Port reform strategy
proposed by the World Bank

Private sector involvement is required

The World Bank said in a recently published report that the aftermath of the Port Explosion presents an opportunity to rethink the nature, function, and location of facilities in the Port of Beirut (PoB). The aim is enhancing port performance and competitiveness, and optimizing capacity and land use.

Revisions to the Masterplan of the PoB should be undertaken within the framework of a new port and maritime strategy for Lebanon that promotes complementary roles among the ports.

The ‘Reforming and Rebuilding Lebanon’s Port Sector: Lessons From Global Best Practices’ report recommends a governance model of the port sector that consists of a three-tiered structure comprised of a national port administration, landlord port authorities, and private sector terminal and stevedoring operators.

A port reform strategy should address the issues of urban congestion around the PoB and reduce environmental and chemical hazard risks. “Decongesting the port would also allow valuable real estate to be developed in the rest of the city in a safer, more integrated way,” according to the report. “For the port’s governance to meet global standards, a well-developed port sector law, anchored in a clear vision for the Lebanese port and maritime sector must be enacted,” the report said.

“This model offers governments the ability to safeguard long-term public interests while harnessing the private sector’s capacity for short-term responsiveness and cost-efficiency and continued long term engagement,” the report said.

The national port and maritime administration will be in charge of strategic planning and policy setting while commercial operations will be carried out by private terminal operating companies and licensed stevedoring operators.

“Given the urgent need for an accountable and transparent port sector in Lebanon, with clear and distinct roles and responsibilities, opting for the creation of a port authority operating under the Landlord Port Model would be a sensible choice in the Lebanese situation,” the report said. This model will allow the port to tap private sector operational skills and investment potential. According to the landlord model, the public port authority owns the land and infrastructure. It awards operational licenses, leases and concessions to private operators.

The port authority could be corporatized as a joint-stock company with full public ownership of its shares. It will have the flexibility of a corporate entity adopting regular accounting and auditing standards. This will allow the port authority to act as an implementing agent of government policy while remaining at arm’s length from political interference. “It would also ensure transparency in the port authority’s financial performance. The new port authority can also award long-term concession contracts to rebuild and operate the port’s infrastructure under explicit and transparent public procurement rules,” the World Bank said in the report.

According to the report, the reform of the port sector must be accompanied by a reshuffle of the Customs administration and by streamlining trade procedures in order to improve efficiency, transparency, and security. It will also require the adoption of digital solutions that include a national single window. The single window will have to integrate the port community and the mandatory data elements of the Convention on Facilitation of International Maritime Traffic (FAL) of the International Maritime Organization (IMO) with appropriate cyber-security.

The report said that procurement should be undertaken in an open and competitive manner, in line with the reformed public procurement and Public Private Partnership (PPP) laws. This will be essential to facilitate rebuilding the basic infrastructure whilst ensuring value for money, and mobilization of the private sector in financing, reconstruction and operation of the port terminals and other logistics and free zone areas.