Case Studies: Barcelona Europe South Container Terminal, Spain

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Project Overview
Figure 1: Barcelona Europe South Terminal
Barcelona Europe South Terminal, Spain
Project Type: Both
Contract Duration: 30 years
Budget: EUR 660 M
Overall budget to date: EUR 860 M
Project Time Line
Conception: 2005
Tender: 2005
Contract Award:

May 2006

Although initially planned for 2008, the works were delayed until 2010. In July 2012, the terminal started to operate


The remarkable growth of container traffic in the Port of Barcelona over the last years – the third largest Spanish container port, and the ninth in Europe -, together with its strategic situation led the Barcelona Port Authority (BPA) to contemplate the development of a new and modern container terminal. With this new terminal, which envisaged an investment close to EUR 860M, port capacity would be increased from 2.6M to 5.5M TEUs. According to BPA, the new terminal contributes to the economy not only by increasing trade in Barcelona, but also by creating 600 direct and 2.000 indirect jobs. BPA also estimates the revenues of this new capacity at over EUR 300M annually.

After a tendering process in which the operator of the existing Barcelona Container Terminal competed against two joint ventures, the 30 year DFBOM contract was awarded to TERCAT S.A, a consortium formed by Hutchison Ports Holdings (HPH) and local firm Grupo Mestre. HPH is one of the world’s largest port operators with close to a 9% global market share.

The decision not only considered the bidders’ economic approach (which accounted for a 30% of the evaluation) but also the prospects of each bidder. The winning consortium committed itself to reach 2.5M TEUs at the end of 2013, mainly from Asian traffic.

In July 2012, after some construction delays, the new container terminal started to operate. The Barcelona Europe South Terminal (BEST) is “the first semi-automated container terminal in the HPH network and marks the expansion of the company’s port operations at the Port of Barcelona.” It is expected to reach 1,500m of quay, 100 hectares of yard space, and 18 ship-to-shore cranes. The new technology applied by Hutchison (nGen) has allowed for an increase in efficiency and productivity, with 30 movements per crane/hour.

According to HPH, "BEST is the most technologically advanced port development project and has the biggest on-dock eight-track rail facility in Southern Europe. It is capable of serving multiple mega-vessels simultaneously and will change the offering that Barcelona can provide to its customers as well as open a new Mediterranean corridor for European trade".

The Contracting Authority (Public Party)

Barcelona Port Authority (BPA) is part of the Spanish port system, together with other 28 port authorities managing 53 general interest ports and minor ports, fisheries and marinas controlled by regional governments. The coordination and efficiency control of the state-owned system belongs to Puertos del Estado, the State Ports Agency reporting to the Spanish Ministry of Public Works and in control of the execution of the Government's ports policy. The system gives port management considerable independence, even understands the need to foster competition among its ports, with individual port authorities operating as single business units.

Spanish legislation has provided the Spanish port system with the necessary tools to improve its competitive position in an open and globalized market, establishing a system of self-managed Port Authorities, which are intended to operate on the basis of commercial criteria. Within this framework, the management of general-interest ports is expected to follow the so-called "landlord" model, in which the Port Authority is not limited to providing port land and infrastructure and regulating the use of public domain, but also leads port activity.

The Concessionaire (Private Party)

The concession was awarded to TERCAT S.A., a joint venture formed by Hutchison Ports Holdings (HPH) and Grupo Mestre. HPH and Grupo Mestre hold 70% and 30% respectively of the shares in the joint venture. In 2011, HPH increased its share in the company to 90%, before buying the remaining 10% in the same year. Thus, HPH is currently the sole shareholder of TERCAT S.A.

HPH is part of the multinational Hutchison Whampoa Limited (HWL). Presently, the company is spread across 52 ports located in 26 countries in Asia, the Middle East, Africa, Europe, America and Australasia, and handles a combined throughput of 78.3 million TEU worldwide (2013).


The project is to be used by shipping lines, port-related logistics services and import/export firms in container traffic. Other stakeholders are Barcelona Port Authority (BPA), consumers, employees, regional residents and public authorities.

Key Purpose for PPP Model Selection

The private sector has been progressively involved in the provision of port services in Spain, and at the core of the delivery of proper infrastructure with a clear tendency for Design-Built-Finance-Operate-Management (DBFOM) contracts.

The legislation is based on the principles established by Law 48/2003, ending with revised Law 2/2011, which intends to encourage public-private collaboration in port activities at the time as promoting competitiveness gains across the Spanish port system.

Although service needs have to be taken into account, since the international expertise of the company awarded the contract was stated to be one of the main reasons for its selection, financial needs were really important in a project that required an investment of EUR 860M.

Project Timing

In this context, Spain – through its regional governments – experienced a development of transport infrastructure when public investment had to be constrained. The project was conceived in the mid-2000s as a PPP. The concession was awarded in 2006. The works suffered a delay as a consequence of the movement of 640M cement blocks during the dock development. Although the traffic forecast was made before crisis and the financial conditions in the country were not appropriate, the PPP scheme allowed the works to be completed and in July 2012 the new container terminal started to operate.

HPH has recently announced the further expansion of the terminal, to be concluded at the end of 2015 with an investment close to EUR 150M, reaching 2.6M TEUs of capacity.

Project Locality and Market Geography

The project is located at the Port of Barcelona (Spain), the third major container Spanish port, and the ninth in Europe. Spain has the longest coastline within the European Union (EU). In this country, port activity represents around 20% of transport sector GDP and 1.1% of national GDP. It generates more than 35,000 jobs directly, and about 110,000 indirectly according to the Spanish Ministry of Public Works.

HPH’s main intention is to employ this terminal as a gateway for Southern Europe, whilst Barcelona Port Authority is attempting to compete more strongly against the current main container port, Valencia.

Figure 2: Spanish port container traffic evolution
Source: World Bank database

Procurement & Contractual Structure


In 2006, three bidders participated in an open call for the new container terminal at the Port of Barcelona: Hutchison Ports Holdings together with Spanish firm Grupo Mestre; Terminal de Contenedores de Barcelona (TCB); and the English firm P&O (now owned by Dubai Ports World) together with the French company CMA-CGM. In May, Barcelona Port Authority awarded the 30-year concession to Hutchison Ports Holdings and Grupo Mestre thru TERCAT S.A., a company initially owned by Grupo Mestre where HPH acquired a majority stake (70% of the capital) in December 2005. capital.

The tendering process was only open to firms with experience in managing container terminals with throughputs of overt 500,000 TEUs p.a., or to joint ventures with at least one partner with such experience which agreed to take a minimum 25% stake in the concession company (Pallis et al, 2010).

Of the three bidders, Hutchison and Grupo Mestre offered EUR 28m in concept of payment on account of the occupation and use of port public domain. This proposal was higher than the P&O/CMA-CGM bid, which offered no payment to the port authority for occupation, and the TCB bid which offered EUR25m. In concept of highest price of the concession, HPH and Grupo Mestre offered EUR 22m, while P&O/CMA-CGM offered EUR68.1m and TCB proposed EUR 25m as payment. In terms of tax on the exclusive or Special Use of the Local Public Domain, P&O/CMA-CGM offered EUR 6 per TEU, while Hutchison/Grupo Mestre and TCB proposed EUR 2.15 and EUR 1.45 per TEU respectively.

For the evaluation commission, the business plan represented the 30% of the final decision, together with the technical and operational proposal (40%) and the financial bid (30%). Thus, although there were better financial offers, Hutchison/ Grupo Mestre was awarded the contract by unanimous decision.

Contract Structure

The contract was designed under the traditional DBFOMT formula, for a period of 30 years. TERCAT S.A. subcontracted construction of the infrastructure to the joint venture formed by Ferrovial (60%) and Comsa-Emte (40%). Central government was involved in the tendering process through the BPA committee. The public authority, as the landlord, also regulates under the specific legislation for state-owned facilities (Law 31/2007).

Regarding to the financial structure, the concession involved an investment of EUR 660M, which was later increased to EUR 860M. In 2011 HPH obtained a six-year credit of EUR 280M to partly finance the container terminal, from a group of six banks (four Asian and two Europeans) led by La Caixa, the main Catalan bank.

The concession fees are EUR 2.15 per TEU as tax on exclusive or Special Use of Local Public Domain; EUR 22m as the highest price of the concession; and EUR 28m for occupation and use of port public domain.

The concessionaire guaranteed an annual increase in terminal container traffic of 18% during the first five years, and 14% after that up to reach the maximum port capacity. Moreover the tendering process stated that if capacity utilization in the first two years reached the 80% target, with over 50% transhipment, an additional concession to expand the terminal would be granted (Pallis et al, 2010).

Risk Allocation

According to regulations as well as the general terms and conditions in force in 2006 it is the private party –TERCAT S.A.- which bears the vast majority of the risk under this contract. There are significant gaps concerning the nature and allocation of risk, such as no mention of force majeure setbacks, or regulatory modifications affecting the economic result of the project and the obligations that the concessionaire may have to face. Risk allocation is depicted in Figure 3.

Figure 3: Risk allocation

According to the regulations - mainly the general terms and conditions for contracts with Puertos del Estado and Port Authorities – the design must not alter the basic project presented by the Port Authority without its consent, and any variations must be approved by the Port Authority. There is no responsibility provision for issues arising from design. Construction risk lies strictly with the concessionaire, and delays to the works can be penalized by the signing authority. As established by law, the subcontractors (Ferrovial and Comsa-Emte) assume the obligations derived from the construction works.

The general terms and conditions provide for maintenance to be undertaken by the private party even in cases of force majeure disruption. If that is the situation, the concessionaire may terminate the concession or continue the work at its own expense with no alteration to the concession’s duration. In cases where concessionaire is to blame for damage or improper conservation, the public authority may penalise the concessionaire.

The concessionaire is to assume responsibility for exploitation and any obligation arising from this. There is a mandatory guarantee imposed on the concessionaire for an amount between 50 and 100% of the annual fee due for exploitation This guarantee will be revised every five years. Inactivity for more than 12 months is a cause for contract termination unless due to justified circumstances approved by the Port Authority.

According to the general terms and conditions of the contract, a minimum traffic level must be reached. Infringement of this minimum may lead to economic sanctions on the concessionaire.

Financial obligations arising from the concession are not directly addressed, but are assumed by the regulations and general terms and conditions to be part of the concessionaire’s overall obligations. Initially the financial risks were shared by the two parent companies, but now they are assigned solely to HPH.

Environmental risk is not strictly addressed assuming the environmental rules are met. Natural disaster or damages to the environment are not under contract rules and only obligations named are those derived from infringement of relevant regulation on the matter.


The contract award established some specific commitments which were made in the proposal, such as: an annual port traffic growth of 18% p.a. during the first five years, and an annual port traffic growth of 24% p.a. after the first five years up to reach the maximum port capacity; 2.5 million TEUs at the end of 2013 (which was delayed because of work delays); and the involvement of eight shipping lines to attract traffic (names not revealed for commercial confidentiality reasons).

In 2013 container exports grew strongly at the port of Barcelona, particularly to countries such as China (+31%), the United States (+17%), Morocco (+35%) and Mexico (+87%). Up to May 2014 the whole port container traffic experienced 7% year-on-year increase. Although this figure is far from the initial forecasts, it reflects delays in the beginning of operations and the impact of economic crisis. In 2013 port container traffic at the port of Barcelona was close to its 2007 pre-crisis level.


  • Pallis, A., Notteboom, T. and De Langen, P.W. (2010) Concession agreements and market entry in the container terminal industry.
  • Port of Barcelona (2013) Statistical reports.
  • TERCAT, S.A. Terminal de Catalunya.
  • A. Suárez-Alemán and M. Cabrera, 2014, Barcelona Europe South Container Terminal, in A. Roumboutsos, S. Farrell and K. Verhoest, COST Action TU1001 – Public Private Partnerships in Transport: Trends & Theory: 2014 Discussion Series: Country Profiles & Case Studies, ISBN 978-88-6922-009-8