Plan Òganizasyonèl ak Plan Pèsonèl Regilasyon

REGULATORY ORGANIZATONAL AND STAFFING PLAN February 2018 T his publication was produced by Nathan Associates Inc. for review by the United States Agency for International Development (USAID). It is made possible by the support of the American people through USAID. Its contents are the sole responsibility of the author or authors and do not necessarily reflect the views of USAID or the United States government R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 2 of 36 Table of Contents 1. INTRODUCTION 3 2. APN’S REGULATORY FU NCTIONS 5 Port Tariff Regulatory Analysis 5 Tariff Analysis Function 6 Skill and Knowledge Domains for Perform Tariff Analysis Function 7 Competition Regulation and Monitoring Function 7 Maximum Tariff Limits 9 Allocating Charges between Shippers and Carriers 11 Competition Monitoring 12 Skill Sets or Knowledge Needed to Perform Competition Regulation and Monitoring Function 13 Operational Performance Monitoring Function 13 Skill Sets or Knowledge Needed to Perform Operational Performance Monitoring Function 15 Operational Regulation 15 Skill Sets or Knowledg e Needed to Perform Operational Regulation Function 16 Contracts and Legal Mechanisms for Private Sector Participation in Port Services 17 Skill Sets or Knowledge Needed to Engage in Port Contracts Function 18 3. REGULATORY SKILL SET REQUIREMENTS AND IN TER - UNIT RELATIONSHIPS 19 4. ORGANIZING THE REGUL ATORY UNIT 26 5. STAFFING THE REGULAT ORY UNIT 32 R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 3 of 36 1. INTRODUCTION The Government of Haiti has introduced draft legislation aimed at reforming the port sector. The legislation was intended to separate port regulatory from operational responsibility by creating two new institutions to assume these responsibilities. The p roposed two new entities, ANAREP (for port regulation) and SONAGEP (for port operations) would replace the National Port Authority (APN), with ANAREP and SONAGEP subsumed as part of the Ministry of Economy and Finance and the Ministry of Public Works, Tran sport, and Communication, respectively. While advancement of the legislation has stalled, and there is some doubt as to the l egislation will secure Parliamentary approval, APN still wishes to pursue a course of firming up its role as a port regulator 1 . Generally, this means that APN will have a stewardship role over port lands and properties while ensuring that the port authority, port users, and service providers perform their activities in a safe, secure, efficient , and competitiv e manner in accord with the regulatory framework established by APN. 1 Under a typical landlord model, port services are performed by private sector operators from the entrance buoy to the port gate. Buoy - to - gate services usually include pilotage, tug assist, vessel stevedoring, and storage and gate operations. In some case s the port authority may provide some of these services, especially where there may be a risk of monopoly (e.g. pilotage) and/or insufficient traffic or volume to warrant private sector investment or enable competition (e.g. tug assist). Where cargo volum e is not sufficient to warrant investment in terminal improvements or construction, some port authorities have opted to provide equipment (the so - called tool port concept), allowing licensed stevedores to compete for the vessel stevedoring business (e.g. t he port of Tema in Ghana or Costa Rica’s Puerto Limon). There are also instances where licensed stevedores may provide the equipment but not invest in terminal development or improvements (e.g. Puerto Quetzal in Guatemala). Whatever the form of port serv ices provision, the landlord model of administration is considered global best practice; see, for example, the World Bank’s Port Reform Toolkit , “Module 3: Alternative Port Management Structures and Ownership Models”, Washington D.C., 2003, Box 5, page 20 for a comparison of port management models (available at: ????? http://documents.worldbank.org/curated/en/120991468762301637/pdf/297970PAPER001821 31504613.pdf . Also, the Asian Development Bank states the following: “The best institutional structure for promoting private sector involvement in public port operations and investment is the landlord port”, that “The landlord model is the best structure for promoting PSP (private sector participation) because it accommodates different forms of public - private partnership”, and “Best Practices supports a policy of promoting the development of private cargo - handling terminals and allowing them to compete for third party cargo”. See Asian Development Bank, Developing Best Practices for Promoting Private Sector Investment in Infrastructure – Ports , Manila, Philippines, 2000, p. ix, 15, and 62, respectively (available at: https://www.adb.org/sites/default/files/publication/27906/ports.pdf ). R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 4 of 36 Accordingly, as a landlord authority, regulatory functions pertinent to APN include:  Port tariff analysis, with which the port authority can determine the impact of port dues adjustments on its cash flows and port competitiveness;  Port performance monitoring so that the port authority can ensure that services provided by the port authority and port service providers are in accord with acceptable standards and (concession) contr act terms ;  Port competition monitoring, where APN can monitor for anticompetitive behavior and conduct inquires on related complaints;  Operational regulation to facilitate adherence to global standards governing port safety and security and facilitating po rt - state control; and  Contracting and other legal vehicles to facilitate private sector engagement for providing port services and monitoring and enforcement of contractual obligations. USAID is supporting APN to enhance capacity to carry out its regulator y role , particularly in view of the impending contract to engage a private sector operator for a new container terminal at Cap Haitien. Nathan Associates Inc., who assisted USAID in assessing the merits of a new or improved port on Haiti’s north coast an d provided advisory services for structuring the port transaction, was retained to prepare training materials and conduct training relative to each of APN’s regulatory responsibilities, specify the regulatory IT system requirements, and to prepare a staffi ng plan reflecting the requirements for APN’s regulatory role. This report addresses the staffing plan needed to support APN’s regulatory functions. In the sections that follow, we first elaborate on the regulatory functions pertinent to APN’s role as a landlord authority. This is done to define the skill sets needed to perform each of these regulatory functions. We then describe the APN’s organizational structure and the framework envisioned as part of the national port sector reform efforts and make s ome observations about their suitability relative to APN’s regulatory role. We also highlight other functional areas that APN should eventually address and present a conceptual organizational structure that includes regulatory and other roles. Finally, w e identify staffing requirements for supporting APN’s regulatory responsibilit ies . In so doing, we consider staffing needs for both APN as well as Cap Haitien, the latter of which serves as guidance for the regulatory role for other ports falling within APN’s domain. R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 5 of 36 2. APN’S REGULATORY FUNCTIONS APN in its role as a landlord authority will focus its activities on ensuring a safe, secure, and competitive environment for its customers and port users. Doing so requir es the effective execution of the regulations identified above. We describe e ach of these functions below. PORT TARIFF REGULATORY ANALYSIS Before their evolution towards landlord administrations, port authorities were “ operating ” ports. T hat is, port aut horities provided the full range of services from berth to gate and, in some cases, provided some or all services between the entrance buoy and berth, including pilotage, tug assist, navigation channel maintenance, and navigation lights and buoys, though t hese latter buoy - to - berth services may have been assigned to other government authorities. Port authorities also provided the capital assets needed to deliver these services and thus would impose a charge related to the use of these assets. So prior to be coming a landlord administration, port authorities would be the primary charging agent for port tariffs, port dues, and other fees. Figure 1 shows the range of services port authorities as operating entities charged to port customers and users, with the m ajority of charges imposed on carriers and shippers. Pre - landlord administration status, the port authority was effectively the “ charge hub ” for port transactions, imposing cargo and vessel handling tariffs and fees for the bulk of services rendered in a port. The transformation to landlord ports would render more complex the system of charges imposed on port customers and users. The system of charges would be distributed among other parties, in addition to APN, reflecting the shift of services responsibi lity to other service providers. Figure 2 depicts the flow of charges at the Port Lafito operation near Port au Prince. As the future container terminal is R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 6 of 36 concessioned to a private operator in Cap Haitien, we can expect Figure 2 to reflect a si milar flow of charges there. TARIFF ANALYSIS FUNC TION APN has the authority to impose charges for the services it provides , such as pilotage, tug assist, and a wharfage on cargo. In contemplating the level of charges to impose, port authorities are generally guided by two principles: the first is to ensure that charges cover port authority cost s for providing the service and the second is to ensure ports are com petitively priced to avoid diversion of their cargoes to other ports. Generally, p ort authority costs include both the cost of common user assets (e.g. navigation channel and traffic routes inside the port area) and the cost (capital and operating expense s) of the service s they provide . However , charges that are too heavy of a burden on producers will constrain pricing competitiveness of their products. Eventually, exports will decline as demand shifts to similar products that are produced less expensive ly elsewhere and the price of domestic consumer goods will increase due to the higher cost of imported production inputs and imported consumer items, the total cost of which includes port and carrier freight costs. So APN needs the ability to gauge the imp act of the charges it imposes for port authority services on its own financial performance while being mindful of the potential impact of tariff adjustments on port competitiveness. An effort to increase charges for APN services may negatively impact the port’s competitiveness, while at the same time APN could adjust other revenue sources and expenses to avoid a negative impact. For example, rather than increasing pilotage fees, which increases the cost to vessel Figure 1 . Flow of APN and Non - APN Charges at Port Lafitio R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 7 of 36 operators, a port authority could instead consider raising property lease revenues which may not be related to port services. Another strategy might be to identify ways to reduce the cost of operations to avoid increases in fees and charges. The consideration of adjustments in charges should no t be done in isolation of benchmarking port costs with potential rival ports. Most terminal operators and port authorities are required to publish tariffs and charges. However, published tariffs of terminal operators do not necessarily reflect actual cha rges. Most terminal operators charge less than there published charges, especially for carriers; terminal operator discounts on the all - in charges to carriers, along with vessel productivity guarantees, are normally provided in exchange for commitments to call the terminal and/or minimum throughput guarantees. Such provisions are found in service agreements signed between carriers and terminal operators. What this means, therefore, is that if APN increased its charges in view of published tariffs of othe r ports, then it risks having tariffs that are artificially higher than the actual charges in benchmarked ports. Importers and exporters are often associated with more than one port; for example, importers and exporters in Haiti may also do business in ot her countries. In such cases, the port authority can validate the extent of pricing differences with sample invoices from shippers and freight forwarders. Skill and Knowledge Domains for Perform Tariff Analysis Function The following skills sets and kno wledge domains are required for effective performance of this function: accounting/invoicing, port operations, and finance. COMPETITION REGULATI ON AND MONITORING FUNCTION Haiti does not now have a competition law. This presents a weakness in Haiti’s ability to prevent anticompetitive behavior. The weakness is acknowledged by government authorities, where the draft port reform law , in establishing the port sector’s regulatory body (ANAREP), prohibits practices that prevent, restrict, or distort competition and abuse of dominance, reflecting the essence of modern competition law today. APN aims to exercise this authority as it continues to evolve and acquires the capacity to undertake this complex form of regulation. Concomitant with the authority to prevent anticompetitive practices is the important role of a regulatory body to promote and advocate for competition. As a competition regulator, competition or prevention of abusive behavior can be accomplished in sev eral ways: 1. An existing port or the layouts for the future port development plan can be configured in such a way that competition is induced by subdividing the port into two or more terminals, assuming future demand can accommodate more than one terminal op erator; the terminals need not be exact reflections of each other, but instead have the ability to handle similar cargoes. For example, one terminal , served by two gantry cranes, can compete with another terminal also offering gantry crane services. Furt her, a multi - purpose terminal served only by mobile or vessel cranes can also compete with an integrated container terminal (see Figure 3). While the R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 8 of 36 productivity of a terminal with gantry crane service will be far superior to the productivity of a termi nal served only by ship’s gear and/or mobile cranes, some vessel operators, particularly those having low loading or discharge volumes, or multipurpose vessels, will be perfectly happy to use their own gear or mobile cranes. This type of scenario is refer red to as overlapping competition. 2. As demand increases and capacity is reached (normally a container berth utilization rate of about 70 percent indicates approaching maximum capacity) , then the port authority can consider adding capacity with a configuration that reflects two or more operators (or two or more terminals). Such a configuration should be incorporated into the port development plan, which typ ically shows staged development in accord with projected demand. As the situation in Cap Haitien shows, expected container volumes will not be sufficient to support inter - terminal competition in the coming few years . The plan is to build a container terminal, while other areas of the port will focus on other forms of cargo. Accordingly, the draft concession agreement allocates containerized cargoes to the container terminal concessionaire. Presumably, this monopol y allocation holds true only as long as there is sufficient capacity for the new container terminal to meet demand. As demand approaches full capacity (as indicated by the berth utilization rate) , then the port authority can begin to think about introduci ng additional capacity, either by providing for overlapping competition or introducing additional physical capacity. The concessionaire is likely to seek ways to expand capacity by improving berth productivity or truck turn times to ameliorate congestion risk; in fact, the draft concession contract imposes level of service standards which, if not met , may subject the Figure 2 . The “Overlapping” Competition Concept for Terminal Operations R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 9 of 36 concessionaire to penalties. This will encourage the concessionaire to seek all possible means to ensure sufficient productivity is in place to mitigate congestion risk. Eventually, however, as demand rises and congestion risk appears while the concessionaire has exhausted all possible measures to prevent congestion, the port authority will take the initiative to provide for capacity expansio n, either within the confines of the existing port, or in a nearby location where a new terminal can serve the same hinterland markets. Maximum Tariff Limits In addition to the two methods described above, the regulator has other options to safeguard com petition. These include: 1. Incorporating maximum tariffs in the concession contract. This involves the detailed specification of a “basket” of services for which maximum tariffs will be set. T his can be done two ways, including allowing concession bidders to propose the lowest tariff as a bid term for the basket of services , which then becomes the maximum tariff, or the government setting the maximum tariff based on its own assessment of what a “fair” tariff should be. Usually, a fair tariff is a reflecti on of investment risk and acceptable profitability. 2. Monitoring competition behavior. This involves determining the relevant market, assessing the transport options that “service” buyers have for the relevant market, monitoring pricing behavior relative to variances of pricing of services by terminal operators and other service providers, monitoring berth utilization rates to determine if congestion exists (congestion normally indicates the potential existence of monopolistic or oligopolistic behavior), and determining the concessionaire’s profitability (return on equity and return on assets). The assessment of realistic transport options is based in part on cost and carrier frequency of service (number of calls) . If cost is “high” and carrier frequency is low, then there is a risk of monopoly as shippers (importers and exporters) will choose better options (lower cost and higher frequency of service) if they exist. Experience shows that in cases where maximum tariffs are incorporated into concession contracts or other legal vehicles , terminal operators will seek ways to expand the range of services they offer to maximize revenue generation opportunity. This behavior is acceptable in circumstances where the buy er of the service has other options. For example, the terminal operator may o ffer container repair services, which can also be offered by other service providers outside the port area. Similarly, container storage can be offered by off - dock operators who compete with the terminal operator to provide storage services . Terminal operators, however, may also attempt to introduce other services by unbundling them from what might be considered standard services. For example, let’s take the case of hatch move s. The hatch is the cover on the deck of the vessel that has to be removed to access containers for discharge or to load them onto designated “slots” (Figure 4). The carrier’s stowage plan communicates to the terminal operator in advance of the ship’s ar rival the location of containers on the vessel that have to be discharged at the terminal and the slots in which containers to be loaded should be placed. The terminal operator will then prepare a vessel operations plan to stage its services to the vessel after it R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 10 of 36 arrives. The terminal operator’s software will determine the “choreography” of the operation to minimize the number of re - stows. As the terminal operator needs to move the hatch to get to containers below deck, as indicated by the stowage plan, then this is a necessary procedure for the terminal operator to make revenue on containers below deck and, accordingly, should be absorbed as part of the cost for the loading/discharge operation. Accordingly, it is not the norm for terminal operators to impose a hatch move charge. However, in circumstances where the move is not indicated in the stowage plan when it is filed, then the carrier will make a special request for the container below deck; in these circumstances, the terminal operator is normally entitled to impose a hatch move charge. The problem with the above example for hatch moves is that the regulator is not as knowledgeable as the operator is in terminal operations. To the typical regulator, a hatch move is a hatch move and, not knowing the fine - line distinctions of the circumstances for hatch moves, regulators are inclined to accept a terminal operator’s request to charge for this service as long as that operator convinces the regulator that the service is not bound by the regulated tariffs . In so doing, terminal operators are adding a charge for a service that normally forms a part of a container handling charge, thereby circumventing the maximum tariffs permitted under t he concession contract. It should be noted that the operator may attempt to impose such charges where the shipper is held captive, meaning the shipper does not have a practical option to get the service elsewhere. Figure 5 shows the growth of the number of charges after a concession was awarded to a global container terminal operator in Peru ; in Peru, all charges for services not covered by the concession contract require approval from the regulator. While some of the charges are certainly for services not bound by concession contract terms, others were “invented” with the intent to collect fees for services that are normally combined with the basket of services governed by the contract. For example, the operator assesses an EDI charge for the electronic conveyance of manifest data or the stowage plan. For its own operational efficiency, the terminal operator benefits from electronic conveyance; in fact, one could argue there should be a charge to those who do not transmit data electronically as not doing Figure 3 . Vessel to Berth Hatch M ove R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 11 of 36 so affects operational efficiency. The EDI service instead should be considered as a cost embedded in the cargo and vessel handling fees. It is important, therefore, that contracts are precise in their definitions of tariffs, addressing the operational details composed in the tariffs. Source: Author’s Review of Published Tariffs Allo cating Charges between Shippers and Carriers It is acknowledged that terminal operators need pricing flexibility. They need the ability to adjust tariffs (within maximum tariff constraints) in accord with competitive conditions. However, there are occasi ons, even in monopoly environments, where terminal operators will do everything possible to minimize the cost to carriers because of their dominant positions . The discounts to carriers, unless otherwise prohibited, are then covered by increasing charges t o shippers. Terminal operators are able to do this if the concession contract does not associate maximum tariff levels with a particular party. Figure 4 . G rowth of Published Tariff Items for Global Terminal Operator in Peru Since Concessioned Container Terminal Became Operational 16 29 30 30 38 52 68 70 0 20 40 60 80 100 120 May 2010 April 2012 June 2012 December 2012 Number of Special Services Published Tariffs Shipper Line R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 12 of 36 For example, the charge for vessel handling is normally charged to the carrier; let’s assume the charge is $90 per move. The terminal operator may decide it will only charge $5 per move to the carrier and then charge the shipper $85 for the same move, even though the shipper does not benefit from the vessel handling service. The terminal operator can do this when the concession contract does not relate a specific maximum charge to a specific party. The concession contract, for example, may set forth a pri ce limit for vessel handling, but should also specify that the charge can only apply to the vessel operator. Such careful specification will prevent the terminal operator from transferring charges to parties that do not receive the service. This will req uire the regulator to audit and validate charges with obtaining copies of terminal operator invo ices to shippers and carriers. Source: Author’s Review of Published Tariffs C ompetition Monitoring The above discussion centered on c ircumstances where tariffs are regulated. However, there can be circumstances where they are not regulated. For example, if there are several stevedores with licenses to serve the same (relevant) market, then it is assumed there is competition. However, some service providers, particularly where the number of them is relatively limited, can be tempted to collude on prices and markets. For example, let’s say there are five stevedoring companies and amongst themselves there is an agreement that none will price below a certain charge for cargo loading or discharge. Such a practice restricts competition and the agreed upon price is likely higher , albeit the Figure 5 . Allocation of Vessel Handling Charges between Carriers and Shippers North Terminal (APMT) South Terminal (DPW) Cargo Owner 67.78 92.86 Shipping Line 25.00 5.00 $0 $20 $40 $60 $80 $100 $120 R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 13 of 36 same as or below a regulated rate, than what the market may otherwise indicate what the price would be. The regulator can monitor for such behavior by reviewing tariff filings to gauge the pricing differences among rivals. Licensed stevedoring companies and terminal operators should both be required to publish tariffs and submit filings to the regulator each time a tariff is revised, enabling the regulator to monitor pricing behavior, and such requirement should be reflected in both concession contracts and licensing agreements. Additionally, as noted earlier, published prices can differ from actual prices; even in a monopoly environment, terminal operators and stevedores may offer discounts from the published rates. As terminal operators and in some cases, licensed stevedores, engage in services agreements with carriers, then these agreements should also be filed, under strict confidentiality, with the regulator. Skill Sets or Knowledge Needed to Perform Competition Regulation and Monitoring Function Competition regulation and monitoring require a broad range of skills sets and knowledge domains due to the nature of analysis required to conduct the needed analysis. Skill sets and knowledge domains include: accounting/invoicing, port operations, finance, contracts/legal, tariff analysis, industrial economics, and port planning. OPERATIONAL PERFORMANCE MONITORING FUNCTION Monitoring the performance of port service providers aims to ensure port users and customers receive quality services. But monitoring is also done to gauge the port’s overall competitiveness relative to rival or benchmarked ports and the port’s previous years’ performance. Monitoring is also done to ensure adherence to operational standards set forth in port concession contracts and to determine if service providers are abusing monopoly positions. In the case of Cap Haitien, the regulator wants to ensure concession contract performance standards are being met and, when they are not met, to determine the causes for less-than-standard performance. This is done by assessing the time associated with each of the activities that take place along the port logistics chain, that is, the activities that take place between the port’s entrance buoy and the port’s gates (Figure 6 ). Having performance that falls below contract standards or that of the level of performance of rival ports places risks of increasing costs for a number of port users (including carriers, shippers, and trucking companies). Increasing costs can result in diverting cargo away to ports that provide superior services or in increased freight charges imposed by carriers and trucking companies. R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 14 of 36 Increased freight costs in turn also increases production and distribution costs for domestic and export production. Figure 6 . Time Accounting System for Port Operations Source: Time accounting system concept originally developed by Dr. Asaf Asha r for the Port of Seattle Productivity Indicator system in the 1980s. Later presented in Asaf Ashar, Paul Kent, et al , Port Reform Toolkit , Module 6, Port Regulation: Overseeing the Economic Public Interest in Ports, World Bank, Second Edition, 2007; ava ilable at https://ppiaf.org/sites/ppiaf.org/files/documents/toolkits/Portoolkit/Toolkit/pdf/modules/06_TOOLKIT_Module6.pdf . Sub sequently modified to include truck - related indicators in: Kent, Paul E., Asaf Ashar, and Gerardo Ayzanoa, “ How Fit Are Central America’s Ports? An Exercise in Measuring Port Performance”, paper presented to the International Association of Maritime Economists, Norfolk, Virginia, July 2014. R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 15 of 36 In general, port performance address three broad categories of port activities, including berth operations (vessel productivity, vessel waiting time , and berth utilization rates ) and truck turn time. APN operational services , which include services that terminal operators do not provide (e.g. pilotage and tug assi st ), should also be monitored relative to performance of these services, such as waiting time between tug or pilot request and arrival, as delay in these services can add to port time and vessel waiting time . Additionally, APN as an agency should monitor the effectiveness of its administration. Administration effectiveness is measured relative to financial performance, administration productivity, and resource allocation. Additionally, there should be an indicator reflective of female gender inclusion gi ven Haiti’s constitutional provisions associated with gender equity. Skill Sets or Knowledge Needed to Perform Operational Performance Monitoring Function Operational performance monitoring is expected for both operational performance and port authority p erformance relative to management effectiveness. Operational performance relates to productivity and efficiency of port services (operational services provided by private parties inside the port areas and those provided by APN, such as pilotage and tug as sist) as well as the effectiveness of the port administration relative to resource allocation, labor productivity, and gender equity. Hence, requisite skill sets and knowledge domains include accounting/invoicing, port operations, budgeting/finance, and h uman resources. OPERATIONAL REGULATI ON Ports straddle the interface between land and water bodies, indicating that ports are usually governed by both the law of the land and of the harbor . The majority of port operations are administered by public port au thorities and they are thus charged with establishing the ground rules for providing services and conducting any activity within the port’s jurisdiction. The port’s jurisdiction is normally defined as that area between the port’s entrance buoy and the po rt’s gate. While the harbor master , which may or may not be a port authority employee, usually has the responsibility for ensuring navigation and safety within the ha rbor; port authorities in turn are responsible for establishing certain rules governing c onduct within the port’ s jurisdiction, including setting forth regulations regarding the use of berths, warehouses, cargo handling equipment , and other facilities within the port’s jurisdiction. Port authorities do not regulate ships and manning. This is normally done by the port - state control entity of a country, which exercises the rights of the state to inspect and as appropriate detain sub - standard ships. The port authority is not involved in this process and, even if it is aware of the fact, i t has no powers to exclude a sub - standard ship unless it can prove that the vessel or its cargo is dangerous as defined in legislation or regulation. Additionally, the port state control entity aims to ensure that there is effective control of compliance with international standards by ships in a country’s ports and thus ensure that ships sailing in a country’s waters have bee n appropriately constructed and are adequately maintained. To this extent, the port - state control entity normally has jurisdiction o ver a country’s entire territorial waters, including harbors and coastlines. R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 16 of 36 Against this backdrop , Haiti’s SEMANAH has been given the technical responsibility for conducting port - state control responsibilities. In addition to assurance of navigation safe ty and marine environmental protection, SEMANAH also is the party responsible for en suring compliance with all international agreements and treaties to which Haiti is a signatory, suc h as the International Maritime Organization and the International Labor Organization . Haiti is not yet obligated to adhere to the full force of international protocols as it has signed onto only a limited number of them ; these include SOLAS 74, Load Lines Convention 66, Tonnag e Convention 69, STCW Convention 78, and London Co nvention 72. SOLAS 74, as amended with the ISPS security protocols, provides that the state meet s certain port and navigation security requirements. Accordingly, SEMANAH ensures that APN satisfies these security requirements and, as appropriate, ensures they are reflected in the body of APN’s operational regulations. SEMANAH also has an important role in assessing the impact of potential commitments to other and future IMO and other international standards. Port operational regulations also include the charges imposed by the port authority and the basis from which they are calculated and applied. The regulations need not report charges of other parties providing port services as port users of these services engage such services directly. Volume incenti ves qualifying customers for discounts from port authority tariffs, invoicing and payment procedures, and late penalties for non - payment, are normally indicated in the tariff section as well. Haiti is void of national environmental regulations. Hence, t he port authority as well as the harbor master serve as the front regulatory line for environmental regulation. Operational regulations should set forth rules prohibiting air, land, and water pollution, procedures for reporting and responding to environme ntal and safety incidences, and designation of spaces for hazardous cargo storage. Rules should also address the discharge of ship wastes into port waters, tank cleaning, and the use of port waste reception facilities . Operational regulations also specify the working hours of the port, vessel arrival notification requirements (in coordination with the harbor master), security (e.g. fencing and lighting) requirements for leased properties within the port area (that are not governed by ISPS rules), vehicle a ccess and parking rules, licensing procedures for port services, a description of the port’s boundaries, location of navigation lights, buoys, turning basins, and anchorage areas, personal identification and individual access permit requirements, gate and berth operating hours, among other provisions. Regulations should also provide for a c omplaint disposition and dispute resolution process related to activities conducted within the port area or interpretation of port regulations. Skill Sets or Knowledge N eeded to Perform Operational Regulation Function Operational regulation is associated with ensuring a safe and secure environment for port users, employees, and customers. Accordingly, needed skill sets and knowledge domains include port operations, port planning, worker safety, environmental protection /mitigation, law enforcement/security, and legal. R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 17 of 36 CONTRACTS AND LEGAL MECHANISMS FOR PRIVA TE SECTOR PARTICIPATION IN POR T SERVICES The entry of private sector participation that began in the 1980s has led to a number of legal instrument for eng aging private sector participation. Though there are exceptions in the features for each type of contractual scheme , the most commonly used ones include: 1) concession contract, which implies substantial investment in a port terminal in exchange for the right to build or improve a terminal and provide services in the terminal for a specified nu mber of years, usually sufficient to cover investment costs and reasonable rates of return or profits; concession contracts are normally awarded for terminal o perations. They can be awarded for both brownfield terminals (which usually have lower investment costs) or greenfield terminals (which usually have higher investment costs). 2) licenses, which are awarded to companies that demonstrate capabilities and qualifications to provide a specific service, and usually providing their own equipment to do so . T hese have been used for pilotage, tug assist, line handling, and stevedoring services. 3) leases, which authorize tenants to use a property within the port’s jurisdiction for a specified period of time, though the property’s use may not be restricted to maritime or port related services and usually do not require significant investment; leases can be short - term or long - term, depending on market conditions and investment commitments. 4) o perating agreements, which are structured similarly to leases, but activities conducted on the premises are restricted to a port or maritime related activity. 5) management contracts, where operators provide a service and are compensa ted by the port authority to do so. . Lawyers will have a field day for arguments over the features of each of these legal vehicles and others that they may have used. In some cases, actual legal vehicles may be hybrids of any of the above, but generally global transaction experience has been limited to the general types defined above. As market conditions change, one form might be considered as a transition to another. For example, many ports where demand is not sufficient will provide for licensing of port services, such as for stevedores , as cargo growth increases over time, port authorities may gravitate to a concession contract provided the investment is justified by cargo growth. A management contract may also be used as an interim agreement between licensing and concession cont racts if the port authority determines there can be efficiency gains by engaging a single operator, though cargo volume may not justify substantial investment. Efficiency gains, investment needs, cargo volumes, the impact on competition, and the ability t o constrain anticompetitive behavior all should weigh in on the decision as to what legal instrument should be used. Haiti is pursuing a contract for the operation and management of a container terminal in Cap Haitien. As Haiti’s port system evolves over time, and as cargo demand increases, it is likely that APN will engage in other legal relationships to engage port service providers. APN’s interest is to contribute to economic growth . I ts success will result in greater demands for lands, facilities, and port services . Among other things, concession contracts address tariffs, concession fees and the basis from which fee s owed are calculated, operational performance standards, terms of default and conditions for force R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 18 of 36 majeure, cross references to regulations, investment requirements, dispute resolution process, obligations of the state and/or port authority, and a host of other provisions that are generally designed to address risk allocation between the parties to the contract. Licenses address qualifications and insurance requirements and the conditions in which licensees may have access t o the port and specific definitions of the services they may provide under the terms of the licenses. In addition to formulating legal documents, mechanisms and procedures , APN will also have to monitor compliance by service providers . From experience w e know that contract non - compliance is often tied to the service provider not meeting the schedule and standards associated with a construction program, exceeding tariff limits or circumventing them (see earlier discussion on how terminal operators can do this), and failing to meet operational performance standards (refer to earlier discussion related to performance monitoring). While we emphasize clarity and preciseness in all contractual provisions, these features are especially important regarding stan dards and milestones incorporated into the contract. It is not possible, for example, to determine if a fifty percent construction completion requirement is met by a certain date without defining what 50 percent constitutes. Similarly, meeting a producti vity performance standard of say 20 moves per ship hour cannot be verified without specifying at what point the clock starts for productivity calculation, such as, for example, the clock starting when th e first (or last) line is tied and ending when the la st line is untied, or the clock starting when a crane’s spreader or hook is secured onto the first container to be discharged until the spreader or hook is detached from the last container loaded or discharged from the vessel. In cases where the contract language is not precise or clear, in this productivity standard example, then the operator will argue for an interpretation that provides the widest latitude on which to make the calculation. Finally, some concession contracts pressure the operator to ex pand the physical capacity of a terminal if berth utilization reaches 70 percent or so because at this level there is a berth congestion risk. The operator, based on other performance standards, will make every effort to increase berth productivity to avo id making more expensive capacity expansion. But at some point, based on a maximum berth utilization rate standard, hypothetically the operator may interpret the basis for calculating berth utilization to be different than intended by the contract. Again , it is important to precisely define the basis for the calculation of any norms and standard to be incorporated into the contract. Skill Sets or Knowledge Needed to Engage in Port Contracts Function Contracts and other legal instruments address not only their structure, but also the array of provisions representing concerns and risk associated with parties to these instruments. Skills and knowledge in law, public domain, pu blic procurement, contracts, land and real estate regulations, accounting, tariff analysis, port operations, and port planning are all required to ensure the efficacy of legal instrument templates as well as assessment of contract compliance. R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 19 of 36 3. REGUL ATORY SKILL SET REQUIREMENTS AND INTER - UNIT RELATIONSHIPS The discussion above described the activities associated with APN’s regulatory function responsibilities. For each, we identified the general skill areas required for their successful performance. Table 1 summarizes the requisite skill areas for each of the regulatory functions described above. Note that all of the functions require skill sets and knowledge associated with port operations while four of the five regulatory areas require skill sets in accounting and invoicing. The skill sets and knowledge for these functions normally reside within a landlord port authority. Competition regulation is an exception as in most countries this is assigned to a regulatory entity with jurisdiction over th e transport sector (e.g. Peru’s OSITRAN) or over the port sector (e.g. South Africa’s Independent Port Regulator), or by competition commissions or authorities. As Haiti does not have a competition authority, the responsibility is to be assumed by APN; however, as Table 1 indicates, the majority of basic regulatory skill set requirements are normally found within a port authority. Figure 7 presents APN’s organizational structure. While we could not obtain a structure from APN, its functions are identified on its website, though not fully detailed to discern the full range of activities for each unit. However, we assume that the functions are performed in accord with global practice. Using this as a backdrop, we then map out the relationship between regulatory functional performance and the relationship with each of the units that perform activities related to, or house or generate information needed for, specific regulatory functions. Figures 8 and 9 show the inter-relationships among units and where the information needed to perform the regulatory function resides. The inter-relationships shown in Figures 8 and 9 illustrate the need for access to information collected and/or generated by relevant units. It also demonstrates a certain degree of the extent of collaboration needed among various units to perform specific functions. R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 20 of 36 Table 1 . Skill Sets and Knowledg e Requirements for Performing Regulatory Functions Tariff Analysis √ √ √ Competition Regulation and Monitoring √ √ √ √ √ √ √ √ Operational Performance Monitoring √ √ √ √ Operational Regulation √ √ √ √ √ √ Skill Sets/Knowledge Function √ √ √ √ √ √ Port Contracts/Legal Vehicles for Private Sector Participation Port Planning Industrial Economics Human Resources Port Worker Safety Environmental Protection/ Mitigation Law Enforcement/ Security Accounting/ invoicing Port Operations Finance/ Budgeting Contracts Legal Tariff Analysis R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 21 of 36 Administration Public Port Regulation Finance Finance, Accounting Technical Port Development Maintenance Operations Loading/Discharge Equipment Maintenance Cabotage Cabotage Port Administration Operation Security Commercial Marketing, Promotion Port Cap Haitien Director General -- Legal -- Controller -- Planning -- IT Technical Cabinet -- Executive Secretariat -- International Affairs -- Figure 7 . APN Organizational Structure R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 22 of 36 Figure 8 . Relationships Between Tariff Analysis, Competition Regulation and Monitoring, and Operational Performance Monitoring Functions and APN Organizational Units Administration Public Port Regulation Finance Finance, Accounting Technical Port Development Maintenance Operations Loading/Discharge Equipment Maintenance Cabotage Cabotage Port Administration Operation Security Commercial Marketing, Promotion Port Cap Haitien Director General -- Legal -- Controller -- Planning -- IT Technical Cabinet -- Executive Secretariat -- International Affairs -- Tariff Analysis Competition Regulation and Monitoring Operational Performance Monitoring R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 23 of 36 Administration Public Port Regulation Finance Finance, Accounting Technical Port Development Maintenance Operations Loading/Discharge Equipment Maintenance Cabotage Cabotage Port Administration Operation Security Commercial Marketing, Promotion Port Cap Haitien Director General -- Legal -- Controller -- Planning -- IT Technical Cabinet -- Executive Secretariat -- International Affairs -- Operational Regulation Contracts andLegalVehicles Figure 9 . Relationships Between Operational Regulation, Contracts and Legal Vehicles Functions and APN Organizational Units R E G U L A T O R Y O R G A N I Z A T I O N A L A N D S T A F F I N G P L A N Page 24 of 36 The figures also indicate that only the Cap Hai