Port Sector And Infrastructure
The emphasis on the development of port and related infrastructure assets in Latin America is part of a larger trend to turn to the private sector to address urgent capital needs of these economies. The reason for this is apparent from even a casual glance at the history of economic development in the region: inability of central governments to fund public sector entities in deep need of capital resources resulted in poor service and inefficiencies, with resulting limiting effects on sectoral and macroeconomic development and adverse socio- economic consequences. Private sector capital and know-how is perceived as a solution to these problems, as well as a means to increase national competitiveness and deliver more efficient infrastructure enterprises with wider reach and deeper penetration in national economies.
A variety of schemes have been used to implement increased private participation in Latin American economies, many of which have been employed in the port sector. These approaches include BOO and BOT structures, as well as concession-based arrangements awarding to a private party the right to long-term operation of a port or port terminal in exchange for capital investment and service standard obligations (among others). Ports are often perceived as key national assets which are legally or culturally constrained from outright privatization.
In addition, ports attract high levels of domestic political interest due to sensitivity regarding factors such as tariff costs, labour issues and environmental concerns. Such considerations often result in combined public- private structures to ensure continued public sector functional oversight.