AL NITAK FOR MARITIME STUDIES Established 2003 JUBAIL INDUSTRIAL CITY بسم الله الرحمن الرحيم.

AL NITAK FOR MARITIME STUDIES Established 2003

JUBAIL INDUSTRIAL CITY

بسم الله الرحمن الرحيم

AL NITAK FOR MARITIME STUDIES

OPERATION OF

THE SAUDI PORTS.IS THERE A BETTER

WAY ?


TO THE SAUDI ECONOMY AND NATIONAL SECURITY.

SAUDI PORTS ARE AND SHALL REMAIN OF

OUTMOST IMPORTANCE

LACK OF ALTERNATIVE SEA ACCESS AND THE LOCATION OF THE KINGDOM

IN THE HOTEST POLITICAL ARENAGIVES OUR PORTS IT’S IMPORTANCE .

COMPARISON BETWEEN ANY EUROPEAN COUNTRY AND SAUDI ARABIA

IN REGARD TO ALTERNATIVE ACCESS TO PORTS


DESPITE THE IMPORTANCE OF OUR PORTS ,WE HAVE UNFORTUNATLY ADOPTED

OPERATION SCHEMES WHICH ARE BASED ON PROFIT ORIENTED OPERATORS,LOWEST

BIDDER AND TEMPORARY CONTRACTS.

NOT ENSURING : UNITY OF AIMS AND INTRESTS OF THE

NATIONAL ECONOMY AND THE PORTS OPERATORS .

BEST QUALITY OF OPERATORS THE VERY MUCH NEEDED CONTINUITY.


OPERATION SCHEMES ADOPTED BY THE SAUDI SEA PORTS

Contract Criteria Old ContractsISNAD

(PRIVITIZATION)

Duration 3 years 10 to 20 years

Award Lowest bidder Ditto

Payments Monthly installments

Contractors levy revenue and retain

their share

EquipmentsTo be supplied

according to contract

Ditto

Labor Specified Not specified

Saudization Contractor must achieve

a percentage

Ditto

Scope of work Specified Ditto

Spare partsLump sum under the

control of the portmanagement

It was left to the contractor


Disadvantages of both schemes :

Conflicting goals of contractors and the national economy .

Duration of 3, 10 or even 20 years does not provide the required continuity.

Awarding the contract to the lowest bidder, where Ports are exposed to the dangers of a contractor having misjudged expenses and revenue.

Saudization is expensive and it meets some resistance .


Additional Disadvantages of the ISNAD (Privatization) scheme :

Contractors concentrate on those activities which generate revenue and neglect other activities such as maintenance and safety.

Delegating to the contractors critical decisions, such as reducing the labor force.

Delegating to the contractors the management of spare parts.

Advantages of the ISNAD(Privatization) :

Longer contracts periods (10 to 20 years)

Faster payment to the contractors. Incentive to the contractors for higher

productivity (higher productivity means more revenue to the contractor and treasury ) .

Larger amounts for investment in equipments


AS SOON AS ANY OF THOSE CONTRACTS IS SIGNED, WE FACE :

DIFFERENCES OF INTERPRETATIONS.

THIS LED TO MANY CASES AT THE GRIEVIANCE BOARD , EXHAUSTING THE PORT’S MANAGEMENT WHO SHOULD DEVOTE IT’S TIME ON

IMPROVING SERVICES.


THE CONTRACTS (NEW AND OLD) GIVES THE PORT’S AUTHORITY THE RIGHT TO IMPOSE

FINES , BUT THAT OCCURES WHEN THE HARM IS DONE, SOME ONE COMMENTED

ON THAT BY SAYING: “ THE OPERATION WAS SUCCESSFUL BUT THE

PATIENT DIED”THE PATIENT HERE IS EITHER EXPORTER,

IMPORTER, AGENT OR CARIER WHO TRANSFERS THE HARM (LOSSES) TO THE

SAUDI ECONOMY AND THE SAUDI CONSUMER IN THE FORM OF HIGHER

PRICES”

Al NITAK FOR MARITIME STUDIES

UNFORTUNATELY WE ARE STILL LOOKING AT OUR PORTS AS

ANOTHER SOURCE OF REVENUE TO THE TREASURY .

THE WORLD BANK WARNED AGAINST THIS ,PORTS IN SAUDI ARABIA HAVE A

MUCH BIGGER ROLL TO PLAY.(THEY SHOULD AND THEY CAN )

STIMULATE THE ENTIRE ECONOMY AND THEY ARE IN A POSITION TO GENERATE MUCH MORE REVENUE IN THE FORM OF

TAXES , DUES AND JOBS ON TOP OF DIRECT REVENUES.


FOR EXAMPLE ,THE INVESTMENT FIELDS OF THE

PORT’S AUTHORITY OF NEW YORK AND NEW JERSEY INCLUDE :-

SEAPORTS, FREE TRADE ZONES ,BRIDGES,

TUNNELS,BUS , RAIL, AIR PORTS, & REAL ESTATE.

WE ARE NOT SUGGESTING TO COPY, BUT TO EXPLORE OUR OPPORTUNITIES

AND NEEDS. .


THE GEOGRAPHICAL LOCATIONS OF OUR PORTS LEND THEM SELVES TO

BECOME MAJOR HUB PORTS AND PLAY A LEADING ROLE IN THE OPERATION OF FREE ZONES, PROVIDING SERVICES TO

SHIPS, CONSIGNEES, SHIPPERS , INDUSTRY AND AGRACULTURE.

THE SAUDI “LAND BRIDGE” BY ROAD AND RAIL, IS AN OTHER OPPORTUNITY

FOR THE TRANSIT TRADE,RELATED ACTIVITIES AND MUCH MORE

SUEZ TO KUWAIT BY SEA201 Hrs

SUEZ TO YANBU BY SEA 29 Hrs.

YANBU TO KUWAIT BY ROAD 25 Hrs

SAVINGS 3900 KM

OR 147 Hrs



IN 1993 A PROPOSAL WAS MADE FROM WITHIN THE SAUDI SEA PORTS AUTHORITY

TO ESTABLISH A PUBLIC SHARE HOLDERS COMPANY

TO OPERATE AND DEVELOP ALL SAUDI PORTS ON COST PLUS BASIS.

THIS WAS WELCOMED BY H.E. DR. FAYES BADR , HE APPROACHED THE (MINISTRY OF FINANCE),

WHO ASKED FOR MORE INFORMATION . BUT LIKE MANY OTHER GOOD IDEAS,

THIS WORLD OVER, IT IS STILL WAITING TO BE IMPLEMENTED


THE PROPOSED COMPANY WAS MEANT TO TAKE THE DECISSIONS EFFECTING OUR

PORTSIN FAVOR OF THE ENTIRE

NATIONAL ECONOMY EVEN IF

CONTRADICTING WITH THE STRATEGY OF MAKING THE MOST REVENUE IN THE

SHORTEST POSSIBLE TIME


PORT’S OPERATION IS NOT CONSTANT WE HAVE PEAK AND SLACK PERIODS ,IF WE EMPLOY ENOUGH LABOR

FOR THE PEAK THEN WE SHALL HAVE SURPLUS LABOR DURING THE SLACK PERIODS .

WHERE SHOULD THE NUMBER OF THE LABOR FORCE BE ?

THIS QUESTION WAS RAISED IN 1981AND THE SAUDI

SEA PORTS AUTHORITY DECIDED TO CONTINUE EMPLOYING ENOUGH LABOR FOR THE PEAK

KNOWING IT SHALL HAVE SURPLUS LABOR DURING THE SLACK PERIODS , A GOOD DECISSION BUT AN

EXPENSIVE ONE .CAN PROFIT ORIENTED OPERATORS TAKE SUCH A

DECISSION ? IS IT FAIR TO ASK THEM TO DO SO ?


THE PROPOSED COMPANY SHALL GIVE US THE CHANCE TO LEAVE THE LOWEST BIDDER’S TRAP FOR GOOD

AND TO AVOID CHANGING HANDS EVERY 3 ,10 OR 20 YEARS AND TO OPERATE OUR PORTS BY OUR SELVES AND EVEN TO COMPETE TO RENDER OUR SERVICES

TO OTHERS PORTS ABROAD ( IF WE WISH TO DO SO )

WE SHALL BE CONVINCED VERY SOON THAT THE PROFIT AND LOSS CALCULATIONS OF OUR PORTS

MUST BE IN PROSPECTIVE TO WHAT THEY ACHIEVE IN RELATION TO THE ENTIRE ECONOMY , AND NOT TO THE SIZE OF THE REVENUE THEY GENERATE TO THE

TREASUREY OR TO A SMALL NUMBER OF CONTRACTORS

UNITY OF AIMS. CONTINUITY. FLEXIBILITY. SAFER PORTS AND BETTER PORTS SECURITY. BETTER EQUIPPED TO DEAL WITH CRISIS. AN INVESTMENT BODY IN PORTS AND RELATED ACTIVITIES . EFFECIENCY. TAKE PORTS PRIVATIZATION TO A WIDER

SPECTRUM . SPARE OUR PORTS FROM REMAINING THE BATTLE GROUND OF CONFLICTING

INTRESSTS. BETTER INTERNATIONAL REPUTATION.

WHAT ARE WE GOING TO GAIN FROM THE NEW PUBLIC SHARE HOLDERS COMPANY ?


HAVING CRITISIZED THE ISNAD (PRIVITIZATION) SCHEME WE HAVE IMPLEMENTED SO FAR

I WOULD LIKE TO EMPHEZIESE THAT THE ONLY WAY TO OPERATE PORTS IN AN EFFICIENT MANNER IS

THROUGH THE PRIVATE SECTOR AND THE COMPANY WE ARE SUGGETING HERE SHALL BE

AFTER ALL PRIVATE SECTOR .

SOME THINK WE HAVE PRIVITIZED THE SAUDI PORTS RECENTLY, AS IF IT IS SOMETHING NEW .

IN FACT OUR PORTS OPERATION HAS ALLWAYS BEEN ENTRUSTED TO THE PRIVATE SECTOR , EVEN

CENTURIES BEFORE THE ESTABLISHMENT OF THE SAUDI SEA PORTS AUTHORITY .

THE PRIVITIZATION OF OUR PORTS WITNESSED THREE PHASES


Phase one : From the beginning of time until the creation of the Saudi Sea Ports

Authority in 1976, ports were operated by the private sector , this era was marked by lack of centralized planning and led to the famous crippling ports congestion of the

seventies.


Phase Two : From 1976 until 1997 , i.e. since the establishment of the Saudi Ports

Authority, through better management, unified Rules and Regulations, the unified tariff and ports modernization in addition to better contracts with the private sector and with sharp discipline the Saudi Ports

ended the congestion within six months. It also witnessed huge development and

rendered a better services to the national economy ..

Phase Three: from 1997 until now : witnessed the

introduction of the ISNAD (privatization) scheme in

marine operations and cargo handling and retained the

three years contracts of phase two in the fields of safety and

maintenance


HAVING GONE THROUGH THREE PHASES OF PRIVITIZATION.

WHEN ARE WE GOING TO SEE PHASE FOUR ?

BY CREATING OUR

NATIONAL PORTS OPERATION COMPANY

WHICH SHALL TAKE US TO NEW HORIZONS.


SHUKRAN, THANK YOU

AL NITAK FOR MARITIME STUDIES Established 2003 JUBAIL INDUSTRIAL CITY بسم الله الرحمن الرحيم.

Documents

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