Nimda: /* Risk Allocation */

2015-06-12T15:39:55Z

‎Risk Allocation

Pmoraiti: /* References */

2015-06-12T10:49:24Z

‎References

Pmoraiti at 12:21, 2 June 2015

2015-06-02T12:21:39Z

Pmoraiti at 17:08, 31 May 2015

2015-05-31T17:08:03Z

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 '''''Source: CI Online'''''
-[[Image:Piraeus4.png]]
+[[Image:Piraeusrisk.png]]
 '''Figure 4: Risk allocation'''

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 *Piraeus Port Authority Annual Financial Report 2011
 *Container Terminal Piraeus SA Annual Report 2011
 [[Category:Case Studies]]

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 |header4 =
 |label4  = Budget:
-|data4   = EUR 1300M (This budget includes Project Development Costs)
+|data4   = EUR 153,6M (620 M including equipment costs)
 |title        = Project Overview
 |image        = [[Image:Piraeus1.png|300px]]

← Older revision		Revision as of 17:08, 31 May 2015
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	Since then, there has been significant recovery in traffic volumes, helped by the decision of Cosco Pacific’s sister company Cosco Container Line to relocate some of its transshipment business to Piraeus, and the return of MSC to Pier 1. Actual traffic in Pier II greatly exceeded forecasts, rising sharply from 1,2 million TEUs in 2011 to 2.2 million TEUs in 2012 and reaching 2,6 million TEUs in 2013, with capacity utilization of over 80%.		Since then, there has been significant recovery in traffic volumes, helped by the decision of Cosco Pacific’s sister company Cosco Container Line to relocate some of its transshipment business to Piraeus, and the return of MSC to Pier 1. Actual traffic in Pier II greatly exceeded forecasts, rising sharply from 1,2 million TEUs in 2011 to 2.2 million TEUs in 2012 and reaching 2,6 million TEUs in 2013, with capacity utilization of over 80%.
		+
		+	==Project Outcomes==
		+	Despite initial controversy surrounding the project, the investment now ranks as one of the most successful Greek PPPs. .Since its commencement, the Port of Piraeus has reported remarkable growth in container throughput, and is fast becoming one of the major trashipment hubs in the Mediterranean, giving a much needed boost to Greece's crippled economy at times of crisis. The concessionaire's strong capacity to meet financial commitments, its direct links to a booming target market, such as Asia, and its ambitious vision for the port will contribute significantly to the viability of the project. The following Critical Success Factors can be identified:
		+	* The dominant position of Piraeus in the Greek and Mediterranean container market.
		+	* The strong financial position of the concessionaire, which has the resources to absorb several years of losses if necessary;
		+	* Links between the terminal operating company and the major Cosco shipping line, which will increase its ability to meet the throughput guarantees.
		+	* The ratification law granted Cosco Pacific various income tax exemptions in terms of VAT and depreciation obligations, whcih are more favourable compared to the standard obligations of a Greek corporation, including OLP’s.Also, accumulated losses could be offset against the taxable profits of later periods without any time constraint.
		+	* Incentive of OLP and consesionnaire equally sharing profits if an IRR of 16% is exceeded.
		+	* Cosco's capability for long-term planning ( further plans to expand—moves that the company expects will boost volumes to more than six million containers by 2016). It should be noted that it ordered 12 ERTG cranes (above its contractual obligations), allowing for an additional increase of 1.1 million TEUs in the capacity of piers II and III (4.7 million TEUs in 2015 instead of the 3.7 million TEUs originally planned).
		+	* Chinese cultural attitudes, which seek to avoid the loss of face associated with failure. The political support provided by the Chinese Government may also be a significant success factor, either facilitating the renegotiation of the contract at some later stage, or providing Cosco Pacific with incentives to continue operating the terminal primarily for political reasons.
		+	* Now in competition with Cosco, the port authority operating Pier I terminal has increased productivity and improved operations and services, reporting a 27.5 % increase in container throughput from 2011 to 2012. Previously inefficient and with outdated infrastructure, the port struggled to secure financing (even from the EIB).
		+
		+	The main barriers to implementation appear to have been union opposition, and lack of understanding of the PPP process on the part of the politicians. Implementation was also complicated by the timing of the PPP, which coincided with the start of the current global recession.
		+
		+	The port’s corporatisation in 1999 and its partial flotation in 2003 had very little effect on its competitiveness, as it did not result in any significant changes to the management structure, or create a group of activist shareholders determined to modernise the port. Instead it increased the commitment of the management to continue in business as a terminal operator in order to generate more dividends and increase the share price.
		+	The creation of Piraeus container terminal PPP has been a highly politicised process, led by the national government. The managing body of the port was given limited freedom to develop port-specific guidelines designed to achieve its original objectives. As a result, insufficient attention was paid to changes, which would have improved productivity and driven down costs, thereby allowing the port to become more competitive in the East Mediterranean transhipment market.
		+	The prolonged industrial action associated with the PPP process led to a sharp drop in traffic and the loss of the major client, MSC, to other ports.
		+	Strong opposition by the port unions, industrial action and the election of a new government in October of 2009 forced the renegotiation of the contract in its first year of operation. As part of this process the unions won a major concession by requiring the port authority – which was still operating the terminal on behalf of Cosco Pacific during the transition period - to offer the same salary and working conditions to newly hired personnel as those already enjoyed by existing staff. This reversed a previous decision that allowed greater flexibility in employment conditions, and undermined one of the original objectives of the PPP, which was to reduce terminal operating costs.
		+	However, there has been more flexibility in respect of manning levels, with a move towards smaller gang sizes since Cosco Pacific took over. Pier II is now reported to employ four dockers per gang compared with 6-9 men per gang at Pier I. This is likely to strengthen the position of the PPP when it comes to competing against the port authority for new business.
		+	It remains to be seen whether the incentive for sharing profits if maximum IRR of 16% is exceeded, will be proven successful or not.
		+	Also, the provisions not included in the contract, but only in the law that ratified the concession, regarding various tax exemptions for Cosco Pacific (while OLP was not subject to these) raises the question of unfair competition.
		+	Finally, OLP is both landlord and competitor under worse conditions, raising acceptability issues.
		+
		+	===Economic Impact===
		+	The project is believed to have largely contributed to rendering the port of Piraeus into one of the world’s fastest growing container ports, despite its modest size compared to other major ports. Only in 2012, Piraeus went up from number 77 to number 46 in the rankings of the top 100 global container ports, with its container throughput growing from 1.7 million TEUs in 2011 to 3.2 million TEU in 2013. Primarily because of Cosco’s involvement, the port is attracting the shipping routes from/to the Asian market, whose global share is also rising rapidly. Cosco itself is a major shipping company operating along this route and, hence, a key customer for the Piraeus port terminal. The above translate to additional revenues for the Greek state, as well as to strengthening the country’s strategic position and ability to attract other investors. Cosco is continuing to expand the port’s capacity above the contractual obligations, following its vision to turn Piraeus into the main container hub in the Mediterranean, and gateway for Chinese exports to Europe, which could only boost further the Greek economy.
		+
		+	According to estimates of the National Bank of Greece (2013), the value added from the projected increase in container handling in Greek ports, 90% of which is attracted by the port of Piraeus (to 4.7 million TEUs in 2015 from 3 million TEUs in 2013) is estimated to rise by around €0.8 billion, or 0.4 per cent of GDP by 2015. The long-term benefit could be much larger (€5.1 billion or 2.5 per cent of GDP by 2018), as the multiplier effect from the formation of a cargo-related cluster (mostly from suppliers) is potentially large.
		+
		+	===Social Impact===
		+	Although the project has significant economic impact to the national economy, container port growth generates limited local economic value and employment.In addition, significant concerns have been raised with regard to the local labour standards.Finally, the controversy generated around Cosco's involvement and the entire PPP process has created an environment of mistrust and cultivated a general public opinion that the port is privatised.
		+
		+	===Environmental Impact===
		+	The project has considerable negative environmental impacts, particularly given its location in a highly dense urban area:
		+	* Air quality due to vessels and equipment emissions contributing also to climate change
		+	* Water quality and marine environment degradation due to vessel activity
		+	* Heavy consumption of energy from machinery and equipment
		+	* Noise
		+	The container terminal of Piraeus is bordering the Perama and Keratsini municipalities, which are exposed to the adversities of the ship exhaust emissions generated within the terminal.
		+

	==References==		==References==

Case Studies: Piraeus Container Terminal - Revision history

Nimda: /* Risk Allocation */

Pmoraiti: /* References */

Pmoraiti at 12:21, 2 June 2015

Pmoraiti at 17:08, 31 May 2015