Note: The following exchange rate are used in this report. 1.00 Balboa = US Dollar 1.00 = Japanese Yen 108 December 2003 Final Report The Study on the Comprehensive Ports Development Plan in The Republic of Panama August 2004
TABLE OF CONTENTS (Volume 3) Supporting Report Page APPENDIX A Financial Conditions of Government and AMP ...... A -1 A.1 Financial Condition of the Public Sector ...... A - 1 A.2 The Financial Condition of the AMP...... A - 3
APPENDIX B Administration and Management of AMP...... B - 1 B.1 Administration and Management of Port ...... B - 1 B.1.1 Institutions of Central Government...... B - 1 B.1.2 Port-related Institutions ...... B - 1 B.1.3 Maritime Authority of Panama (AMP) ...... B - 5 B.2 Port Management and Operation...... B -17 B.2.1 Classification of Port in Panama ...... B -17 B.2.2 Role of AMP’s Office ...... B -17 B.2.3 Preliminary Observations ...... B -20 B.3 Concession...... B -21 B.3.1 History of Major Concessions...... B -22 B.3.2 Outline of Concessions...... B -22 B.3.3 Procedure of Port Concession ...... B -23
APPENDIX C Present Conditions of Port Sector ...... C - 1 C.1 Outline of Ports ...... C - 1 C.1.1 General ...... C - 1 C.1.2 Candidate Ports...... C -12
APPENDIX D Aguadulce Port and River Channel ...... D - 1
APPENDIX E Wave Analyses on the Pacific Coast...... E - 1 E.1 General ...... E - 1 E.2 Scope of the Analyses ...... E - 1 E.3 Methodologies of the Analyses ...... E - 3 E.3.1 Latest Hindcast Wave Data ...... E - 3 E.3.2 Statistical Analysis of Extremes...... E - 3 E.3.3 Calculation Method of Wave Deformation on the Shallow Water ...... E - 4 E.3.4 Wave Calmness Analysis in Harbor...... E - 4 E.4 Results of the Analyses ...... E - 9 E.4.1 Study for Offshore Waves...... E - 9 E.4.2 Study for Design Waves...... E -19 E.4.3 Determination of Design Waves for Wave Protective Facilities ...... E -22
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E.4.4 Study for Typical Waves...... E -25 E.4.5 Wave Calmness Analysis ...... E -36 E.4.6 Examination of Needs for New Protective Facilities...... E -53 E.4.7 Confirmation of Adequacy for New Harbor Alignment ...... E -53
APPENDIX F Design Criteria of Port Facilities...... F - 1 F.1 Design Basis...... F - 1 F.1.1 Design Codes and Standards ...... F - 1 F.1.2 Design Life ...... F - 1 F.1.3 Major Design Criteria...... F - 1 F.2 Natural Conditions ...... F - 2 F.2.1 Tides and Currents ...... F - 2 F.2.2 Design Waves...... F - 3 F.2.3 Subsoil Conditions ...... F - 5 F.2.4 Winds...... F - 6 F.2.5 Earthquakes ...... F - 6 F.3 Material Conditions...... F - 9 F.3.1 Concrete...... F - 9 F.3.2 Reinforcement ...... F - 9 F.3.3 Protective Concrete Cover to Reinforcement...... F -10 F.3.4 Structural Steel ...... F -10 F.3.5 Corrosion Rates of Steel...... F -11 F.3.6 Unit Weight of Materials...... F -11 F.4 Structure Design Methods...... F -12 F.4.1 Design Method of Structural Analysis ...... F -12 F.4.2 Design Method of Pile Foundations...... F -12 F.4.3 Safety Factor on Structural Stability ...... F -15 F.5 Particular Design Criteria...... F -15 F.5.1 Mooring Facilities ...... F -15 F.5.2 Breakwaters ...... F -19 F.5.3 Revetments ...... F -21 F.5.4 Other Port Facilities ...... F -21 F.5.5 Fishery Facilities ...... F -21
APPENDIX G Unit Rates of Construction Works in Panama...... G - 1 G.1 Unit Price of Materials ...... G - 1 G.2 Manpower Cost ...... G - 4
APPENDIX H Port Administration and Privatization in Costa Rica and Nicaragua...... H - 1 H.1 Port Administration and Operation/Management System...... H - 1 H.2 Privatization...... H - 3 H.3 Private Ports and Concession ...... H - 3 H.4 Coordination and Cooperation among the Countries in Central America ...... H - 4
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APPENDIX I Port Management in Mexico and Jamaica ...... I - 1 I.1 Mexico...... I - 1 I.1.1 Port Sector in Mexico...... I - 1 I.1.2 Manzanillo Port ...... I - 3 I.1.3 Veracruz Port...... I - 4 I.1.4 NYK Logistics...... I - 6 I.2 Jamaica ...... I - 6 I.2.1 Port Sector in Jamaica ...... I - 6 I.2.2 Kingston Port...... I - 8 I.3 Summary and Findings...... I - 9
APPENDIX J Study on Cruise Tourism in Caribbean Sea...... J - 1 J.1 Introduction ...... J - 1 J.2 Ports of Call...... J - 3 J.2.1 Charlotte Amalie (St. Thomas; US Virgin Islands) ...... J - 3 J.2.2 Philipsburg (St. Maarten; Dutch West Indies) ...... J - 6 J.2.3 St. John’s Harbor (Antigua) ...... J - 9 J.2.4 Castries (St. Lucia)...... J -11 J.2.5 Bridgetown (Barbados) ...... J -14 J.3 Findings and Summary...... J -16 J.3.1 Tourism Development in Caribbean Islands ...... J -16 J.3.2 Cruise Tourism...... J -16 J.3.3 Roles of Port in Cruise Tourism...... J -18
APPENDIX K Workshop Report...... K - 1 K.1 General ...... K - 1 K.1.1 The First Series of Workshop (July 15, 17, 18, 21 and September 10, 2003) ..... K - 1 K.1.2 The Second Series of Workshops (December 5, 2003, January 13, 16, 20 and 21, 2004)...... K - 1 K.2 Discussion note of Workshop at Bocas del Toro ...... K - 2 K.2.1 First Workshop...... K - 2 K.2.2 Second Workshop...... K - 5 K.2.3 Third Workshop ...... K - 8 K.3 Workshop at David...... K -11 K.3.1 First Workshop...... K -11 K.3.2 Second Workshop...... K -13 K.4 Discussion Notes of the Workshops at La Palma ...... K -16 K.4.1 The First Workshop...... K -16 K.4.2 The Second Workshop ...... K -18 K.5 Workshop at Vacamonte ...... K -20 K.5.1 First Workshop...... K -20 K.5.2 Second Workshop...... K -24 K.6 Workshop at Colon...... K -27
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APPENDIX L Panama Maritime Strategy...... L - 1 L.1 English Translation by the Study Team ...... L - 1 L.2 Original (Spanish) Panama Maritime Strategy ...... L - 4
APPENDIX M Panama Trade ...... M - 1
APPENDIX N The Sensitivity Analysis on EIRR and FIRR of the Priority Project ...... N - 1
APPENDIX O Environmental Field Surveys ...... O - 1 O.1 Initial Field Survey...... O - 1 O.1.1 Coastal Water Quality ...... O - 1 O.1.2 Seabed Material Property and Quality ...... O - 2 O.1.3 Quality Evaluation...... O - 2 O.1.4 Coastal Ecology...... O -16 O.1.5 Social Environmental Aspects...... O -18 O.2 Supplemental Field Survey ...... O -21 O.2.1 Riverine Ecology...... O -21 O.2.2 Social Environmental Aspects...... O -23
APPENDIX P Environmental Impact Assessment (EIA) ...... P - 1 P.1 Bocas del Toro and Almirante Ports Project...... P - 1 P.1.1 Baseline Environment ...... P - 1 P.1.2 Project Synopsis ...... P - 6 P.1.3 Environmental Impact Statement ...... P - 9 P.1.4 Environmental Management Plan ...... P -14 P.1.5 Environmental Monitoring Plan...... P -16 P.1.6 Conclusion...... P -18 P.2 Chiriqui Port Project ...... P -19 P.2.1 Baseline Environment ...... P -19 P.2.2 Project Synopsis ...... P -21 P.2.3 Environmental Impact Statement ...... P -24 P.2.4 Environmental Management Plan ...... P -32 P.2.5 Environmental Monitoring Plan...... P -35 P.2.6 Conclusion...... P -38 P.3 Coquira Port Project...... P -39 P.3.1 Baseline Environment ...... P -39 P.3.2 Project Synopsis ...... P -41 P.3.3 Environmental Impact Statement ...... P -43 P.3.4 Environmental Management Plan ...... P -47 P.3.5 Environmental Monitoring Plan...... P -49 P.3.6 Conclusion...... P -50 P.4 La Palma Port Project...... P -51 P.4.1 Baseline Environment ...... P -51 P.4.2 Project Synopsis ...... P -53
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P.4.3 Environmental Impact Statement ...... P -55 P.4.4 Environmental Management Plan ...... P -59 P.4.5 Environmental Monitoring Plan...... P -62 P.4.6 Conclusion...... P -64 P.5 Recommendation...... P -64
(Volume 1) Nationwide Port Development
Preface Letter of Transmittal Perspectives List of Abbreviations List of Tables and Figures Page 1. INTRODUCTION...... 1 1.1 Outline of the Study ...... 1 1.2 Background of the Study...... 1 1.3 Study Area...... 2 1.4 Study Team ...... 2 1.5 Study Reports...... 4 1.6 Conclusions and Recommendations ...... 4
2. PRESENT SOCIO ECONOMIC FRAMEWORK...... 7 2.1 Social Framework ...... 7 2.2 Macro Economic Indicators ...... 17 2.3 Industry Scan...... 36
3. POLICIES AND PROJECTS FOR NATIONAL AND REGIONAL ECONOMIC DEVELOPMENT ...... 89 3.1 Economic Development Policies ...... 89 3.2 Ongoing Developments...... 98
4. NATURAL CONDITIONS OF PANAMA...... 118 4.1 Geomorphology...... 118 4.2 Land Use ...... 120 4.3 Vegetation ...... 120 4.4 Meteorology ...... 121 4.5 Geology ...... 125
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4.6 Marine Climate...... 129 4.7 Natural Disasters...... 131
5. ENVIRONMENTAL CONDITION OF PANAMA ...... 134 5.1 Overall Environment...... 134 5.2 Coastal Water Environment ...... 136 5.3 Environmental Laws, Regulations and Standards...... 137
6. PORT SECTOR OF PANAMA...... 141 6.1 Maritime Network...... 141 6.2 National Port System...... 164 6.3 Capacity of the Existing Port Infrastructure ...... 175
7. FUTURE SOCIO-ECONOMIC FRAMEWORK ...... 209 7.1 Basic Assumptions and Development Constraints ...... 209 7.2 Population Forecasts ...... 220 7.3 Economic Forecasts ...... 252 7.4 Summary Conclusions...... 283
8. DEMAND FORECAST OF PORT TRAFFIC OF PANAMA...... 287 8.1 Forecast of Import/Export Cargo ...... 287 8.2 Forecast of Transshipment Cargo ...... 296 8.3 Summary ...... 299 8.4 Detailed Traffic Forecast of Each Port ...... 300
9. NATIONAL PORT STRATEGY ...... 322 9.1 Basic Policies of the National Port Strategy ...... 322 9.2 Roles of Port Sector and Basic Policy for Promotion...... 327 9.3 Nationwide Port Planning Structure ...... 336
10. NATIONWIDE PORT DEVELOPMENT ...... 338 10.1 Nationwide Port Development Plan (NPDP)...... 338 10.2 Individual Port Development Plans...... 359 10.3 Port Administration and Management Plans...... 381
11. SELECTION OF PORTS SUBJECT TO MASTER PLANNING ...... 392 11.1 Policy and Directions Employed in the Identification of the Projects...... 392 11.2 Development Concepts of Major National Ports ...... 395 11.3 Selection of Ports Subject to Master Planning...... 398
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(Volume 2) Master Plan and Feasibility Study
Perspectives List of Abbreviations List of Tables and Figures Page
12. MASTER PLAN OF BOCAS DEL TORO PORT ...... 1 12.1 Development Scenario ...... 1 12.2 Demand ...... 5 12.3 Natural Conditions ...... 10 12.4 Environmental Condition...... 19 12.5 Facility Planning and Layout ...... 24 12.6 Preliminary Design of Facilities ...... 26 12.7 Project Implementation ...... 34 12.8 Project Costs and Capital Expenditure ...... 36 12.9 Administration and Management...... 38 12.10 Economic Analysis...... 42 12.11 Initial Environmental Examination (IEE) ...... 46 12.12 Recommendations on Regional Economic Development...... 49
13. MASTER PLAN OF CHIRIQUI PORT ...... 51 13.1 Development Scenario ...... 51 13.2 Demand ...... 59 13.3 Natural Conditions ...... 70 13.4 Environmental Condition...... 76 13.5 Facility Planning and Layout ...... 79 13.6 Preliminary Design of Facilities ...... 84 13.7 Project Implementation ...... 97 13.8 Project Costs and Capital Expenditure ...... 100 13.9 Administration and Management...... 101 13.10 Economic Analysis...... 104 13.11 Initial Environmental Examination (IEE) ...... 107 13.12 Recommendations on Regional Economic Development...... 111
14. MASTER PLAN OF COQUIRA PORT...... 112 14.1 Development Scenario ...... 112 14.2 Traffic Demand ...... 117 14.3 Natural Conditions ...... 122 14.4 Environmental Condition...... 130 14.5 Facility Planning and Layout ...... 132
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14.6 Preliminary Design of Facilities ...... 135 14.7 Project Implementation ...... 141 14.8 Project Costs and Capital Expenditure ...... 143 14.9 Administration and Management...... 145 14.10 Economic Analysis...... 147 14.11 Initial Environmental Examination (IEE) ...... 151 14.12 Recommendations on Regional Economic Development...... 154
15. MASTER PLAN OF LA PALMA PORT...... 155 15.1 Development Scenario ...... 155 15.2 Production and Staged Development ...... 159 15.3 Natural Conditions ...... 165 15.4 Environmental Condition...... 170 15.5 Facility Planning and Layout ...... 173 15.6 Preliminary Design of Facilities ...... 179 15.7 Project Implementation ...... 189 15.8 Project Costs and Capital Expenditure ...... 192 15.9 Administration and Management...... 194 15.10 Economic Analysis...... 196 15.11 Initial Environmental Examination (IEE) ...... 199 15.12 Recommendations and Regional Development ...... 202
16. FEASIBILITY STUDY ON BOCAS DEL TORO PORT SHORT-TERM PROJECT ....205 16.1 Identification of Short-term Development Projects ...... 205 16.2 Facility Requirements and Layout ...... 205 16.3 Project Implementation ...... 214 16.4 Administration and Management...... 215 16.5 Economic Analysis...... 220 16.6 Financial Analysis...... 221 16.7 Environmental Impact Assessment (EIA)...... 230
17. FEASIBILITY STUDY ON CHIRIQUI PORT SHORT-TERM PROJECT...... 236 17.1 Identification of Short-term Development Projects ...... 236 17.2 Facility Requirements and Layout ...... 238 17.3 Project Implementation ...... 248 17.4 Administration and Management...... 249 17.5 Economic Analysis...... 251 17.6 Financial Analysis...... 252 17.7 Environmental Impact Assessment (EIA)...... 258
18. FEASIBILITY STUDY ON COQUIRA PORT SHORT-TERM PROJECT...... 268 18.1 Identification of Short-term Development Project...... 268 18.2 Facility Requirements and Layout ...... 268
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18.3 Project Implementation ...... 274 18.4 Administration and Management...... 275 18.5 Economic Analysis...... 276 18.6 Financial Analysis...... 277 18.7 Environmental Impact Assessment (EIA)...... 284
19. FEASIBILITY STUDY ON LA PALMA PORT SHORT-TERM PROJECT...... 289 19.1 Identification of Short-term Development Project...... 289 19.2 Facility Requirements and Layout ...... 289 19.3 Project Implementation ...... 300 19.4 Administration and Management...... 301 19.5 Economic Analysis...... 302 19.6 Financial Analysis...... 306 19.7 Environmental Impact Assessment (EIA)...... 313
20. CONCLUSIONS AND RECOMMENDATIONS...... 318 20.1 Conclusions...... 318 20.2 Recommendations ...... 328
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APPENDIX A Financial Conditions of Government and AMP
A.1 Financial Condition of the Public Sector
As for the scale of the economy of Panama Republic, Nominal GDP was 7,906 Million USD (1995) and 12,296 Million USD (2002) and is growing steadily (Table A.4).
Three tables, Tables A.1, A.2 and A.3, are available in order to understand the financial activity of the public sector of the Republic. The largest definition of the government activities is shown in Table A.1. Five groups (Central Government, Decentralized Entities, Non-Financial Public Companies, Financial Intermediates and Municipalities) make up the public sector. Excluding the duplicated portions, the aggregated income of the public sector is 5,983 Million USD and the aggregated expense of the public sector is 5,582 Million USD in 2001. The ratios against GDP are 49.6 percent in income, 46.3 percent in expenses and are moderately well controlled. It is the first characteristic of the public finance of the Republic.
The point that requires attention is the extremely small size of the budget of the local government. The total financial size of the municipalities is only 1.6 percent of the whole public sector. Another data about the local governments is Table A.6 that shows the income and expenses of individual provinces.
Table A.1 tells, in addition to the central government there are many public entities such as decentralized entities, non-financial public companies and financial intermediates at central level. But precise analysis of these organizations is out of the scope of this study.
Table A.2 is another data on the financial activity of the central government. Financial intermediates and Municipalities are excluded from the data. The size of the social security budget is revealed in this table. The income of social security is 725 million USD and the expense of social security is 1,055 million USD in 2002. The difference between income and expense is the burden on the central government and it is steadily increasing year by year. Therefore, it has negative effects on other expenses, especially capital expenditure. Capital revenue seems to come from the sale of national assets including the stocks held by the central government.
The payment of the external interest was increasing. It amounts to 413 million USD in 2002 and is the substantial burden to the finance of the central government. There was 261 million USD of the default of external interest in 1995. But the size of the default was decreasing year by year and disappeared in 1998. The capitalization of the interest was decreasing too. The overall external situation of the public finance is improving recently.
Table A.3 shows the structure of the income and expenses of the central government. The revenue structure of the central government is shown in Figure A.2. Income tax on individuals and corporations is only 22 percent of the whole revenue. It is unique characteristics of the Republic. Taxes on foreign trade consist of 9 percent and tax on domestic consumption consists of 17
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percent of total revenue. Total tax revenue consists of only 51 percent of total revenue. The other half of revenue comes from the Canal, non-tax revenue, transfer from the public sector and capital revenue.
Figure A.3 shows the expense structure of the central government. The major expense items are wages and salaries (31%), pensions and transfers (25%) and external interest (19%). Goods and services (6%) and fixed capital formation (12%) are relatively small in terms of size.
Table A.4 shows the trend of the public debt. The ratios against GDP are shown in Figure A.4. Total of internal and external debt amounts to 96 percent of GDP in 1995 but has been decreasing year by year. It is 69 percent of GDP in 2002 while absolute amount has been increased from 5,891 million in USD in 1995 to 6,349 million USD in 2002 by small amount.
Table A.5 tells the structure of the expenses of the central government by the departments. The service of the debt and investment are separated from current expenses of the departments. According to Figure A.5, Current expenses of the departments consist of 51 percent of the total expenses of the central government. The service of the debt (internal and external) consists of 38 percent of the total expenses. Only ten percent, 277 million USD, of total expense goes to investments
The current expenses by departments are shown in Figure A.6. This tells the policy of the central government in terms of budget size. Education (33 percent) and Health (25%) occupies 58 percent of current budget. The third is Government and Justice (13 percent). The budgets of the departments other than these three departments (71 percent in total) are very small.
Table A.6 shows the size of income and expenses of the local government by the provinces. Not only the size of the local budget is very small compared to the central government, but also the tremendous difference exists between the canal area and the other provinces. As shown in Figure A.7 and A.8, Panama province has the largest share. Adding Colon province to Panama province, total share reaches to 80 percent. The third is Chirique province whose share is 7 – 8 percent. Total of other provinces except for these three provinces amounts to around ten percents
The implications of the financial structure of the Republic to the finance of AMP are:
i) The substantial portion of the government income comes from non-tax revenue of various government agencies. Tax base of the government is not strong. The various incomes that AMP corrects now will be the important source of the revenue of the government. Therefore, the utilization of them for AMP activities will be limited not only now but also in future.
ii) Government emphasis on expenditure focuses to education, health and social security and the budget for fixed capital formation is limited. These trends will continue.
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iii) MEF controls the investment budget in strictly centralized manner. It seems to be impossible for individual departments to manage their investment budgets or to establish a special account to manage specific activities (such as port construction) in both current and investment budget including income and expenses.
iv) The debt service will continue to be big burden to the public finance.
v) The relative and absolute scale of local finance is very small. In addition, the budget of the provinces other than Panama, Colon and Chirique is almost negligible. It is the reality of the current Panama’s local administration or decentralization.
vi) Decentralizing the port administration such as establishing port authority managed by local governments will be very remote in terms of time frame.
vii) Such small scale of the local finance, especially of the provinces of remote area from the Canal is the reflection of low level of economic activities or low accumulation of industries. Therefore, when we study the development of local port systems, these huge discrepancy between the Canal area and the remote area must be fully understood.
A.2 The Financial Condition of the AMP
The Balance Sheet of the AMP is shown in Table A.7. The number for the year of 2002 is as of the end of October and others are as of the year-ends. The majority of the assets are property, plant and equipment and the corresponding value appears on the equity side. There is no specific point that requires special attention.
The Income Statement of the AMP is shown in Table A.8. The numbers for the year of 2002 are closed at the end of October. The major current costs and expenses consist of employee expenses, operation costs, and services provided by the third parties and provisions. The operating costs are decreasing dramatically. The largest expense that exceeds current expenses is the transfer to the government (30 – 40 million USD every year). Figure A.9 shows the structure of AMP expenses graphically in order to facilitate understanding.
Table A.9 separates the income and expenses of the AMP in 2002 into subdivisions such as the headquarters, ports and marine school. Table A.10 is the same table for 2001. But in Table A.10, the expenses for the major ports are not separated from the ones of AMP headquarters. Therefore Table A.9 is more useful than Table A.10.
Figure A.12 shows the income and expenses of the AMP in 2002 by subdivisions. Major portion of the income and expenses belongs to the headquarters and the next is major ports. The share of the local ports (both Vacamonte and small ports) is very small.
Figure A.13 focuses the income and expenses of port activities separated from other AMP activities. If the depreciation expenses are excluded from the cost and expenses, the operation of
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Vacamonte port become positive but in case of small ports, the financial result is still negative in aggregate basis. In both Vacamonte and small ports, there is very little amount of operating expenses except for personnel costs
Table A.11 shows the income and expenses of sixteen small ports. But the depreciation expenses are shown in aggregate number and details of the individual ports are not shown. As Figure A.14 shows, among the small ports, the highest income port in 2002 is Aguadulce, the second is Panama and the third is Charco Azul. But total income of the all sixteen small ports is less than half of the one of Vacamonte in 2002.
The income budget of the AMP is shown in Table A.12. This table gives the most detailed explanation of the structure of AMP income. In the year of 2002, the largest income item is certification, the second is the ship tax and the third is consular collection that is the largest in 2000 but has decreased to the third. Among these income items, AMP classifies four items as the income related to the port administration that is shown in Figure A.11.
The expense budget of the AMP is shown in Figure A.13. It is useful for us to understand the detail structure of expenses. But the budget is not necessarily realized. Therefore, Table A.9 (result) is more reliable for analysis.
Table A.14 summarized the four items that are classified as the port revenue.
Table A.15 summarized the investment budget that is administrated separately from the current budget and shows the progress of the execution of the budget as of July 2003 that is authorized in 2000. This investment budget actually consists of the budget for repairs. It is the characteristics of the AMP budget that the repair budgets are separated from the current budget and are under the screening of the MEF item by item.
As for the analysis of the budget of port activities in AMP, the port portion of the budget of the AMP headquarters must be estimated in addition to the budget of individual ports under AMP administration. This estimating will be done later.
In conclusion, the financial condition of AMP will be summarized as follows:
i) The AMP is the public authority not only to manage the maritime issue but also to collect the government revenue related to ships and ports;
ii) The operation and maintenance budget other than personnel costs is very little and insufficient;
iii) In addition to the investment, the budget for repair is under strict control of the MEF.
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Table A.1
Figure A.1
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Table A.2
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Table A.3
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Figure A.2
Figure A.3
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Table A.4
Figure A.4
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Table A.5
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Table A.6
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Figure A.5
Figure A.6
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Table A.7
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Figure A.7
Figure A.8
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Table A.8
Figure A.9
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ct. 2002) O
–
Table A.9 Details of Income and Expenses AMP (Jan. 2002
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Table A.10 Details of Income and Expenses AMP (2001)
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Figure A.10
Figure A.11
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Figure A.12
Figure A.13
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Table A.11
Figure A.14
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Table A.12
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Table A.13
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Table A.13
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Table A.14
Table A.15
Figure A.15
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APPENDIX B Administration and Management of AMP
B.1 Administration and Management of Port
B.1.1 Institutions of Central Government
Panama is a state of representative democracy with three branches of government: legislative, executive and independent judiciary branch. The legislative branch is one- chambered Legislative Assembly consisting of 72 members elected by direct and secret vote. The executive branch includes a President and two Vice-Presidents. The President and Vice-Presidents are also elected by direct and secret vote for 5 years term. The structure of whole public sector of the Republic is shown in Figure B.1.1.
Executive Branch carries out the Republic’s administrative matters, and under the President as the chief executive, ten Ministries are engaging in the works of their relevant jurisdiction. Other than ten Ministries, two Ministers, to wit. Presidency and Panama Canal Affairs are placed in the Cabinet.
General Auditor, Peoples’ Defender and Public Service Controller’ offices are also consisting of the executive branch under the Presidency.
It is a distinctive character of the Panamanian Public Sector that a certain number of so called ‘decentralized institutions’ carry out the work of public or quasi-public nature. Thirty institutions cover a wide range of functions of the Executive Branch. The whole organizational structure of the Branch is shown in Figure B.1.2.
The judicial branch is organized under the Supreme Court of Justice with nine Judges, and includes, among others, Civil Court and Criminal Court as well as local courts and tribunals.
B.1.2 Port-related Institutions
Because of various aspects of the activity, many institutions intervene port planning, management, operation and other activities. Following seven institutions are specifically closely connected with port activities, thus formulate the Steering Committee when conducting the Study; namely Ministry of Commerce and Industry, Ministry of Economy and Finance, Ministry of Public Work, National Maritime Service (Ministry of Government and Justice), National Environmental Authority, Panama Canal Authority, Panamanian Tourism Institute and Panama Maritime Authority. Brief description of each institutions except Panama Maritime Authority (its detailed description appears in the next section) are shown in the below.
Ministry of Commerce and Industry (MICI)
Present form of MICI was established in 1998 by Ley No.53. Its main objectives are to promote, coordinate, develop matters of industry, commerce, mining, energy, insurance, financial services etc. MICI is fulfilling its functions in four tiers.
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Directive Level is Offices of Minister and two Vice-Ministers who are delegated the exercise of Minister’s functions of internal commerce and industries, and foreign commerce, respectively. Two Vice-Ministers may act in name and representation of the Minister by delegation of their function. They constitute the supreme level of the Ministry.
Advisory Level consists of Secretary General, Special Projects Directorate, Legal Advisors Directorate, Communication Directorate and Planning Directorate. They functions as an advisory body to the Minister. The third tier is Administration Directorate, which carries out personnel matters, budget and account matters and other function of internal matters.
Executive level is divided in two parts according to each Vice-Minister’s functions. Of Internal Commerce and Industry, there are five National Directorates: National Directorate of Industrial Development, National Directorate of Commerce, National Directorate of Finances, National Directorate of Patrimony and National Directorate of Banana. Under the Vice-Minister of Foreign Commerce, three National Directorates are working as executive branch. National Directorate of International Trade Negotiations has functions to participate trade negotiations, watch for an adequate compliance of agreements, defense Panamanian position formulate the policy of prevention of illegal practice. National Directorate of Promotion of Production and Investment is responsible for promoting export goods and services, particularly by means of technology transfers in export sector, training of enterprises relating to exporter activity and among others, examining for foreign investments perspectives, promoting such investments including supporting the provider to seek potential partners. National Directorate of Services to Foreign Commerce has the functions to promote improved product aiming at getting international quality levels, and with other measures assist exporting enterprises to obtain the trade opportunities.
Ministry of Economy and Finance (MEF)
MEF were created in 1998 by Ley No.97, integrating Ministries of Property, Treasury, Planning and Economic, as Ministry to formulate economic policy initiative, such as planning of public investment and social strategy, drafting of national and regional development, the design and execution of general guidelines and tasks of the government in terms of national property and treasury, elaboration, execution and control of the State’s general budget, public loan and the modernization of the State as well as elaboration and execution of the financial planning of the State.
Functions of MEF are, according to the 1998 Ley, divided into following four aspects; matters of economy, investment and social development matters, budget matter, matters of public finance and administration. To execute these functions there are a certain number of units, directorates and departments as shown in Figure B.1.3. Officials from Investment Planning Directorate and Department of International Technical Cooperation participate the discussion of Steering Committee of the Study. The Investment Planning Directorate assesses in certain depth every project included in the budget request of capital expense provided by each public institution. MEF
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examines and compiles the request for budget both in terms of capital and current expense from all the government institutions. Examination of budget starts on May and submits to the Cabinet Council, then to the Legislative Assembly for assessment normally by September. Among the functions of the Ministry, the preparation and evaluation of technical cooperation program from foreign countries are included.
Ministry of Public Works (MOP)
Roads, of course, largely affect ports’ quality, thus personnel responsible for both facilities should be closely communicated particularly in planning stage. Panamanian Government created at very early stage of the Republic an institution to look after the construction and maintenance in 1904. After several institutional changes, 1978 Ley No.35 established Ministry of Public Works in present form. The Ministry have as it own object develop and apply the construction and maintenance policy of public works, and are responsible for executing and implementing policies for construction and maintenance of roads and urban avenues as well as bridges. The ministry has duties to administer, coordinate and supervise the preparation of policies, plans and budget for public works. It is also the Ministry’s duty to develop and supervise the country’s cartography. The organization structure is shown in (Figure B.1.4).
National Maritime Service
National Maritime Service is created by Cabinet Degree No.38 on February 1990 as a branch of Ministry of Government and Justice. The Ministry has wide range of jurisdiction in terms of safety and security of the nationals and the territory as well as protection of community and mass media supervision. The Ministry has three public forces, to wit. National Police, National Air Services and National Maritime Service, responsible for preserving the public order in all the national territory, air space and territorial waters, and enforcing the laws. National Maritime Service has the mission of protecting and defending the neutrality and operation of the Panama Canal, guarantee the security in ports, patrol and guard the coast and territorial waters. It also has the mission to protect contamination and preserve marine environment, renewable and unrenewable resources and archeological heritage, to provide help and rescue in the water and isolated islands. It establishes observances and operates patrol vessels. The organization chart is shown in Figure B.1.5.
National Authority of Environment (ANAM)
When planning, conducting and maintaining public works, it increases importance to take into account of various environmental aspects. In this sense, ANAM is a member of the Steering Committee. Panama has a firm national environmental policy to protect, conserve, improve and restore the quality of environment, thus bring about healthy environment adequate for life and sustainable development. For the purpose, ANAM are created by the several legislations, The objective of ANAM is to create the condition for formulating and carrying out of an adequate environmental policy, laws and regulations, and projects which promote effectively evaluation,
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protection, conservation and recovery of environment, and sustainable use of resources. It has a power to impose sanctions and taxes. (Figure B.1.6)
Panama Canal Authority (ACP)
Panama Canal Authority is established by Political Constitution, Title XVI, Article 310 on December 31, 1999.
Article 309 of the Title says:
“The Panama Canal constitutes an inalienable patrimony of the Panamanian Nation; it shall remain open to the peaceful and uninterrupted transit of ships of all nations,”
Hence, the organization that governs the Canal is given more independent nature than other public sector organization. Article 310 says:
“An autonomous legal entity by the name of Panama Canal Authority is hereby established under public law, which shall be exclusively in charge of administration, operation, conservation, maintenance and modernization of the Panama Canal and its related activities, pursuant to current constitutional and legal provision in force,¼”
1997 Ley No.19 enacted in compliance with Article 317 of the Political Constitution provides with the framework of ACP activities, and its Article 36 says as financial autonomy:
“The budget of the Authority will not be a part of the general budget of the government, nor will the provisions of the General Budget of the Government be applied to the budget of the Authority.”
Although the Authority is exempted from the payment of national or municipal levy, tax, rate, charge or contribution, it shall annually pay to the National Treasury, fees collected from ships transiting the Canal, subject to the payment of tolls. However, the financial independence of the ACT is assured by such provision as:
“The National Government may not commit the gross revenues received by or through the Authority, or offer any property from its patrimony as collateral for loans or any financial transaction of the State or by any of its agencies.”
ACP has powers to control and inspect navigation in the Canal and all other activities related to navigation in the Canal and adjacent ports including pilots, tugboats and maritime safety. At the same time, it is responsible, in coordination with other government agencies, for the administration, maintenance, use and conservation of the water resources of the Panama Canal watershed. For this reason, all plan for construction, the use of waters, and development of the ports, or any other work or construction along the bank of Panama Canal should require the prior approval of the ACP.
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The supreme organ of ACP is the Board of Directors with eleven members, one of whom is designated by the President, who shall preside over the Board and hold the rank of minister of state for Canal Affairs. This is the peculiar arrangement among decentralized institutions. The organizational structure is shown in Figure B.1.7.
Panamanian Institute of Tourism (IPAT)
IPAT is established in September of 1960. Its objective is to increase tourists’ attraction, giving knowledge of all the activities regarding tourism industry to outside and inside Panama, and also to promote the permanent income from foreign visitors who look for rest, amusement and entertainment, as well as to develop national tourism, especially for youth and social. Since Panama is facing both the Caribbean Sea and the Pacific Ocean, a considerable number of the tourists abroad come by sea, coordination of organizations in charge of both tourism and maritime affairs is inevitable, and IPAT is a member of the steering committee. The organization is shown in Figure B.1.8.
B.1.3 Maritime Authority of Panama (AMP)
History and Powers
AMP is created by Decreto Ley (Law Decree) No.7 issued by the President on February 10, 1998, in accordance with 1998 Ley No.1. Decreto Ley was enacted during the vacation of the Legislative Assembly (Vacatio Legis), but has same effects as Ley after approval of the Assembly.
1998 Ley No.1 is enacted to give the President extraordinary and specified powers for making necessary arrangements for creation of the National Bank Commission and AMP, and modification of 1994 Ley No.8 regarding to activities of tourism.
AMP is a unified body of various maritime competencies from different institutions in the Executive Branch such as: managing of marine and coastal resources from MICI, education and training of seafarers from the Ministry of Education, registry of merchant marine vessels from MEF, and absorbing the National Port Authority (APN) with port matters (after privatization of major ports).
The objectives of the AMP stipulated in the Article 3 of the said Decreto Ley are following three points:
i) Regulate, project and carry out the policies, strategies, laws and programs that are related to the functioning and development of the Maritime Sector. Here, ‘Maritime Sector’ means all the activities related to the merchant marine, the port system, the marine and coastal resources, the human resources and the maritime ancillary industries of the Panama Republic;
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ii) Coordinate its activities with ACP, Authority of the Intervocalic Region (ARI), IPAT, the National Institute of Renewable Resources and any other institution related to the Maritime Sector for promoting the country’s socioeconomic development;
iii) Act as a supreme maritime authority of Panama, and exercise the rights and comply with the responsibilities of the State within the framework of the UN Convention of LAW of the Sea, 1982 and other existing laws and regulations.
Among the functions assigned by 1998 Ley Decreto to AMP, following six points are directly dealing with the port matters:
i) To propose, coordinate and carry out National Maritime Strategy;
ii) To recommend policies and actions, to carry out administrative actions, and to enforce laws and regulations regarding to the Maritime Sector;
iii) To prepare jointly measures to safeguard the national interest within jurisdictional waters;
iv) To cooperate with the National Maritime Service in order to enforce national laws in the maritime areas and internal waters of Panama;
v) To update signaling system, navigation aids, nautical charts and other hydrographic data needed for safe passage of ships through the waters of Panama, in accordance with the National Constitution and the laws of the Republic;
vi) To conduct, with cooperation of other competent State agencies, the operations required for controlling oil and chemical spills, and other disasters or casualties taken place within the marine area and internal waters under jurisdiction of Panama.
The Ley Decreto says that in view of assuring the development of the Maritime Sector, the Authority should promote the creation and expansion of private/mixed companies through granting of guarantees, leasing of assets or by any other means. Also says that it should participate in private/mixed companies by acquiring share or stock, and within the existing legal framework may sell, lease and negotiate any kind of assets, or may award concessions.
Comparing to the budgetary arrangement of ACP (see final part of Section 6.4.1), AMP does not enjoy such independence in terms of budget and account.
Structure of the Organization
The supreme body of the AMP is the Board of Directors consisting of seven members and their alternate. One Minister of the State designated by the President of the Republic shall be on the chair and the Minister for the Canal Affairs is a member. Other five members are appointed through the Executive Branch within professionals/businessmen from various field connected to the functions of AMP, who fulfill the requirements such as citizenship, age, non-criminal record etc. It oversees and recommends on all the activities of the institution.
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AMP’s organs are divided of six tiers according to the function; to wit policy making, coordinating, advisory, inspection, administrative support and operations (see Figure B.1.9).
Directorate of Planning and Development of Maritime Sector, that is the counterpart of the Study, is positioned at the advisory level, being charged to draw up the plans and projects for development of maritime sector and to formulate maritime policy of the institution coordinating with other organ in the Authority as well as relevant institution outside AMP. It is also responsible for statistics and computerization.
On administrative support level、Resource of Personnel and Finance Directorates are functioning. Finance Directorate is responsible for budget and account as well as patrimony and asset control. The Directorate examines and compiles the budget request for submission for Board of Directors. Budget is sent to MEF, then to Legislative Assembly. The Directorate is sometimes requested to attend the Assembly’s deliberation for detailed explanation of the content of budget. For execution of budget, AMP has to, like other public institutions, be authorized by Contrarolia every month.
Operations of AMP’ work are executed by the next four General Directorates, which mainly succeed their predecessors.
i) General Directorate of the Merchant Marine—registry of merchant marine, navigation and maritime safety, prevention and control of marine pollution;
ii) General Directorate of Port and Maritime Ancillary Industries—concession and maritime ancillary industries, port captain and other operation of port, plans and annual programs of port-related work;
iii) General Directorate of Marine and Coastal Resources—development and control of fishery, management of coastal zone, marine laboratory (conservation and protection of marine environment);
iv) General Directorate of Seafarers—training and education of seafarers and fishermen, certification of seamen and fishermen, maritime labor affairs.
AMP has a certain numbers of local offices and three international offices (New York, London and Manila).
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Figure B.1.1 Public Sector Organization Republic of Panama
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Figure B.1.2 Executive Branch
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inance F Figure B.1.3 Ministry of Economy and
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Figure B.1.4
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Figure B.1.5
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Figure B.1.6
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Figure B.1.7
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Figure B.1.8 Panamanian Tourism Institute
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Figure B.1.9 Panama Maritime Authority
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B.2 Port Management and Operation
B.2.1 Classification of Port in Panama
As stated in Section 6.4.1, AMP is created to dedicate to the development of marine sector, and it has an operational branch called ‘Directorate General of Ports and Auxiliary Maritime Industries’. The Directorate General is responsible for operation of existing ports, directly or through capitainaria or local administration.
Major ports in Panama are classified as port for foreign commerce and cabotage.
Name and main activity of foreign commerce ports are as follows:
Cristobal Container Mansanillo Container/Vehicle Coco Solo North Container Coco Solo Container/General Cargo Bahia Las Minas Container/Cement/Crude Oil Balboa Container/General Cargo/Grain Chiriqui Grande Crude Oil/General Cargo Charco Azul Crude Oil Almirante Banana Armuelles Banana Pedregal Sugar/Fish/General Cargo Agua Dulce Sugar
Followings are major cabotage port:
La Palma Wood and Plantain Panama General Cargo Vacamonte Fish/Shrimp Mutis Rice Bocas del Toro General Cargo/Ferry
Ports of the country are also classified as national port and private port. All the top- ranking foreign trade port are private，and even in national port, many functions and facilities are privatized through concession. In this sense, this sort of classification seems to have no more meaning than indicating ownership of the patrimony.
B.2.2 Role of AMP’s Office
As the ports at the both end of Panama Canal must have special status owing to their activities’ huge influence to the national economy, matters of these ports should be dealt separately. And here, mainly AMP’ work at local ports will be stated.
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AMP’s intervention to day-to-day port activities are conducted through Port Captainaria or Administration (hereinafter quoted as “AMP offices”). These are located in many port areas and dealing with all the work required for functions of AMP, not limited to the port matters. Functions and sizes of AMP offices are differed by each port according to the characteristics of the port and the functions of AMP office. Here take up some examples.
Captainaria of the port of Balboa
i) Total number of the office is thirteen, three of which are engaging in marine pollution;
ii) Contents of the works are: · port captain business, permission of ships’ entering and leaving, port state control on SOLAS, MARPOL · maintenance of IVTMS(terminal of vessel information system) · collection of fees from tanker · collection of rents and fees with regard to concessions · prepare statistical tables
iii) Jurisdictions: Other than Balboa, Rotman and Tabogilla(oil terminals), and Flamenco
Administration of Vacamonte
i) Number of the office personnel is 142 which is the largest among AMP offices, and total employees of the port are some 5,000. For the convenience of those employees and firms carrying business in the port, there are considerable number of government institutions’ legs, namely Social Security Agency, Customs, Emigrations, Agricultural Quarantine, Health Ministry, Consular and Vessels Department, Marine Resources Department and National Bank of Panama;
ii) Since Vacamonte is the largest fishing port of Panama with 252 fishing vessels being registered at Port of Vacamonte, and more than twenty fishing or fish-processing companies have main operation center in the port;
iii) Apart from fishing industries, many companies are carrying out such businesses as ship-repairing, restaurant, retailing shop, storehouse and ice making factory being awarded concessions. As they are all piecemeal concession, it can be said that the port is primarily operated by ANP office;
iv) The AMP office is conducting following wide range of business:
Collection of fees and concession money1, maintenance, mechanic, fire fighting, security, traffic control, procurement and storage.
The Administration is divided into several sections corresponding to their tasks.
1 Collected fees and money are paid to Accounting Department of Headquarter.
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Administration of Pedregal
i) The Administration has nine personnel. One personnel is the Coordinator who supervises the work of Pedregal, Armuelles and Charco Azul Administrations. Others are divided into four sections: Administration (also responsible for fee collecting, marine pollution and statistics), Communication and security, Merchant marine and Marine resources.
Office of National Maritime Service is located with three vessels for Santiago, Chiriqui and Armuelles;
ii) Among the works of the office, inspection for fishery is the largest. All the works are seemingly conducted by documents, not by personal inquiries;
iii) Wharf and yacht harbor are operated by Chiriqui Port Co. and Ademar respectively under the concession contract at the time of transition from APN to AMP. Although water area is retained by AMP, dredging of channel and basin is the obligation of operators under the permission of the AMP. But by some reasons these are left as it was the time of transition;
iv) Chiriqui Port Co. hires seven staff for operation. It complains that fees by fishing companies become frequently unpaid, and found to be difficult to recover.
Administration of Armuelles
i) Ten personnel are engaging watching of ship safety (four), and administration, statistics and collection of port charges (five);
ii) A pier constructed for banana export and awarded concession to Chiquita Co. was returned to AMP in 1998. Iron scrap from removal of banana railway is shipped through the pier, but it was damaged by earthquake of 2002 autumn. AMP are authorized to expense for the recovery.
Administration of Almirante
i) It conducts such tasks as permission of entering and leaving of port, collection of fees, marine safety and prevention of pollution and statistics with three staffs. A wharf are granted a concession to Chiquita, and a gas filing station and quay of small passenger vessels (called ‘water taxi’) is also operated by private sector;
ii) Since Almirante is the major port for banana export in Bocas del Toro Province, a pier with railway is constructed and managed by a banana company. General cargo on returning vessels from Europe is handled on the pier, too;
iii) One berth is used for a roll-on roll-off vessel to Bocas del Toro. Five round voyage a week are on schedule, but seems not to be operated on schedule;
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iv) It is their desire that for the benefit of water taxi passengers, a quay will be constructed at an appropriate site, but there is no good prospect until now.
Administration of Chiriqui Grande
i) With two staffs the administration carries out watch on berth, collection of fees, and statistics. Other than Petroterminal de Panama (PTP), restaurant, fuel supply and store are operated under concession;
ii) PTP is a joint venture of public and private, which is established in 1982 by several oil firms and Panamanian government which owns 54% of the share. The initial purpose of the establishment was to build facility between Chalco Azul and Chiriqui Grande for crude oil of Alaska to transport to the Caribbean Sea. Now, it is used for stockpiling and bunkering of diesel oil. It is decided that Ecuadorian crude oil will come after 90 days;
iii) The company builds a pier within concession area to export banana and other cargo. The quay is managed effectively and neatly with only two permanent staffs. After one vessel left, cleaning are done carefully to prepare next vessel;
iv) Total permanent staff of PTP is 40, but hire a number of people for cleaning, cargo handling and other works. 21years ago when PTP build the facility, the town has only small number of huts with fishermen, but gradually developed to a certain scale of the town. In accordance with the clause of the concession contract, PTP made a wide natural reserve on just opposite side of the town;
v) The permanent staff of Chalco Azul is 30 with considerable temporary staff engaging maintenance, cleaning, operation, etc;
vi) The company pays dividend and tax, thus does not pay concession fee.
Administration of Bocas del Toro
A coordinator supervising administration of Chiriqui Grande, Almirante and Bocas del Toro is stationed at Bocas del Toro. The administration is small only with two personnel (one is vacant and temporarily comes to work from Chiriqui Grande) and only conducts collection of fees and statistics.
B.2.3 Preliminary Observations
While visiting several local ports, the team conducted inspections at the sites and made interviews to the relevant personnel, thereby found some point, which are characteristic of the management of Panamanian ports. Because of the short time available at each port, certain point may be missing or even may not be entirely correct, however, it is of the view that those points may well serve as a basis for future consideration of the Study.
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Centralization
All the fees, charges and other payment collected by AMP offices are remitted to the Accounting Department of the Directorate of Finance. On the other hand, expenses for the office activities including salary of personnel come from the Department. Without concrete directives, AMP office cannot act for any management activities except for routine works such as permitting of ship’s entering/leaving and making and reporting statistics. AMP offices have neither their own financial resources nor is afforded to work with their initiative such as maintenance or repairing of the facilities. It is felt that major discretion and financial resources are concentrated to headquarter. This sort of work arrangement might partly be caused by the lack of human resources.
Under-manning
It should be noted that AMP offices are responsible not only for port matters including harbor master but also for ship safety, prevention of marine pollution, fishery supervision as well as administrative matters. In many cases except Vacamonte, number of personnel positioned in AMP offices is less than ten, and sometimes position is vacant. Aside from port management functions, many works are limited to inspection of document without personal inquiry or investigation in site. It may be hindered not only from proper port management but also enforcement of law concerning ship safety or marine pollution prevention.
Behavior of Privatized Ports
Private firms operate many piers and quays under concession contracts. Cargoes are petroleum products, banana and general cargo. Concessions are granted to the companies or their affiliates which produce the cargo, with exception of general cargo at Chiriqui Grande and Pedregal. Panamanian Government owns more than half of the share and sends two representatives to the Board of PTP, however, government does not intervene PTP’s routine business. PTP operates cargo terminal at Chiriqui Grande by very small number of staffs with orderly manner. And the company contributes the development of the town and preservation of natural environment. Chiriqui Port Co. operates a quay only a short time period, and is being suffered financially from unpaid fishing companies.
B.3 Concession
Concession is a valuable tool for running port, and Panama is not an exception in the world to put the tool practical use. But it should be born in mind that utilizing of the tool might cause some problem in terms of port management, port client and administration. These points may be touched upon at later stage, here, the history, outline and procedure of concession in Panama is briefly explained as a basis of future deliberation.
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B.3.1 History of Major Concessions
‘Concessions’ has different meaning, however, it generally means to give another person or a group of persons way or yield. Among the government or legal circle, it signifies special right or power that a particular person or particular group of persons are allow to have (by the government or public body). Showing ‘mining right of oil or other minerals’ is most popular. Sometimes, it means customs/duties reduction.
In the terminology used for port matters, a concession is granted by the competent authority to person or group of persons who requested the construction, exploitation and/or operation of maritime or port installation in fixed time. In Panama, concession of port has a long history and many cases. Ley No.42 of May 1974 by which creates the National Port Authority (APN), has a provision to give function for granting concession at existing national ports or for construction at the future port. After that, Ley No.31 of Dec.1993 and Ley No.5 of Jan. 1997 provide development, construction, operation and management for private terminal of container vessels, ro-ro vessels, bulk and general cargo ships in Balboa and Cristobal. According to these legislations, port facilities of Manzanillo (MIT), Colon Container Terminal (CCT) and Panama Port Co. (PPC) were constructed or remarkably upgraded under the concession contract.
Concession is utilized for tool of so-called ‘privatization of port’ to introduce port management the skill of private sector. Further, behind the policy of privatization, there was a fact that among the circumstance of universal trade, which pursued good quality of port services, ports at the both end of Panama Canal have to catch up world standard of services and facilities. At the time, it became increasingly clear for those ports that reform of the system cannot be put off to keep it competitive position in the universal market. By means of extensive concession, Panama attracted foreign investment, brought about greater participation of Panamanian and foreign private sector and introduced entrepreneurial spirit to the port management.
The policy can, in broad terms, be claimed to be successful so far as above-mentioned ports are concerned. First and foremost, Panama was not affordable to make such enormous investment for modern terminals by his own financial resources at that stage. Terminals operated by concessionaires have shown very good performance to handle much more cargo and containers, while cargo volume of other ports stay at same as it was.
B.3.2 Outline of Concessions
Aside from cases of above major ports, each port gives a part of their functions to private sector by means of concession or other. Since a port is a complex aggregated by many functions, the functions are totally or partly leave to bodies other than the port owner. It is said there are some two hundred of concessions in Panama. While MIT, CCT and PPC are granted concessions for a terminal or terminals as a whole, most of the concessions are limited to operate a facility or a small number of facilities. This sort of concession can be called as piecemeal concession. On the
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other hand, concessions of MIT type might be called as hybrid concession. Although there are many concessions about oil, bulk and banana terminals which are run by cargo owner or their affiliates, in case of multi-purpose berth, oil and general cargo terminal of Chiriqui Grande and terminal of general cargo and fishery of Pedregal are the examples of hybrid type.
Between piecemeal concession and hybrid concession, no clear distinction is observed, since extent of operation to be transferred is varied by each case. Even in terminals under hybrid concession, many facilities or equipment are working, such as water or electricity supply, tugs, pilots etc. by the port authority himself or other concessionaire. But the effect to cause relationship of government or port authority and concessionaire are much different. While in case of piecemeal concession government/port authority retain the power to regulate or control the port’s activities as a whole or at least its major part, in case of hybrid concession government/port authority are, generally speaking, ruled out from controlling the port’s day to day activities as a whole.
The role of government/port authority at the port of hybrid concession is varied in each case. In some port the government/port authority carries out energetically from such routine work as permission of vessel entering or leaving, tug arrangement etc. to supervising major civil engineering to planning for improvement. Sometimes it takes a responsibility for coordinating interests among relevant firms.
It will be very important agenda to consider in what manner or how much extent AMP as a body responsible for port should keep function to intervene port business carried out by concessionaire of hybrid type. This should be dealt at later stage of the study.
B.3.3 Procedure of Port Concession
There are three tiers of being granted a concession. When the sum does not exceed one million Balboas, Administrator of AMP signs the contract(called license), but when the sum exceeds one million Balboas, the Board of Directors makes the deliberation and resolution to sign the contract. Nevertheless, where foreign investment is involved, it is the Minister of MICI to sign the contract.
In 1976, National Port Authority enacted the Regulation on Concession Procedures, which AMP has succeeded. According to the Regulation, concession will be refused if a third party proves their interest harmed. Government will keep ownership over the concession properties, so that there won’t be granted any ownership rights over the area or properties. Concession can be modified, extended, renovated or expanded in each case. Generally, request for renovation, extension and extension will be preferred to new application. Improvements or constructions by concessionaire will be returned to AMP free of cost when concession term is expired.
Concessionaires who are granted for piers, wharfs and other objects to transit people or cargo have, among others, following obligations:
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i) Maintain adequate measures to fight fires and to have security services that comply with conditions established by AMP and other organizations; ii) Maintain adequate building for Customs and National Maritime Service employees; iii) Permit loading and unloading of goods in special circumstances at the request by AMP; iv) Charge tariffs previous approved by AMP; v) Allow free use of installation of National Maritime Service ships.
The initial assessment whether a concession be granted or not is carried out by Department of Concessions, Directorate General of Port and Maritime Ancillary Industries. When a request is made for a concession, the Department examines information about the requesting company and nature of the business, particularly with the view to harm the existing right, and for legal matters asks Legal Advisors in AMP. It seeks information of Land Register Tax Department, MEF and other relevant institutions. Before making conclusion the environmental aspects should be, among others, taken into account. Contraloria should approve the concession contract, in advance.
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