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 ?
AL NITAK FOR MARITIME STUDIES
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
AL NITAK FOR MARITIME STUDIES
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.
AL NITAK FOR MARITIME STUDIES
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
AL NITAK FOR MARITIME STUDIES
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 .
AL NITAK FOR MARITIME STUDIES
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
AL NITAK FOR MARITIME STUDIES
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.
AL NITAK FOR MARITIME STUDIES
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.
AL NITAK FOR MARITIME STUDIES
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. .
AL NITAK FOR MARITIME STUDIES
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
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AL NITAK FOR MARITIME STUDIES
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
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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
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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 ?
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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 ?
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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
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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.
AL NITAK FOR MARITIME STUDIES
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
AL NITAK FOR MARITIME STUDIES
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.
AL NITAK FOR MARITIME STUDIES
SHUKRAN, THANK YOU