Manuel de l'utilisateur - Aspects juridiques et institutionnels des systèmes de réglementation portuaire

USER MANUAL— LEGAL AND INSTITUTIONAL ASPECTS OF PORT REGULATORY SYSTEMS CAP - HAITIEN PORT REGULATORY STRENGTHENING PROJECT April 2018 This document was produced for review by the United States Agency for International Development. It was prepared by Nathan Associates for the Cap Haitian Port (CHP) Regulatory Strengthening Project, contract number AID-521-C-16-00003. U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 2 USER MANUAL— LEGAL AND INSTITUTIONAL ASPECTS OF PORT REGULATORY SYSTEMS Activity Title: Cap-Haitien Port Regulatory Strengthening Project Sponsoring USAID Office: Office of Infrastructure Contract Number: AID-521-C-16-00003 Contractor: Nathan Associates Inc. This document was produced for review by the United States Agency for International Development. It was prepared by Nathan Associates for the Cap Haitian Port (CHP) Regulatory Strengthening Project, contract number AID-521-C-16-00003. U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 3 CONTENTS 1. Introduction .........................................................................................................................................................6 1.1 Purpose Of The Manual .................................................................................................................................6 1.2 Who Is This Manual For? ...............................................................................................................................6 1.3 Structure Of The Manual ...............................................................................................................................7 2. Regulatory Concept ..........................................................................................................................................8 2.1 What Is Regulation ..........................................................................................................................................8 2.2 Principles And Scope Of Port Regulation ..................................................................................................8 2.3 Functions Of The Regulator ..........................................................................................................................9 2.3.1 Competition Control ..............................................................................................................................9 2.3.2 Police, Security And Safety Standards - Exclusive Jurisdiction Of The State .......................... 10 2.3.3 Environmental, Public Health And Hygiene Norms And Standards, ........................................ 10 2.3.4 Concept Of Public Service .................................................................................................................. 10 2.4 Delimitation Of The Port Public Domain ............................................................................................... 11 2.4.1 Use Of The Public Domain ................................................................................................................. 12 2.5 Role Of Apn As The Regulatory Authority ............................................................................................ 12 3. Primary Port Management Business Models ............................................................................................ 14 3.1 Types Of Port Management Models ........................................................................................................ 14 3.2 Main Characteristics ..................................................................................................................................... 14 3.2.1 Dominant Management Model - Landlord Port ............................................................................ 14 3.2.2 Management Model – Privatized Port .............................................................................................. 16 3.2.3 The Intermediate Model (Tool Port) ............................................................................................... 17 4. Types Of Contractual Models In The Port Sector ................................................................................. 18 4.1 The Ppp And Delegation Of A Public Service Concept - Definition .............................................. 19 4.1.1 What Is A PPP? ...................................................................................................................................... 19 4.2 Main Characteristics Of Port Contractual Agreements ...................................................................... 25 4.2.1 Port Concession Agreement .............................................................................................................. 25 4.2.2 Concession For The Use Of An Area Of The Port Public Domain ......................................... 25 4.2.3 Domain Fee ........................................................................................................................................... 27 4.2 Lease Agreement For Port Infrastructure Management ..................................................................... 27 U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 4 4.3.1 Lease /Affermage Agreement - Definition And Scope ................................................................. 27 4.3.2 Remuneration Mechanisms ................................................................................................................. 29 4.4 Risk Allocation Between The Port Authority And The Private Operator ..................................... 29 4.4.1 Risk Identification And Assessment .................................................................................................. 29 4.4.2 Infrastructure Risks (Design, Construction, Technical, Performance) .................................... 30 4.5 Types Of Contracts Authorized By The Port Reform ........................................................................ 32 4.6 Terms And Conditions Applicable To All PPP/DSP Contracts ......................................................... 33 4.6.1 Identity Of Contractual Parties And The Role Of Different Government Institutions ....... 33 4.6.2 Operator’s Legal Status ...................................................................................................................... 33 4.6.3 General Terms And Conditions Applicable To All Port Contracts ......................................... 33 4.7 Specific Conditions For Each Type Of Contract .................................................................................. 35 4.7.1 Port Concession Contract ................................................................................................................. 35 4.7.2 Content Of The Concession Agreement For Port Works And Public Services Under The Port Reform ..................................................................................................................................................... 36 5. Legal And Institutional Framework Applicable To The Port Sector .................................................. 38 5.1 Current Legal Framework / Current Context ...................................................................................... 38 5.2 Port Sector Reform –Development Of The Private Sector Participation ...................................... 38 5.2.1 Establishment Of The Sonagep – Role And Missions ................................................................... 39 5.2.2. Establishment Of The Anarep – Role And Missions ................................................................... 39 5.3 Establishment Of A PPP Legal And Regulatory Framework ............................................................... 39 5.3.1 Existing Ppp Framework ...................................................................................................................... 42 6. Public Procurement Procedures .................................................................................................................. 43 6.1 Public Procurement And Calls For Tender ............................................................................................ 43 6.2 PPP Contract Award Procedure ............................................................................................................... 43 7. Contract Supervision, Audit And Regulation ........................................................................................... 45 8. Appendix ........................................................................................................................................................... 46 U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 5 ACRONYMS ANAREP National Port Regulatory Authority AOT Temporary Occupation Authorization APN National Port Authority BLT Build-Lease-Transfer BOO Build-Own-Operate BOT Build-Operate-Transfer CET Terminal Operating Agreement ( convention d’exploitation de terminal ) DBFO Design-Build-Finance-Operate DPP Public Port Domain DSP Public Service Delegation MEF Ministry of Economy and Finance MTPTC Ministry of Public Works and Telecommunications SME Small and Medium-Sized Enterprises PPP Public-Private Partnership PPPI Institutional Public-Private Partnership RLT Rehabilitation-Lease-Transfer ROT Rehabilitation-Operate-Transfer SEMANAH Haitian Maritime and Navigation Service SONAGEP National Port Management and Operating Company U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 6 1. I NTRODUCTION 1.1 P URPOSE OF THE MANUAL APN has entered into a variety of contracts for the provision of port services, construction and operation of warehouses and merchandises handling facilities in Cap-Haitian, with different companies. However, the purpose and scope of the responsibilities and obligations of APN and the operators are described in a fragmented and imprecise manner. Furthermore, the technical specifications and performance levels of service providers are not expressly defined in these contracts. In addition, certain contractual conditions stipulated herein do not comply with the applicable laws and regulations in force in Haiti. It is important that APN, as a contracting entity of these agreements concluded with corporations, has the capacity to define the precise terms and conditions under which the management and operation of the facilities and the provision of port services shall be carried out. APN must also be able to monitor and supervise the proper performance of the contracts concluded as well as to safeguard the Haitian people, the port users and the government interests d in managing the Haitian port domain . Therefore, it is essential for APN to have the necessary resources and expertise in order to apprehend and comprehend the main aspects of port management and operation contracts and to master the stakes and implications of its responsibility as the regulator of the port sector. The purpose of this Manual is to define the role and responsibilities of APN as the port regulatory authority in Haiti in the development and implementation of port infrastructure management and operation agreements. This Manual also aims at providing contractual tools and defining the procedures for the fulfillment of APN's missions and functions, as defined in the Haitian legislation and regulations in force, and pursuant to international standards and best practices. This Manual applies to all concession contracts and other agreements for the delegation of public port services to the private sector relating to the provision of services to ships or the transportation of goods, as well as to authorizations and licenses granted by the port authority to private operators. 1.2 W HO IS THIS MANUAL FOR ? This Manual is intended for APN's staff involved in the management of ports and port activities at operational, financial, accounting, legal and fiscal level This Manual is also relevant to APN's staff in charge of public safety, security, health and hygiene in the port domain. In addition, this Manual is addressed to the APN line ministries (MTPTC, MEF), the Superior Court of Accounts and Administrative Litigation (CCCA) and all other public authorities involved in the management and operation of Haitian ports and in the supervision and regulation of port activities. U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 7 It is important to note that the provisions of the preliminary draft legislative and regulatory texts relating to port reform and the PPP legal framework, as well as the institutional and operational organization foreseen for PPP implementation, have been taken into account in the preparation of this Manual. Accordingly, it would be necessary to define the respective roles and responsibilities of ANAREP and SONAGEP within the scope of this reform. This Manual will also take into account the project to delegate the operation and management of the Port of Cap Haitian container terminal to a private operator and will define the role and functions of the port authority in the management and supervision of this contract, object of this delegation. 1.3 S TRUCTURE OF THE MANUAL The Manual will first define the regulatory concept and its purpose, as well as the port regulator functions and scope of responsibility. The present document will then describe: - The main business models of port management and the port authority as well as the various economic actors’ respective roles; - The typology of port contracts and PPP contracts in the port sector, including their main characteristics highlighting the functions and responsibilities of the port authority in the development and supervision of these contracts; - The legal and institutional framework governing port activities in Haiti that defines the missions and role of the port authority; - The selection mechanism of private operators and related public procurement procedures; - A list of standard clause comprising the main clauses and conditions to be included in the identified contracts, including their legal grounds and operational justification. The annotated standard port concession agreements (Terminal Agreement, Tool Concession Agreement, and Authorization for temporary occupation of the port domain) will be addressed in a separate document. This document does not, however, exempt the relevant authorities from obtaining proper assistance in the legal, technical, financial, environmental, insurance aspects or other fields, in light of the specific characteristics of a given project. However, the Manual should help them to engage in a productive and informed dialogue with their advisors. U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 8 2. REGULATORY CONCEPT In this context, it is important to define first and foremost the meaning of regulation, which is a complex concept, covering several aspects of the economic and social life of a country, and involving a broad range of economic and institutional actors categories of with diverse objectives. This section will attempt to clarify the main characteristics of regulation as well as its purpose. Then, it will describe in the subsections below, its application to the port sector and the role and functions of its regulatory authority. 2.1 W HAT IS R EGULATION Definition: Regulation may be defined as « a set of mechanisms, rules, institutions, decisions, principles, which allow certain sectors to build and maintain balances that they would otherwise not be able to establish on their own economic capacity" » . 1 Thus, the regulation of a given sector can be described as, various mechanisms, standards and procedures for direct and indirect oversight of certain aspects of an economic activity, as well as the decisions or actions taken by actors operating in that sector, as established by the public authorities. Regulation can cover different aspects of business activities. In addition to economic regulation, the State and governmental institutions can establish and impose principles and rules relating to environmental, health and safety matters to economic actors. Public entities in charge of regulating the industrial, technological (e. g. telecommunications), commercial (e. g. banking) and commercial areas of activity are generally endowed with police forces and can apply sanctions in the case of violation. 2.2 P RINCIPLES AND SCOPE OF P ORT R EGULATION It is important to define the scope of the regulator’s overseeing economic activities in the port sector and to clarify its principles. The scope and purpose of regulation is multi-faceted in order to ensure the following main tasks: i. effective competition between the various economic players in the sector (exclusion of any monopoly or abuse of dominant positions) while complying with public service obligations and constraints (exclusivity and non-competition); ii. the conditions for delegating the operation of public facilities and/or service provision; iii. competitiveness of the sector; iv. arbitration between the respective interests of operators, public management authorities/granting authorities and users; v. determination of the tariffs applicable to port services and the mechanisms for reviewing and indexing them. Under a concession system in which port activities are delegated to several private operators, regulation may be between ports, where different ports compete with each other or intra-port where several operators in the same port compete for the provision of the same services. 1 Regulation “can also be a result of political will, which forsakes the system of public monopoles, willingly or by force in order to bring some balance in the workings of competitive markets and in public service objectives such as equal access to goods, like health and security» Anne-Marie Frison- Roche – Regulatory Law Review – december 2009 U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 9 2.3 F UNCTIONS OF THE R EGULATOR The regulatory operational aspects concern the following tasks: (i) overseeing compliance with the commitments made by port operators; (ii) monitoring the application of legislation and rules governing the port sector; (iii) collecting, monitoring and exploiting information on the performance of different stakeholders. The regulatory entity is also entitled to impose sanctions in case of non-compliance with stakeholders' obligations , including, in particular, the following: - a warning notice , in case of non-compliance or errors and the determination and application of sanctions; - Received and processed complaints from users or third parties affected by the rules contravention issued by the regulator. The table below summarizes the main functions of the port regulator: Table 1 Role of Port Authority Role of the port authority regulator Harbor Police Regulation of Competition Environmental, public health and public hygiene regulation and control Construction and maintenance of port infrastructures (channels, dykes, locks, wharves, road and rail accesses….) Management of development of the port domain and heritage preservation by elaborating appropriate strategies General promotion of the port and development of the port services including its inland, rail and river access services. 2.3.1 Competition control The prohibition of dominant position abuses , which hinders free competition between the various operators, tends to impose an obligation on the port authorities (owners or operator of an installation) to refrain from adopting abusive dominant positions measures by refusing, without objective reason, to allow third parties access to the installations. To that must be added the principle of non-discrimination, imposed to the manager of the public domain. Restrictions on the right to occupy port public domain may also, depending on the circumstances, constitute an infringement of the freedom to provide services. These principles are reflected in the draft ANAREP legislation, which state that practices aimed at "preventing, restricting or distorting competition in the market, port and transport sector" are prohibited. Thus concerted actions, agreements, express or tacit agreements, coalitions or cartels are prohibited if they result in anti-competitive practices. The provisions of the draft ANAREP legislation also expressly prohibit any abuses of a dominant position that would consist of abusive operation by a company or group of companies: « (i) a dominant U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 10 position on the market in the port sector or maritime transport to or from Haiti, or in a substantial part of it: (ii) a state of economic dependency in which a customer or supplier does not have an equivalent alternative. » ▪ Exclusivity and anti-competition Notion - Anti-competition measure to the benefit of the concessionaire: The concessionaire often request the inclusion in the contract of a clause guaranteeing that no concession of the same nature will be granted, either within the radius of a given distance from its own location or before a certain period of time. This is particularly the case of large investments over a long-term- payback period projects - Anti-competition to the benefit of the Contracting authority: The Contracting authority may requeste that the concessionaire refrain from taking part in any other concession that is likely to compete with the granted concession rights. At times, it may be provided that should the contracting authority or the State for economic or social reasons impose preferential tariffs on the concessionaire for the benefit of certain users or a certain type of traffic, the concessionaire should be compensated on the basis of the tariffs normally applicable to such uses or traffic. 2.3.2 Police, Security and Safety Standards - Exclusive Jurisdiction of the State The concession for operation of port public infrastructures and the provision of port public services does not grant the private operator any right to undertake responsibilities in the following areas: - the placement of ships and boats at wharves equipped by him or in the movement of these ships and boats, - the main roads, traffic and wharf use police. 2.3.3 Environmental, public health and hygiene norms and standards, All public or private actors carrying out port activities are bound by environmental requirements aimed at protecting the public maritime domain and its surroundings. In this respect, the port authority must ensure compliance with environmental regulations, particularly when it comes to the transport of dangerous products and pollution control. 2 2.3.4 Concept of public service The definition of the concept of public service is crucial to impose or to lighten the public service mission obligations imposed on the port authority. Public service obligations and constraints are in fact lower when the activities authorized on the port public domain are of a purely commercial nature and do not involve users. However, even if public sector intervention tends to decrease in the management and operation of the port area and related activities, its role is essential in the commercial management of the ports. 2 International treaties, conventions and standards relating to matters of environmental protection, pollution and toxic waste management are listed in the manual on port operational regulation, which is part of the documents provided to the APN in the context of this Project. U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 11 Therefore, in all forms of delegation of port services to the private sector, the public authority exercises and should always exercise its control power. 2.3.4.1 Public service obligations In general, the public service provider is compelled to do the following: - Continuity of services is one of the fundamental principles of public service ; - The Quality and Adaptability of the service to customer needs, both in quantity and in nature; - Transparency is also an inherent principle of the public service that resides in: o the obligation to communicate administrative documents and the justification of administrative acts; o a transparent public tendering process for the implementation of public service delegation contracts, concessions and sub-contracts for the operation of public port equipment. - Neutrality of the public sector: the port authority cannot use its public management authority to unduly favor an occupant of the public domain and competition must apply; and - Equal treatment of users . all users meeting the same conditions must be treated in the same way. Respect for equality between users is a fundamental principle of public service (the port authority must not discriminate between users. In the absence of an overriding reason of general interest, the exclusive use of a wharf cannot be granted to a single ship owner). 3 2.3.4.2 Legal status of port services and public service mission All activities taking place in ports do not constitute a public service mission and are purely industrial or commercial. This is the case for the terminal convention where port merchandise handling carried out by private companies is not considered as a public service activity. The party to such convention freely organizes its commercial policy and is not subject to strict oversight by the port authority. These activities are therefore not subject to the same constraints and obligations required for the provision of a public service as described in subsection 2.4.2.1 above. 2.4 DELIMITATION OF THE PORT PUBLIC DOMAIN First and foremost, we must try to define the concept of port public domain. If there is no definition under current Haitian law, the ANAREP draft legislation provides that the port public domain for every Haitian port is defined by ministerial decree. In general terms, it is all the movable and immovable property belonging to the ports that serve the needs of public port operations. There are therefore two cumulative conditions for a property to be considered a public property: - public ownership; and - the use of these assets for public service purposes 3 U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 12 More specifically, the port domain's assets are, among other things, the wharf, public wharehouses and developed land parcels where port companies are located. Hence we can consider that a large part of the port area is within the public domain. 2.4.1 Use of the public Domain When it comes to the use of the public domain, it is important to remember that in order to carry out their activities port's companies must hold a permit allowing them to occupy the port public domain. This administrative authorization is mandatory and is issued by the port authority. According to the ANAREP draft legislation, this authorization is called "Authorization for the occupation of public domain''. The form of this authorization is not clearly defined in the draft legislation. However, the conditions for carrying out the activities of the companies authorized by the port authority must be expressly set out in the contract between the latter and private actors. 2.5 ROLE OF APN AS THE REGULATORY AUTHORITY APN, established by the Presidential Decree of March 15, 1985 is a commercial entity with legal personality, administrative and financial autonomy operating under the authority of the Ministry of Economy and Finance. APN's main mission is to control the management and operation of all ports in Haiti. It is responsible for the following: - Oversight of all commercial port activities and all port facilities under its jurisdiction; - Management, operation, maintenance and development of port facilities within its jurisdiction; - Establishment of all necessary procedures to regulate the services required by vessels, cargoes, passengers and other users of the ports within its jurisdiction; - Establishment, strengthening and revision, whenever necessary, of the modalities and procedures to ensure a certain level of economic profitability in all ports where investments have been made; - Determination of the charges, fees, duties, rates, tariffs, rules and regulations for all ports within its jurisdiction, including private wharves and definition of the modalities for collecting said charges; - Establishment of the terms and conditions for the lease or rental of land and property within the port areas within its jurisdiction; - Organization of cabotage throughout the national territory. APN's missions include economic, legal and financial regulation of all port activities in Haiti, including private wharves. APN has also the powers to impose sanctions in cases of non-compliance with the regulations governing the port sector and the standards established in the carrying out its mission. The table below describes the different statutory schemes that can be adopted by the authorities in charge of port management around the world. It is noteworthy that in most cases the public sector, through the government or its territorial divisions, retains control of these port management entities. U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 13 Table 2 Status of port authorities (ESPO-Port Governance survey, 2010) 4 Legal status of port authorities (PA) Ensemble Hanseatic* Latin The port authority (PA) is a department of a local authority (municipality or region) 13 18 8 The PA is a satellite entity of a local authority 40 27 60 The PA is a separate entity from the local government with shared capital held by the local government. 35 34 32 The PA is a private corporation 5 5 0 Other 7 16 0 * It is a geographical area in northern Europe (Germany, the Netherlands, Poland, Baltic States) where port activities were developed during the Middle Ages . The following table shows the revenues of the port authorities classified by origin. It shows that the portion of public subsidies is decreasing and that the sources of revenue from land occupancy charges made available by the port authorities are the main driver of growth for the port's financial resources. 5 Table 3 Financial Resources of Port Authorities Financial resources of port authorities Ensemble Hanseatic Latin Port dues 49 46 41 Fees for occupancy of port domain 25 29 29 Sales of services 16 13 19 Public Subsidies 5 5 7 Other resources 5 7 4 Total 100 100 100 4 "Two forms of statutes are dominant: (i) a legal entity separated from the local or national government but without shared capital (Latin model) or; (ii)a legal entity separated from the government but with a capital in which the government holds all or part of it. The “de-municipalization” of the ports, observed especially in Benelux, allowing the creation of companies whose capital is open to private investors, should not make us forget that the local authorities, sometimes along with the representatives of the State, control the supervisory boards. »The new role of port authorities for the adaptation of clusters to globalization challenges: Laurent Lévèque - Revue Espace Politique - No 16- 2012 -1 5 Op cit no 6. Op cit no 6. * Hanseatic ports: Ports of Northern Europe U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 14 3. PRIMARY PORT MANAGEMENT BUSINESS MODELS 3.1 TYPES OF PORT MANAGEMENT MODELS In the handbook Port Reform Toolkit, the World Bank and the PPIAF (Public Private Infrastructure Advisory Facility) classify the possible port management business models according to whether the management of infrastructure, superstructures (equipment and coating of terminals), operations and other services are predominantly private or public. Accordingly, we can determine the following models: - The management concession model (privatized port), in which the public sector entrusts the whole management of the port to the private sector. - The public service port model (Service Port) , where the port authority is responsible for its own management, cargo handling and other front-line functions through a centralized administration. The private sector’s involvement remains limited to secondary services. - The landlord port model (Landlord Port), where the port authority transfers the ownership and operation of the superstructures to private operators, i. e. the equipment (cranes and gantry cranes), in order to focus its activities on the ownership and management of the port infrastructure (wharfs and berths) and its estate, that it puts at the private operators disposal, as well as the control of navigation and planning. - The intermediate model (Tool Port) - quite common in French-speaking countries, the port authority leases equipment, warehouses and storage space to authorized private maintenance companies, who handle ship-owners by providing maintenance equipment, hiring daily laborers, and assisting ships during their port of call. NB: However, i t is important to note, that the concept of "concession" is sometimes used as a generic term which does not reflect the reality of the contractual relations between the public and the private partner. Indeed, authorizations to occupy a public domain are wrongly qualified as "concessions" such as the operation by a private operator of an industrial terminal, except where the agreement also confers the management of a public service. 3.2 MAIN CHARACTERISTICS The purpose of this section is to describe the main characteristics of the different port management mechanisms, from which the nature of the specific contracts derives. However, the boundaries between the different business models are not airtight, certain elements that are specific to one management model may be found in a different management and operational mechanism. . 3.2.1 Dominant Management Model - Landlord Port Since the 1980s the port sector has undergone profound changes in the management and operation of its activities. Commercial ports are evolving from the tool port model to the landlord port model. The "tool port" model is characterized by public authorities holding a majority stake, and the private sector activities generally remained limited to operational functions, particularly maintenance, but with equipment owned by the public authority. In the landlord port model, the public authority reduces U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 15 its scope to the ownership of the infrastructure and land that are leased to private operators (concessions, terminal agreements). The "Landlord Port" is emerging today as the major contractual model for a progressive disengagement of public authorities in port management. The deregulation of the maritime transport sector and activities has led to considerable growth in ports evolving from a business model of public management (ownership, management, operation) to a model in which the port authority is no longer the sole owner of the infrastructure and land that are leased to private operators, who in turn operate the terminals and finance their equipment. Numerous ports, around the world, have indeed developed concession based models of technical, business and financial partnership that grant the construction of infrastructures as well as the management and operation of port terminals to private operators. This trend is particularly noticeable in container terminals financed and operated by major shipping groups. 6 Main characteristics: ▪ In the « landlord » model: - The public sector is responsible for planning and implementing the regulations. The State, through the port authority, retains ownership of land and certain basic infrastructure that are leased to private companies or industries such as refineries, terminals or chemical industries. These operators finance the superstructure. - The private sector owns its own infrastructure and equipment in the field and is responsible for terminal operations. In this model, the contract should provide for a payment or remuneration mechanism for the investment in infrastructure. In such a case, the private operator's revenues must enable it to assume the current operations of a terminal and to finance its infrastructure investments, including their depreciation over several decades. The table below illustrates the contractual arrangement and articulation between the different stakeholders in a proprietary port management system: 6 The management and operation of containerized terminals around the world now follow a quasi universal Port-type model. In this model, the responsibility of the sovereign authority when it comes to operation disappears in favor of private interests in the framework of concession processes granted over long periods (from 20 to 35 years on average). Only 17.4% of container port terminals remained fully under public control in 2008 compared to more than 56% under the control of total terminal operators (Aldrick, 2009) (Alex-Grosdidier De Maton - March 2011). U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 16 Table 4 Contractual Arrangement in Port System 3.2.2 Management model – Privatized port The port concession is a transport concession, covering infrastructures, works, superstructures, equipment and services. 3.2.2.1 Global port concessions – Main characteristics Global port concessions cover the whole port, infrastructure, superstructures, equipment and services relating to the different types of traffic. Unlike the proprietary landlord port management model, this concession model is rarely used. Indeed, port concessions very seldom include infrastructure for the following reasons: - Lack of economy of scale linked to the operation of infrastructures (protective works, access channels, wharf walls, etc.). Whether one or five hundred vessels with a large draught use a 16-metre dredged channel, the dredging cost will be the same; - The economic life and the length of their infrastructure depreciation exceed bank loans terms. - Costly norms standardization process - Low market value and inalienability of these infrastructures, such as channels or protection works. As a result, port private concessionaires rarely take part in these infrastructure projects. Infrastructures concessions are generally limited to quay walls, embankments, berths and dredging of basins. Although major infrastructures are kept out of concession projects, the contracting authority/port authority may require the concessionaire to contribute financially to their maintenance and development. U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 17 However, in some parts of the world, terminal operators are sometimes willing to invest in infrastructure that is limited to operational infrastructure (dredging and quay). 3.2.2.2 Concession of a port domain area - port domain and land concession (Terminal Agreement & Public tool Agreement ) The port concession is an agreement, which aims to outsource the totality of a project involving the occupancy and operation of an area within the port public domain (DPP). This concession is granted to a private partner and often concerns the operation of a port terminal or port public equipment. The parties to an operating agreement for a port terminal (CET) often refer to a model agreement known as "Build, Operate, Transfer" (or BOT), which provides for the outsourcing of a whole port public service, from the design of a project to its operation, including its financing and construction. The port domain concession consists of entrusting the private operator with the maintenance and warehousing of general cargo , and in particular of restructuring ship maintenance ("shore handling") and operations, in order to supervise and better control these activities and obtain gains in productivity. 3.2.2.3 Port Public Tool Concession The purpose of the port public tool concession agreement is to delegate to a private partner the operation of warehouses, hydrocarbon storage facilities, berths, grain silos, etc., built and financed by the port authority. The private partner usually carries out works, even minor works, with result in privately occupying the DPP. This concession agreement is then qualified as a public service delegation combined with a domain concession. 3.2.3 The Intermediate Model (Tool Port) The "tool port" model is characterized by public authorities holding a majority stake, while the private sector is generally limited to operational functions, particularly maintenance but with tools owned by the public authority. U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 18 4. TYPES OF CONTRACTUAL MODELS IN THE PORT SECTOR The different port business management models, as classified by the World Bank in the aforementioned Section 2, takes into account a variety of contracts between the port authority and economic operators, which can be defined according to: - The purpose of the contract and the nature of the services provided (public service or commercial activity to the benefit of the operator); - The nature of the relevant port domain (public or private); - The content and scope of the port authority and the private operator’s respective obligations and responsibilities, as well as the related risks; - Remuneration mechanisms of the private operator. These different management models are not divisible and it is possible for the port authority to combine different management models in a single port, depending on the the authority’s technical and financial resources and the market context. This is the case of the port of Cap-Haitian, where the container terminal and the commercial terminal will follow the landlord model (with the terminal being built by the public sector and operated by the private sector) while the pilotage services will be provided by the APN, a public entity. Nonetheless, clear distinction must be made between: - The Port business management models (Landlord port /privatized port / intermediate port) which describe , the conditions according to which the technical, economic and financial conditional aspects of a given activity are performed;on one hand - and on the other hand, the contractual arrangements (concession, leasing, lease, etc.) relating to those business management models, according to which the operators and the port authority agree to carry out the activity that has been entrusted to them. U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 19 It is therefore important to distinguish the different types of contract and to identify the role and responsibilities of the APN and the private co-contractor in accordance to the business management models described in the above sections. The implications relating to the parties’respective obligations in these different agreement as well as their transposition in the contract will be subsequently described. 4.1 THE PPP AND DELEGATION OF A PUBLIC SERVICE CONCEPT - DEFINITION 4.1.1 What is a PPP? Given the nature and scope of the regulatory authority's responsibility in the supervision of contracts concluded with private operators, it is important to define the concept of public-private partnership. In fact, a PPP constitutes one of the public procurement contractual modes which differs from public procurement common law. PPP agreements are particularly complex and entail the involvement of multiple stakeholders, as well as the evaluation and understanding of technical, economic, financial, environmental, social and administrative parameters which require specialized skills in various different fields. It is therefore necessary to describe beforehand, the constitutive elements and main characteristics of the different contractual mechanisms involving the public and private sectors in the development, operation and management of port infrastructure and services under the PPP mode. The agreements between public authorities and private economic actors represent a broad variety of contractual mechanisms, as follows: - the nature of the tasks and responsibilities entrusted by the public authority to the private sector; - the method of remuneration of the private operator; - the public procurement process ; - the nature and extent of the risks incurred by the parties to the contract (demand risks, construction risks, currency risks, tax risks, etc.); - the ownership of assets. (see Table 1) However, the legal PPP definitions prevailing in many countries or those stemming from regional organizations and international donors, are not always clear and do not clearly establish the boundaries between the different types of public procurement contracts entrusted to the private sector. In fact, there is no consensus on a precise definition of PPPs, among the various stakeholders involved in developing private sector participation. Therefore, for the purposes of this Manual, we will adopt a very broad definition of PPP formulated as follows "forms of cooperation between public authorities and the business community, with the purpose of financing, building , rehabilitating , managing or maintaining infrastructures or providing a service" 7 . This definition has also been used by the Central Unit for PPP Management (UCG/PPP) at the MEF in Haiti. 7 Green paper on public-private partnerships and community law 30/04/04 U S E R M A N U A L — L E G A L A N D I N S T I T U T I O N A L A S P E C T S O F P O R T R E G U L A T O R Y S Y S T E M S | 20 4.1.1.1 The main characteristics of PPPs are: (i) The length of the cooperation (minimum of 5 years for a management contract, up to 30 years for a concession); (ii) The existence of private & public funds (iii) The role of the private operator; and (iv) The optimal allocation of risks between the public and private partner ( a substantial part of the risks shall be borne by the private entity); (v) The purpose of the contract must relate, directly or indirectly, to the provision of a public service. As such, if one of the criteria listed above is not part of the characteristics of the contract, this is not a PPP. 4.1.1.2 Public Service Delegation contract – a PPP variant PSD agreements such as concessions or leases could be viewed as a contractual variant of PPPs, in which the collaboration between the public sector and private actors, the PPP comprising a much broader contractual scheme and including innovative financial and economic mechanisms. These principal characteristics are, in many aspects, similar to the public works or service concession described above. However, the operational risk is mitigated by the public authorities' participation in the form of subsidies, financial and industrial guarantees. Definition of the PSD: the public service delegation contract can be defined as an agreement, according to which the State or its divisions (local authorities, public institutions) entrusts the construction or rehabilitation, operation and/or management of a public facility or the provision of a public service to a public or private delegate, and whose remuneration is substantially linked to the income generated by the provision of the service, including the contractual models as described below. However, PPPs should be distinguished from public service delegation (PSD) as the former (i) does not substantially link the private partner’s remuneration to the revenue generated by the provision of the service, but (ii) instead the payments to the private partner are dependent upon reaching performance objectives in relations to the quality of the public service provided - unlike the DSP contract, which does not in principle require the achievement of such performance objectives. 4.1.1.3 Conventional PPP contracts Concession: the operation of a public service or of a general interest mission, by a public or private entity, for which the concessionaire’s remuneration is based on the financ