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Is the Quota allocation policy crippling private stevedores at Tema port?

Ghana a little over a decade ago, launched the Ghana Gateway Project (GGWP) which was among other things aimed at positioning the nation and its ports as gateways into the sub-region.

private stevedores
Quota allocation policy in stevedoring

   As part of making the ports very competitive and efficient, the port authority (GPHA) was to assume a “landlord port” status which permitted and encouraged private participation in ports operation (stevedoring). This has since been the practice at the ports.

   However, the nature and extent of private participation in ports operations in the country has been an issue of grave concern especially to the stevedoring companies themselves. In 2007, a concession agreement between the GPHA and MPS ( a consortium formed by APMT and The Bollere group with a GPHA interest) gave exclusive rights to MPS to stevedore all vessels at berths 1 and 2. Which by the way are the 2 deepest berths at the Tema port.

   In addition to that, a “50 +1” policy agreement with the consortium enabled it to stevedore all vessels that call at the port with more than 50 containers. Prior to this, the private stevedores all together handled about 75% of all container vessels that were stevedored at the Tema port, a function which they performed effectively with heavy investments in the acquisition of various handling equipments, staff and other resources. The private stevedores therefore saw this new agreement as an attempt by government to stab its own people at the back especially after some huge financial commitments have been made prior to acquiring business operating licenses. Each stevedoring company  was required to pay a non-refundable annual license fee of US$ 10,000 and provide an insurance cover of US$ 200,000 valid for 12 months as well as a performance bond with an irrevocable bank guarantee of GHC 50,000. In addition to a fixed royalty of 25% of gross income from stevedoring operations, a commitment which they still do to the port authority.

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  During the early stages of the agreement, for instance in the first half of 2008, MPS alone handled about 2,489,748 tonnes representing about 59.52% of container throughput whiles the rest private stevedores( more than 8) together with GPHA shared the rest(1,693,221 tonnes) .

   In recent times also, the private operators claim the system of quota allocation applied by the port authority further deepens their woes. This is a system the GPHA uses to allocate vessels to particular stevedores. Every operator is given a targeted quota at the beginning of the business year and vessels are then allocated during the year. The port authority on its part indicates that this system would ensure that every operator gets a share of the cargo throughput coming to the ports enabling all to still be in business. The disturbing part according to the private operators is that, GPHA which used to be part of this quota system has now taken itself out which means that, it no more has a limitation on the number of vessels and can at its own discretion decide on which vessel to work on.

  The authority however mentions that, its involvements in stevedoring activities is for strategic reasons especially to provide capacity back up for private stevedores and they (private operators) on the other hand says the current practice leaves no room for competition and does not serve as an incentive enough for further investments and capacity building.

   The  private operators alleges that adherence to these policies by the authority has saddled them with lots of difficulties with some having an almost empty yard and inability to keep permanent staff due to overhead cost. They would rather prefer in most instances to rely on casual workers from the Ghana Dock labor and rent machinery from private owners as and when necessary to argument their capacity.

    In an interview with one official from a stevedoring company he mentioned that

“ we do not even see the need to advertise  or publicize our services as it is up to  the discretion of the port authority to allocate vessels , and you get the quota as  they deem fit”. Asked whether he sees any glitter of hope in the future , he mentioned that , if for nothing at all the GPHA should rather opt for the “free for All” policy which would give the chance to stevedoring companies to have direct contact with shipping lines to lobby for business, this he believes would drive competition among them and would alleviate their problems a bit.

  Also Read THE RACE FOR A GATEWAY PORT STATUS IN THE WEST AFRICAN SUB REGION

  In conclusion, it is an undeniable fact that the MPS deal has really changed the scope of cargo operations at the Tema port, with huge investments in the acquisition of modern machinery, advanced terminal operating softwares, world class training for staff which has enabled the ports to rub shoulders with competitors globally. The consortium is also to spearhead the mega expansion works at the port announced recently.  However,the private stevedores needs to empowered by creating an enabling environment so they can compete among themselves and also serve as a check to MPS  (which as it stands now, enjoys some form of monopoly due to the exclusivity rights granted it).

  To sum it up, the dilemma now is , Should the port authority opt for the “Free for All” policy which would allow competition among stevedores or should it stick to the “Quota Allocation” policy which would ensure that every private operator gets a “piece of the cake”

Competition as we all know drives an economy.

Please do well to leave your comments and lets continue the debate by visiting the  discussion forum

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  • We see “quota” or “allocation” systems in place around the world, and most prominently in China – although the situation there is a little different with the Port Group(s) (Authorities) usually holding majority shares in the stevedoring entities.

    In other locations different models prevail, whereby the Port Authority acts and landlord only, and leaves competition for business to the individual stevedores. That model most likely promotes and produces lower costs and higher efficiency for the overall supply chain. The Port Authority is then responsible for overall and high level port policies and master planning, earning income from marine related services and royalties as per the individual concession terms – which ideally are equally applied to all.

    The work and methods of GPHA historically have places Ghana and especially Tema on the map of major terminals within the region. Now that it is more established, time might be ripe to relinquish some micro-management controls and permit for a more open market place.

  • Jonas

    I am surprised at what I am reading in this article. Exactly 10 years ago the stevedoring companies opposed the introduction of a the ‘free for all’ competitive system and advocated for the quota system which guaranteed them jobs without any effort from them. See this article http://www.modernghana.com/news/71751/1/maritime-board-to-decide-trend-of-stevedoring-oper.html ; http://www.ghanaweb.com/GhanaHomePage/economy/artikel.php?ID=71961; This made the industry attractive business people and politician seeking to make easy money. What are we hearing from them now? That they want the competitive system?

    I was expecting that when the Port Authority advertised for firms to bid for a concession to build and operate a terminal recently they will come together as a consortium and bid for and compete with MPS but I have not heard any news to that effect. That would have helped the nation than the inefficient quota system… Some research by my students shows that some of them only own a fork lift or two only yet they have been licensed to operate at our port just because they can rely on the GPHA plant pool and other sources for equipment.

  • Kaliech

    1.6 million TEUs handled by GPHA in 2008? That’s obviously false. There are only 6 ports in Africa that do more than 1 million TEUs per year and Tema is nowhere near one of them.

    • dennis

      Well there was a mishap in statistics, the figure is actually supposed to be in “metric tonnes” and not TEUs. Thanks for your correction, greatly appreciated

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