Home » Ports/Terminals » Draft order dictates rules for granting PH port concessions

Stakeholders have until January 10 to submit their position papers on the draft memorandum circular (MC) that provides the implementing guidelines for the new port terminal management regulatory framework (PTMRF) of the Philippine Ports Authority (PPA).

PPA has conducted in December a series of public consultations on the proposed MC, which will govern the bidding and awarding of contracts for port terminal management. The MC will be implementing the provisions of PPA Administrative Order (AO) No. 03-2016, or the PTMRF.

Issued in early 2016, PPA AO 03-2016 outlines the guidelines for the awarding of terminal contracts.

Under the draft circular, a public bidding to manage a port’s terminal will be conducted at least six months before the existing port terminal management contract or cargo- handling contract expires. For either new port facilities or ports without authorized cargo-handling operators, bidding for cargo-handling services will be conducted immediately. For existing special takeover units, bidding for cargo-handling services will take place within six months of effectivity of the circular.

Membership to the bids and awards committee for public bidding will vary depending on the category of investment to be done at a port. Suggested observers to public biddings include authorized representatives from the shipping industry; the Philippine Chamber of Commerce and Industry and the Philippine Chamber of Arrastre and Stevedoring Operators; and the Commission on Audit.

PPA port operations and management manager Roberto Aquino, during a public consultation on December 22, said the new PTMRF aims to enhance PPA’s rules for awarding of terminal management contracts in order to reduce the administrative burden of PPA.

Under AO 03-2016, investments in ports are to be categorized into six tiers, ranging from a full private concession to a fully PPA-managed port, to makes it easier to determine the investment arrangements of a port.

Aquino said that under the new port terminal framework, concessions will be performance- or outcome-based, instead of investment-based or based on the number of equipment or facilities to be provided by the concessionaire.

He said that with this, PPA hopes “to be able to reduce transport and transaction costs”, especially on agricultural products.

PPA is also soliciting suggestions for the key performance indicators (KPIs) the concessionaire has to attain and maintain. Under the proposed terms of reference (TOR), suggested KPIs per hour include vessel’s average working time at berth, vessel’s average time at berth, average number of cranes per vessel, average tonners per hour for bulk and breakbulk shipments, average moves per hour for containers, average yard dwell time, and passenger/port user satisfaction survey results.

If the concessionaire fails to meet the KPIs, it may be liable to pay KPI charges, and PPA may enforce payment of the unpaid balance if it cannot collect it from the operators.

PPA will also do mandatory review of the contract if targets are not met and terminate it if targets are still not fulfilled after three years.

The TOR also proposes the number of equipment to be provided by the concessionaire during the commencement of the contract.

Asked if the new rules for granting concessions will translate to lower port charges, PPA assistant general manager for operations Hector Miole said “productivity is really designed to bring down costs.”

He noted that a vessel that stays at berth for 10 hours instead of the supposed five hours doubles its costs.

Miole said increasing productivity will also result in “increasing returns to profit and savings.” – Roumina Pablo

Image courtesy of Pitiya at FreeDigitalPhotos.net

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