Who should pay for infrastructure?

Public investment in dredging at Liverpool has been criticised. Credit: Andrew Public investment in dredging at Liverpool has been criticised. Credit: Andrew

COMMENT: Who picks up the bill for infrastructure investments is a key issue in port development, writes Peter de Langen

In many parts of the world, governments are still required to stump up the cash for port development. Even in the UK – where private funding is most dominant – investments in maritime access, hinterland access and in a few cases terminal infrastructure, have been financed by government. For example, necessary dredging in Liverpool was largely publicly funded, while road connections often require government cash. In other countries, partial government funding is the rule, rather than the exception.

The core argument for public funding is that port infrastructure creates value for society, for instance through reducing emissions as investments may lead to a shift of transport flows to environmentally-friendlier shipping. Investments in infrastructure may also lead to increased energy efficiency, or more trade and associated employment. Academic research on the relationship between the quality of ports, trade volumes and cost/benefit analysis indeed confirm that investments in port infrastructure do, in specific cases, create value for society. A recent Policy Report from ESPO confirms that conclusion (https://www.espo.be/media/Port%20Investment%20Study%202018_FINAL_1.pdf).

However, while partial government funding is legitimate for investments that create value for society, they can also distort the playing field and disadvantage competing ports. This argument was put forward by private UK port companies when they filed a complaint against the public funding for both the dredging and terminal investments in Liverpool.

In addition, partial government funding may shift investment decisions from the commercial to the political domain, with the associated risk of allocating resources to projects that do not create the value they were designed to create.

Both issues can be overcome with a competitive mechanism for partial co-funding of port infrastructure investments, which is open to competing ports, even if they are located in different countries. While that may seem a distant dream in many parts of the world, surely it’s worth making moves in that direction?


Siwertell road-mobile capabilities added to Ashdod’s sulfur-handling operations

Bruks Siwertell has secured a further Siwertell ship unloader order from Israel’s Ashdod Port Compan... Read more

SANY Boosting Business in Europe for Container Handling Equipment

SANY Europe have had a very busy 1st half of 2019. Several orders have been secured and machines hav... Read more

SOHAR Port Anticipates Potential Business Opportunities

Muscat, July 2019: With several developmental plans underway, including future projects, SOHAR Port ... Read more

BEST - The coolest terminal in the Med

Hutchison Ports BEST terminal in the Port of Barcelona has recently increased its storage and connec... Read more

SFT participates in extensive Tema Port expansion in Ghana

Meridian Port Services (MPS) invested USD 1.5bn to expand the infrastructure of Tema Port in Ghana, ... Read more

LASE opens first office in Australia

LASE announces local presence in Perth, Australia in order to support the growing base of Australian... Read more

View all