The Philippine Ports Authority (PPA) hopes to start implementing before the year ends its new guidelines for awarding terminal contracts, noting this is seen to improve efficiencies in port operations.
PPA assistant general manager for operations Hector Miole, in a chance interview with PortCalls during the 2018 Arangkada Fora on September 12, said the port authority is already identifying port operations that can be bid out to private operators under the Port Terminal Management Regulatory Framework (PTMRF).
Miole said PPA will start with small ports before eventually involving bigger ports “because we need to demonstrate also that this terminal management policy can work, and it can work well.”
Embodied in PPA Administrative Order (AO) 03-2016 issued in 2016, PTMRF outlines the guidelines for awarding terminal management contracts. The framework has among its objectives the promotion of private sector participation in port operations to provide higher quality service.
Under AO 03-2016, investments in ports are to be categorized into six tiers, ranging from a fully private concession to a fully PPA-managed port, to makes it easier to determine the investment arrangements of a port.
Performance-driven
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.
Miole explained that PTMRF is a “system where a terminal operator handles all the services in the port.”
He said this is in contrast to the current arrangement in which PPA operates the port and bids out cargo-handling operations and other ancillary services separately to different service providers.
“This time there is one accountable terminal operator, just like what you have in North Harbor, MICT (Manila International Container Terminal), in South Harbor, Batangas,” Miole pointed out. Currently, these ports are developed, operated, and maintained by port operators that won concession contracts from PPA.
“We think that governance model is effective for Philippine ports,” Miole noted.
With terminal management assigned to the private sector, Mioel said PPA can then “focus on monitoring performance [and] contract provisions.”
PPA as referee
“We’ll make sure that the users are also protected so we stand in between…we referee,” Miole added.
Asked if PTMRF will entail lower costs, Miole said “we believe that with the integration of all the activities, the terminal operator is able to rationalize the cost and the services there.”
There should also be port efficiencies experienced with PTMRF, Miole said.
He said PTMRF will be “focusing on deriving outputs or results of operations” and that “investments in equipment and other resources that are needed for port management will be demand-driven.” He said if there is demand, the terminal has no choice but to provide more equipment “because there are performance targets that you have to meet” under PTMRF.
He said PPA “will need to drill them (terminal operators) on that.”
He added that PTMRF also promotes ease of doing business, as port users will no longer have to deal with many different service providers inside the port but only one.
“Today when you go to the port, sometimes you have to transact with several parties and this creates many problems for many other users. So with one vertically integrated and laterally scaled operations, we should be able to improve on our port systems in the future,” Miole explained.
Meanwhile, under AO 09-2018, PPA is granting or extending the hold over authorities of cargo-handling/terminal operators for another six months pending implementation of PTMRF. – Roumina Pablo
