Ministerial signature clears the way for Haifa and Ashdod IPOs

Ministerial signature clears the way for Haifa and Ashdod IPOs

The reforms come five years after the Ports Authority was restructured, and two years after the first draft proposal on the ports fees was completed. The changes to the port fees will take effect on October 1, 2010, though the reforms will take a full 10 years to implement.

The intention is that following the reform Israel’s ports will begin working much more rationally and that the system of incentives created by the reform will improve service and will ultimately also increase the ports’ competitiveness.

The main change in the newly approved prospectus will involve the cancellation of wharfage fees, which today contribute 50% of the ports’ income of around NIS1bn (US$270m) a year.

The present wharfage fees are set as a percentage of the value of the goods imported or exported, without any relationship to the actual costs of handling the specific cargo. Charges are calculated on 1.02% of the cargo’s CIF value for imports and 0.2% of the FOB value for exports, with both subject to a maximum of US$250 per ton.

A new usage fee will now be charged, based on the needs of developing the port infrastructure. These fees will be charged to the ports companies, and will then be passed on to the Israel Ports and Assets Company – the Government body responsible for financing port development.

The new regulations mean that exporters, shipping companies and the Ashdod and Haifa port companies come out as losers and importers are expected to come out the big winners, paying much less for port services.

The new infrastructure fees will initially be set at NIS485 (US$131) for 20ft and NIS555 (US$150) for 40ft containers. By the end of the 10-year reform period, they will drop to NIS135 for 20ft and NIS147 for 40ft containers.

According to the prospectus, exporters will be exempt from the new fee for the first three years to ease the changeover. The Israeli Manufacturers Association and Federation of Israeli Chambers of Commerce have established temporary internal subsidy mechanisms to aid the affected companies.

Other port fees will be combined into a single charge, and will include all the charges to be paid by shipping companies, instead of the present multiple charges.

The new fee structure will also provide incentives for the ports to operate 24 hours a day, by offering up to NIS75 off per container for ships entering the ports between 23:00 and 06:00 hours.

Labour reaction to the news of the prospectus has been unfavourable with the unions demanding changes to workers’ pay and benefits. The labour court has ordered a return to work and that the parties discuss the desired changes before the reform prospectus is published.