TBY talks to Nabeel Al Amudi, President of Saudi Ports Authority, on private sector collaboration, restructuring agreements, and the National Transformation Plan (NTP).

What are some key changes to further involve the private sector in the nation's ports?

The port sector was one of the first sectors that privatized its operations through concession agreements and BOT agreements. There were long-term incentives to the private sector to invest and reinvest in the terminal operations and the various ports. This started nearly 20 years ago and everything was based on a revenue sharing model where the incentives of the regulator and the Saudi Port Authority and the operator incentivized to increase volumes and thereby increase revenues for both sides of the concession. Looking forward we see a two-pronged approach to the next round of privatization. We have learned a lot through 20 years of experience about what works and what does not in these long-term concession agreements. We are keen on addressing those deficiencies that imbalance some of the concession concerns over the next 20-30 years. In the future, we see more focus on raising the efficiency of operations vs. ensuring a certain amount of investment. Thereby trying to manage the concession through efficiency gains rather than pure investment numbers. This is building on the great work of the 15-20 years that have gone, and we have three of the top four port operators operating in the Kingdom now. Many if not all of them are keen on investing in the next 20-30 years. We see that overall structure as good but needing improvement, and we are working on the next round of concession agreements and the restructuring of those agreements.

Will you restructure any current agreements?

Most agreements expire before 2020. For some of the remaining concession agreements we will have to figure out what we will do. We are going to look at a corporatization of the assets that remain within the Saudi Port Authority. That corporatization structure will allow the government through these companies to operate on a more efficient basis, will be better in terms of capital efficiency and operational efficiency, and will allow more commercial flexibility in dealing with the concessionaires. We see an initial stage of granting the Port Authority clearer authorities and will soon thereafter enter a corporatization structure; privatization is another step down the road but we do not see that happening immediately. At this point we have the assets we need for the next 10-20 years within the country. We have been working with customs and other government agencies to streamline this area. It does not matter how much capacity we put on the seaside if our efficiencies and processes and procedures are not supporting that capacity. We do not get the goods out of the ports quickly enough. We have made huge strides as the Port Authority as well as the customs are improving and digitizing. I am confident that within the next year or two that we are going to see significant ease of importing and exporting goods to and from the Kingdom. In fact, we are working on a 24-hour initiative where containers coming into our port in Jeddah and in King Abdullah Port will be processed within 24 hours and this will be rolled out to the rest of our ports before the end of 2017. The last element is hinterland access. Here we have been working with the Ministry of Transport to ensure that we have better rail connections as well as high speed roads or dedicated roads for containers and exiting of the ports.

What are some of efforts you have taken in terms of human capacity and work culture?

The key to the National Transformation Program and Vision 2030 is not just a new vision of how the economy is structured, but it is a new vision of how government operates. That vision is being cascaded through multiple efforts through KPI driven objectives about demanding efficiencies from government agencies and demanding responsiveness to requests either from the business sector or the citizen, all depending on what sector you are in. We are seeing more demand for being more business friendly and open for business. We are seeing overall opening of data and opening up of better statistics for the country. One of the things we are working on that will be integrated as part of the overall KPI structure of the government is a clearer KPI structures within this organization, SPA, and being developed that will allow them to have a real assessment of where the bottlenecks in our logistics chain within the ports is. As well as customs clearance and all that as well. You are seeing new blood coming into various government agencies all across the kingdom and that is changing the typical work patterns that have existed for decades. We are going to see a significant shift of accountability, which is important. It is not an easy journey but ultimately we will get there.

What does that shift imply about the way the authority is run today?

My job here is to sweat my assets and not to build something new. It is to make sure I get everything out of the assets that I currently have. The government has spent in excess of SAR40 billion over the past 30-40 years in ports, and we need to make sure that the investment has an adequate return. Not to mention the other SAR10 billion in private investment on top of that. There is an asset base that needs to be sweated and we need a better return on it now and increase volumes as much as you can. Anything that can be done by the private sector will be done by the private sector. There is no desire for the government to crowd out the private sector. My predecessors went down this path and they privatized the operations of the ports. We need to keep down that path and be more aggressive about privatizing as much of these operations as possible.

For the rest of 2017 where do you hope to be? What are your goals and what do you hope to accomplish in the next 12 months?

The NTP has targets in 2018, and we are expecting our dwell time to be down by seven days. The other thing that we will have accomplished by the end of 2017 is to have a better delineation within authorities between the Saudi Ports Authority. Ensuring the inner sections between the various government agencies is clarified. There are other minor steps along the way in terms of our corporatization process and internal assessments in terms of where we are and overall balance sheets of the operations Saudi port authority. Also by the end of 2017 we should have most of our concession structures done with and possibly some announced, if not sooner than that. The National Transformation Program envisages major changes for logistics by 2030. That includes mostly ports and clearance of goods and so forth and a significant shift in the short term.


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