A recently published World Bank Viewpoint has delivered detailed insight on port governance.
Achieving Full and Effective Corporatization of Port Authorities, authored by Periklis Saragiotis (private sector development specialist at the Trade & Competitiveness Global Practice of the World Bank Group) and Peter de Langen (principal consultant of Ports & Logistics Advisory and author of The Analyst viewpoint in Port Strategy), argues that many countries fall short of fully effective corporatisation of their port authorities, because they retain administrative and decision-making mechanisms under government control.
The viewpoint offers broad guidelines for effective corporatisation:
- Transform the port authority into a corporate entity, with Government (national, local or a combination) as shareholder.
- As shareholder, development a shareholder policy by Government to provide strategic direction to the port enterprise(s). A shareholder policy may oblige the port company to make periodic master plans.
- Install a merit-based and independent supervisory board. A fully independent board focused solely on transitioning the port authority toward a professional port company represents an important improvement in corporate governance.
- Ensure that the port authority is autonomous regarding concession granting, land leases and procurement decisions, and have the freedom to negotiate tariffs with its customers. Increased commercial autonomy should be accompanied by well-developed mechanisms to ensure that competition law applies to the port authority.
With these recommendations, the World Bank has expanded its widely-used Port Reform toolkit, with the aim of contributing to a better ports industry, critical for facilitating trade.
