redress.
60
4.
The Port Authority
This part of the questionnaire sought to create a link between the Port‟s administrative entity and
Port Authority at national level, allowing for statistical classifications of the number of workers
that are found within every region and whether they are publicly or privately affiliated to the
company.
5.
Other Information on PPP options
Under this part, respondents were requested to list in any other materials that they felt was most
pressing with regards to the implementation of PPPs in the Suriname ports and shipping industry,
laying much attention on the political and economic effectiveness of the program.
3.5.2 Respondents
Four key persons were interviewed, namely the managing director of the port management
company NV Havenbeheer was interviewed because he could provide (or not) the necessary
scope of the government towards privatization. The three others were two terminal operators,
namely VSH Shipping and Integra Marine Services, and an international shipping line CMACGM who is a partner of the largest terminal operator (Integra Marine Services as terminal
operator and CMA CGM as shipping liner). Why these terminal operators were included is
because VSH and Integra Marine Services are the only two terminal operators left, a third one
(CSA Shipping) is on the verge of bankruptcy. Over a time period of two months these four
persons were interviewed, during consecutive weekends. The first interview was a face-to-face
session using the questionnaire, while the follow up conversations were meant to clarify
statements and verify the accuracy of the description of interview results.
61
Chapter 4: Developing A Framework For Privatization of The Ports In
Suriname
4.1 Relevant Privatization models
Privatization is essentially when all the shares belonging to a company, including the outstanding
stock, is bought by its employees or a foreign party, especially investors. If the company‟s assets
initially belonged to the government, privatization may be defined as transferring these assets to
the private sector. During the process of privatization, all the government‟s functions and
responsibilities are transferred to the private sector. Such responsibilities include collection of
revenue, implementation and enforcement of company rules and regulations. Since the 1980‟s
most governments around the world have been seen to encourage privatization because of its
positive effects to the economy. However, some economists argue that privatization have more
cons than pros. They argue that the impact that privatization has on developing countries is by
far devastating when compared to already developed countries. This issue is still under debate
and is yet to be resolved.
Suriname is a nation located in South America that as an option may look to privatize its ports
located in Paramaribo, the capital. However, for privatization to be facilitated smoothly, certain
procedures and protocols should be conducted. These procedures majorly involve the
government and the private sector that want to privatize that sector. The relationship between
these two parties is crucial to the successfulness of the privatization process. There is also a need
to develop a framework that will guide these two parties, especially the government, in deciding
the best and most suitable PPP options. These options should complement the objectives,
purpose and ideals that initially led to the need of privatization of the ports.
The BOT model is better than the Landlord model with respect to the outcome based on the
annual reports. In essence, two models greatly stand out as PPP options for the privatization of
ports in Suriname. In a quest to develop a framework that would, best fit the goals and objectives
for the privatization of the ports in Suriname, the management company of the port invested one
hundred and twenty five million dollars. In addition to this, there was the TEU file and the
62
proprietor owner policy, which required the terminal operators to pay a fee of 56 dollars a year
(this was agreed through heavy negotiating form the terminal operators with the landlord who
had 103 USD as a first proposal). At 56 USD the port is still one of the most expensive ports in
the world; the employee costs of the port management company are very high. The annual
reports of 2007 and 2008 show an increase from 2,529,020 USD to 3,122,137 USD with an
employee total of 250. On the other hand, when the BOT model is used, more income is
generated and the expenses incurred are minimal and the workforce would lead to much more
efficiency.
4.2 Findings
A BOT model is also known as a build-operate-transfer, it is mostly used in the financing of
projects. In essence, the private company receives consent from the private sector that has
invested there to operate, construct and finance the facility, in this case, the Suriname Ports. The
investor who advocated for the project is able to recover his investment. The BOT model is
usually a long-term agreement, and in the period of concession, the fees are almost automatically
hiked. This is due to an amalgamation of external and internal variables that lead the investor to
achieve a comfortable rate of return.
With reference to the questionnaires conducted in the ports in Suriname, it is clear that there is
no formal privatization plan or strategy that has been published by the company. This sparks the
need to establish a suitable framework to guide the privatization of the port. However, there was
a landlord model that was floated, but when the logistics were put into consideration, the model
proved to be quite costly, and would consequently make the port one of the most expensive ports
in the world, (CEO Integra marine services, November 2011 and CEO VSH Shipping, October
2011)
In the localization and integration of citizen participation, there is no agenda that looks into the
formulation of a privatization framework; in fact, the government does not have any clearly
outlined and documented strategy.
63
The questionnaire findings also indicate that the initiation of the privatization plan was due to
pressure from external forces such as the European Union. Financial donors also demanded that
the ports be privately manage for more efficiency and substantial returns. Privatization of the
ports was also rooted for to eliminate political influence that greatly influences this sector (CEO
Integra marine services, November 2011 and CEO VSH Shipping October 2011).
From the year 2004 onwards, imports have steadily increased in the port. The number of
containers imported to the country rose from 26,747 in the year 2004 to more than 40,000 in the
year 2009. Privatization has also had the same impact on exports from this port. The number of
containers being exported has gradually risen from 2004. This can be concluded by the figures
from the annual reports from these ports. The combined export-import will tremendously
increase after the introduction of a BOT model because the investment of the operator as sole
operator is attractive, since now the landlord model is used and the other 2 Terminal operators
don‟t invest in equipment the benefit of total efficiency of the terminal operator is negatively
affected. In the year 2004, the accumulated export-import container recording was 33,492, this
figure rose over the years to reach an all-time high of 59, 584 this was achieved mostly by
Integra marine port services who made great investments as a private sector. Efficiency is from
the private company (cargo handling and sharp prices lead to these positive changes can be
attributed to the introduction and use of the BOT model in privatization in this port. Especially
Integra Marine Freight Services in 2009 and 2010 invested millions of dollars in new harbour
cranes that the productivity and the need to increase security for the port workers ("monster port
crane processed containers three times faster", 2009; "Entrepreneur Vijzelman invests in three
large cranes", 2010) Source: http://lib.ugent.be/fulltxt/RUG01/001/491/026/RUG01001491026_2011_0001_AC.pdf UNIVERSITEIT GENT FACULTEIT POLITIEKE EN
SOCIALE WETENSCHAPPEN, Wetenschappelijke verhandeling JAN DE DEKEN and (
questionnaires 2 and interviews CEO Integra marine and CEO VSH Shipping)
The Suriname government therefore had no intention on privatizing this sector even though it
would be of general good to all parties; the government, the investors and the citizens. As
evidenced from some ports in the country such as the Nieuwe Haven port operational facilities
were greatly inadequate; after investment from the private sector the port has three cranes that
64
are used for moving containers faster. Privatizing such a port, especially using the BOT model,
would help in increasing the standards of the port, the private company contracted would be
responsible for facilitating all these needs. This would in turn increase the productivity of the
port as a whole.
Some companies in the area have also bought most of the shares in Integra marine port, an
example is DP world which. Consequently, this company handles over 90 percent of the cargo
that passes through the port of Nieuwe Haven. DP world is quite a big company in which the
BOT system would primarily go hand in hand with. “The transaction is expected to close in the
third quarter of 2011. The price was not disclosed”. Quoted by Natasha Bukhari, Global
Corporate Communications Manager DP World (Natasha.Bukhari@dpworld.com).
Generally, there are quite a number of reasons why the BOT model would be more efficient as
compared to other models such as the Landowner model. To conclude, the BOT model would
facilitate the transfer of technological knowhow to the ports. The public budget would also be
relieved of the burden and pressure associated with development of infrastructure in the country.
The BOT model whereas a international company is involved for example “DP WORLD “will
encourage the introduction of foreign private capital in the country in the questionnaire the CEO
of Integra marine. The BOT system also encourages foreign investors to the country; this is
because the investors are assured of little or no government interference.
Privatization is essentially where the all the stock belonging to a company, including the
outstanding stock, is bought by its employees or a foreign party, especially investors. If the
company‟s assets initially belonged to the government, privatization may be defined as
transferring these assets to the private sector. During the process of privatization, all the
government‟s functions and responsibilities are transferred to the private sector. Such
responsibilities include collection of revenue, implementation and enforcement of company rules
and regulations. Since the 1980‟s most governments around the world have been seen to
encourage privatization because of its positive effects to the economy. However, some
economists argue that privatization have more cons than pros. They argue that the impact that
65
privatization has on developing countries is by far devastating when compared to already
developed countries. This issue is still under debate and is yet to be resolved.
Suriname is a nation located in South America that looks to privatize its ports located in
Paramaribo, the capital. However, for privatization to be facilitated smoothly, certain procedures
and protocols should be conducted. These procedures majorly involve the government and the
private sector that want to privatize that sector. The relationship between these two parties is
crucial to the successfulness of the privatization process. There is also a need to a basic
framework that will guide these two parties especially the government, in deciding the best and
most suitable PPP options. These options should complement the objectives purpose and ideals
that initially led to the need of privatization of the ports.
To add more from the findings of the questionnaires in chapter four, given in this study, it is
evident that Suriname has its strategies and plans on privatization, not in place. It is evident from
the questionnaires that a suitable framework in this process of privatization has to be established.
The questionnaires also promote the fact that models have to be considered for the
implementation process to take place. In addition to this, it is evident that the model outlined in
the findings obtained from questionnaires is that they require to be implemented on logistics and
needs which, as a result, turn out to be extremely expensive. Additionally, it is evident that some
economists are of the opinion that privatization possess a lot of risks rather than advantages.
They continue to argue that this adverse effect is well pronounced in developing countries than
developed countries. With regard to the questionnaires that were handed out, it is quite evident
that there is no official plan or strategy that has been established by the current managing
company. Therefore, there is an urgent need for a framework to guide the privatization venture.
The landlord model that had been proposed earlier, proved to be too costly. This was decided
after considering logistics, whereby it was discovered that with this model, the port would be
among the world‟s most expensive ports.
Currently with regard to participation of the citizens, there is no official strategy that deals with
privatization of government property. The government does not have any guidelines with regard
to the same. As a matter of fact, the privatization is taking place due to external forces, for
example, the European Union. Financial donors are of the opinion that privatization of the ports
will lead to better management and significant returns. In this case, imports and exports at the
66
port have risen since 2004. The rise of imported containers from 26, 747 in 2004 to over 40, 000
containers in 2010 is one indicator. The exported containers have also increased gradually since
2004.
From the findings obtained on questionnaires, it is evident that port privatization is efficient
which, as a result, leads to reduced operational costs for Suriname ports. In regard to the
questionnaires on Privatization in Suriname, the politicians and the government usually make a
shift in their paradigm so as to ensure that the private sector has understood that the firms in the
private sector are the engines to an economy that is developed. It also ensures that there are no
structural measures and that the challenge is to change the cultural mindset of their politicians.
In the realization to measures that are required, there is anticipation on the private sector‟s
development and the design of work. There are increased benefits that are reaped, when it comes
to the investment ports. This results to the private sector backing-off due to its small scale. The
existing link for the organizations at the national level is controlled by the government, the ports
authority and the port management. As an advantage for PPP, they are set in a way that they are
the upfront investors and guardians for the lease system. Conclusively, the key significance of
the government is to guard the common interests of the private sector firms that are located in
Suriname.
Based on the results that I collected, I conclude that my literature review can be stated to show
that the privatization of firms is necessary in Suriname port.
The data that I collected can be observed as follows:
Full analysis of solutions of privatization at the port was seen to be efficient as a result of
reduced operational costs for Suriname.
After a full analysis of the questionnaires, the following was observed:
a) Benefits increased somewhat, when it came to Port investment.
b) There were structural measures that were obtained as a challenge to the politicians in
Suriname.
c) There was a shift in the port‟s paradigm as a result of the private sector being involved.
d) The structure at the port seemed to remain the same and the stakeholder‟s communication
improved.
67
e) The key advantage noted in the guardian and investors of the lease system is that BOT
model can be used despite the investments made.
68
Chapter 5: Conclusion and Recommendation
The main conclusion is that privatization of the port will be economically beneficial to Suriname.
The result gained from the research questionnaires indicates that both the private sector and
public sector are in favor of privatization. Business organizations, institutions, as well as
managers confirm this finding. Both the private sector and the public sector need to work
together in partnership to improve the business environment of ports in Suriname. However,
according to the questionnaire results, the sector is not yet fully ready for privatization. More
needs to be done.
As such, I suggest establishing a system for further analysis and more in-depth detail research. I
also recommend choosing the BOT model when privatizing the port of Suriname. This due to the
fact that it is compatible with current developments and creates an even greater model of
efficient cooperation between stakeholders in addition to establishing clear ownership of
functions, responsibilities and value of economy. The BOT system is also suitable for
encouraging foreign investment. In addition I also recommend further study and fact finding
system for a suitable framework for PPP development for Suriname. This system should not be
regarded as waste, but best practices can be drawn from its operational strengths in other parts of
the world with similar economic challenges such as Suriname. In conclusion, the BOT model is
a suitable port privatization model. This has been seen in its numerous advantages over other
models in terms of attracting private financing, providing incentives to port operators for
improved efficiency & effectiveness and also allowing for innovation as part of Suriname‟s
position on the Global Competitiveness Index. All other similar models have some elements of
the BOT model. For instance the BOO model is very similar to BOT, but there is no set date for
handing over the port to the government or port authority. Adding to this its successes has been
numerous in terms of port management. For instance this model attracts private financing in
developing and renovating of port and infrastructure. It also reduces commercial risks that are
affiliated to the private company. The model allows for a single customer (government) and
lastly there are additional revenue sources such as shadow tolls, vehicle registration fee & lease
payments. However there are also many disadvantages behind the model. For instance, it may
have a limited effect on the overall project performance. Issues such as difficulty to link
69
production may increase with the commensurate demand improvements. Lastly private debt can
be a costly substitute for the government funding where pay or take agreement is operational.
According to the questionnaire findings of this study, we can conclude that there is a specific
privatization plan or strategy that has not been published by Suriname. This shows that there is a
need to first off a suitable framework that will be useful to guide the privatization process. Some
models may have been considered such as the landlord model, however, with this model
implementation needs and logistics are quite expensive and this would in turn result in costs
being transferred to the customers, thus this system is prone to profit lost. Among the most
important factors to consider in port privatization is efficiency, which eventually brings down
operational costs. With a Landlord model in place, the cost factor rises which is not practical
consumers in for Suriname.
The cost factor can however be ruled out since the findings of the research indicate that the
intentions behind privatization were not economical but political. In this case we can then
conclude further that a model that is cost efficient may not be the solution to the privatization
process. This is because the initial privatization of the ports was aimed at eliminating political
influence that is so prevalent in this sector. There are many other factors to consider apart from
cost in choosing a privatization model. For instance, the combined export-import of a BOT
model has shown tremendous increase after the introduction of the BOT model. Results from the
study also show that there were minor financial requirements for port privatization in the
government expenditure in the first place.
Privatization of the port is thus in good interest of all parties which include the government, the
investors and the citizens. From the research findings, privatization is expected to increase the
efficiency of operational facilities. This may not always be the case as seen through the findings
of this research. We see some ports such as the Nieuwe Haven port having operational facilities
which are greatly inadequate yet the ports are privatized. Privatizing such a port, by using the
BOT model, helps increasing the standards of the port as the private company contracted would
be responsible for facilitating all these needs. This would in turn increase the productivity of the
port as a whole.
70
In summary, the positive reasons outweigh the negative ones in terms of why a BOT model is
more efficient as compared to other models such as the Landlord model. The model is the most
suitable for privatizing Suriname ports in that it would facilitate the transfer of technological
knowhow to the ports. The pressure on the country‟s Gross Domestic Product and current HBS
cash flow would also greatly reduce in terms of spending associated with the development of
infrastructure in the country. The BOT model remains the best model as it encourages the
introduction of foreign capital into the country which in turn results in increased economical
standards and accessibility and availability of foreign currency.
The BOT system is also suitable for encouraging foreign investment. According to the
questionnaire findings of this study, we can conclude that there is a specific privatization plan or
strategy that has not been published by Suriname. This shows that there is a need to first of all
establish a suitable framework that will be useful to guide the privatization process. Some
models may have been considered such as the landlord model‟ however, with this model
implementation needs and logistics are quite expensive and this would in turn result in costs
being transferred to the customers. Among the most important factors to consider in port
privatization is efficiency which eventually brings down operational costs. With a Landlord
model in place, the cost factor rises which is not practical for Suriname.
71
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Appendices
Appendix 1
QUESTIONNAIRE ON PRIVATIZATION OF THE PORTS IN SURINAME
1) National importance of port privatization
1.1)
Does the government have a formally published port privatization strategy?
Yes
No
If yes, does this include using local investors in the public private partnerships for port
development? (Tick the most appropriate from among the following).
The ports are vital and the plan includes well set out implementation actions meant to
incorporate local investors. (Kindly attach).
Local private partners form part of the strategy but the operational aspect has not yet been
developed.
There are plans to set out one, entrusted to a finance department committee.
Other, give details:
1.2)
If the government does NOT have an articulate port privatization strategy, or if local partnership
is not the main agenda, are there any other strategies that look into local citizen participation? (It
is Ok to tick more than one box).
75
Government objectives are not clearly outlined in a documented strategy
In the government bi-annual gazette
In the government public private ownership agreements
1.3)
Do the Public private partnership for port privatization studies and action frameworks reflect
government local capital empowerment strategies? (Tick the most relevant).
The PPP and related action frameworks reflect the government‟s willingness to empower
the local populace as a means of poverty eradication.
The PPP and related action frameworks reflect the government‟s analysis of local
participation and quality of work tradeoff as a long term cost effectiveness measure.
The PPP and related action frameworks are not good indicators for the government‟s local
empowerment strategies, because it has never been discussed at a national level nor has it
been documented in government papers.
76
The PPP and related action frameworks are currently not proper indicators of the
government‟ local empowerment strategy but are in the process of being updated so as to
conform with the government‟s poverty eradication strategy.
Other
1.4)
What is the government‟s priority in improving the country‟s capacity to benefit from increased
trade as a result of port privatization? (Tabulated here are the main areas of capacity advantage –
please rank two from the table)
Business related policies
Economic
infrastructure

Trade facilitation

Tax review

Link roads to
the ports

Air terminals

Network
infrastructure
77
Capacity building

Competitiveness

International trade

Diversification.
Other

Operational
costs

Regional
collaboration.

1.5)
Other.
Does the government have a deadline for the priority areas in the practical aspect of port
privatization?
Priority I) Business related polices
Yes
No
Priority II) Capacity building
Yes
No
Priority III) Economic infrastructure
Yes
No
2) Port privatization financing
2.1) Are the financing requirements of the port privatization included in the current government
expenditure estimates?
Yes
2.2) If YES, where is the financing going to come from?
No
78
Taxes
Government borrowing
Other
3) Port privatization strategy implementation
3.1) What is the procedure for the privatization?
A top level government team is responsible for harmonization and execution.
A finance department committee has an oversight role.
The coordination is decentralized with each department handling its relevant part of the
process.
Other
3.2) Is there a platform for engaging with the private sector and other stakeholders about the
implementation of the ports privatization strategy?
Yes there is a strategy in place
No strategy has been put in place
3.3) What is the expected level of participation of external partners in the ports privatization?
Joint feasibility assessment and analysis
Joint-financing
High
High
Low
Low
79
Joint execution
High
Other
Low
High
Low
4) Accountability
4.1) How is corruption defined in the context of the port privatization process? (Write your answer
below)
4.2) Have you put in place mechanisms that will reduce incidences of corruption in the privatization
process?
Yes
No
If yes, please elaborate.
4.3) Is a committee to have the final word regarding corruption matters or the minister in charge?
A Committee
The minister in charge
4.4) If it‟s a committee, what criterion is used in selecting its members?
Public tendering
Direct appointment by the president
4.5) What Measures are there to ensure that, committee members comply with laid down rules and
regulations?
A Parliamentary oversight committee
None
4.6) What does the government plan to do, to ensure that efficiency is maintained after privatization?
80
Highly coordinated reporting requirements
Tighter port activity regulation
Other
5) Addressing port privatization challenges
5.1) Are there challenges to the privatization process?
Yes
No
5.2) If yes, what are the main challenges in the port privatization process? (Please list them below).
5.3) What measures are in place to tackle each of the challenges listed above? (Please link each measure
to a specific challenge).

National Level Regulation:

Give details on how the existing or proposed normative frame will or attracts private
investment in ports management?

Have there been any amendments on the existing foreign investment legislation or
regulatory rules on PP partnerships various?
81

The Privatization Process and PPP option(s)

specify any process of privatization and/ or Suriname Ports concession of ports executed in the
last decade, by indicating the dates, and the approximated investment and result annual canon
based on the chart below:
Terminal Operators
Concession/
Privatization
Date
(MM/Y
Y)
Variable/
unity
Annual
Fixed
Investment
in US $
(dollars)
Date
(MM/
YY)
Investment
distribution
(years)
1Y
r

5Y
rs
10Yrs
What form of privatization option do you favor? Please Tick (X) the most appropriate
option(s)
Service Contract

Build-operate
Concessions
Lease/Affermage
Arrangement
Management
Contract
Please expound on your answer in (b) above, and give details of your PPP option as
illustrated :
Benefits:…………………………………………………………………………………………………
…………………………………………………………………………………………………………
………………………………………………………………………………Demerits:………………
…………………………………………………………………………………………………………
……………………………………………………………………………………….…………………
……………………………………………………………
82

How beneficial or useful is the political leadership to the effectiveness and accountability
in Suriname ports operations? Please Tick (X) the most appropriate option
Very detrimental
Detrimental
Neither
detrimental or
beneficial
Beneficial
Very Beneficial
 Please expand on your answer in (a) above by giving your details here:
…………………………………………………………………………………………………
…………………………………………………………………………………………………
…………………………………………………………………………

Among the following options, what role was given to private investors to merge with
government authorities? Please select appropriate option.
a. Advisory
b. Management
c. Management and advisory
d. None of the above

Private and Public Participation
a. In your own opinion, is privatization the best advancement in improving the modernization process of
all Suriname ports? Please select appropriate option
Yes
NO
b. Kindly explain your opinion or idea of Suriname ports improvement in terms of effectiveness,
efficiency and accountability benefits in the Ports operations and strategic management:
………………………………………………………………………………………………………
a. What level of political influence does the national or state leadership have in Suriname ports
management? Please Tick (X) appropriate option
Very weak
Weak
Neither weak
Strong
Very Strong
83
nor strong
b. Please expound on your answer in (a) above by giving your details here:
………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
………………………………………………………………………………………

The Port Management company

Please specify the existing organizational link between the MAS and Port Management company
(NV Havenbeheer) at national level.

For every port, please designate the allocation or sharing of the given responsibilities. (Just put an
"x" mark where appropriate):
MAS
Nv Havenbeheer
Private
Terminal Lease System
Concession
Equipment
Pilotage
Security
Work Police
4. Ports Labor Aspects

Classify the approximate number of workers in Suriname ports and terminals, by separating
private from state workers.
84
Public Ports
Ports in concession
Terminals
Awarded in
concession
Private Ports
Contractors
State

clarify the system used in every Suriname port when contracting workers, as per the below
chart:
Public Ports
MAS
NV Havenbeheer
Terminal operators
Combined System
Fixed employment
Employment
agency
5. Other Information on PPP options
a. Efficiency in ports: Are there operational inefficiencies in terms of delayed clearance on
Suriname ports that are state-owned or not awarded in concession
b. Political Interference: What is the role does political leadership play during national level
appointment in the ports?
c. What role would the Government adopts in ports operations, the role of regulator or a player?
Please explain your views in the section below.
85
Appendix 2

Developing a Framework for Privatization of the Ports in Suriname

Transcription

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