Dili, 15 December 2017
The Government of Timor-Leste has long decided to develop a new port west of Dili to serve the country for many decades to come under a Public Private Partnerships (“PPP”) model.
By means of an international competitive tender, Government selected Bolloré Group (private partner) to develop a greenfield port at Tibar Bay through design, build, co-finance, operate and transfer (DBFOT) basis. Bolloré Group is a world renowned French company specialized in port concessions and logistics and it currently operates 16 container terminals around the world. To undertake the development of new Port, the Government signed an agreement on June 3rd ,2016 with Timor Port S.A. (a company registered on Timor-Leste and owned by Bolloré) granting 30-years concession.
After the concession period, Timor Port S.A. will transfer back the international port to Government of Timor-Leste.
Tibar Bay Port will be a state-of-the-art port with modern equipment to ensure quick and efficient movement of containers and cargo. The new Port will be able to accommodate much larger ships than Dili Port and this will allow for savings in freight costs which will ultimately mean lower consumer prices.
A detailed Environmental and Social Impact Assessment was conducted by the Concessionaire in accordance with international high standards, including measures to avoid, mitigate or offset any impacts.
Implementing the project as a Public-Private Partnership makes it possible to bring the experience and know-how of a world-class port operator to Timor-Leste, introducing innovation, fostering operational efficiency and providing a better service to the public, and most of all, it enables the Government to shift some major risks to the private partner, including the risk of construction delays, cost overruns, traffic, efficiency of operation etc. The PPP model also creates the right incentives: since concessionaire will have to operate the Port for 30 years it is in their own interest to build it to a very high-quality standard.
Under the Concession Agreement, Timor Port S.A. is the sole responsible before the Government for the design, co-finance, construction and operation of the Port and must comply with all the obligations and high standard and strict technical specifications imposed by the Concession Agreement. Timor Port S.A. is allowed to independently subcontract the construction and operation services to other entities and will ensure that those subcontractors comply with the referred technical specifications.
Therefore, the Concessionaire independently launched an international competitive tender and has concluded the tender with the appointment of the China Harbour Engineering Company (CHEC) as the winning bidder on 12 December 2017.
Inquired by the Government, International Finance Corporation (IFC), a member of World Bank Group has already confirmed that CHEC is part of China Communication Company, which was previously debarred by World Bank Group but the debarment ended in January 2017 and it was never applied to Ports.
For the current World Bank Listing of Ineligible Firms and Individuals, please see the following
The role of the Government is to ensure that the Concessionaire and its subcontractors comply with the Concession Agreement, which gives enough mechanisms to protect the Government in case of failure.
For this reason, Government has established a Project Management Unit entirely dedicated to this project implementation, staffed with experienced professionals, both international and national, that combines the backgrounds needed to manage the agreement during the construction phase (technical; health, safety and environment; and legal).
Through an international tender, EGT Engenharia & FASE Estudos e Projetos (Independent Engineer) was jointly hired to independently supervise the design and construction of the port. EGT&FASE is a Brazilian/Portuguese consortium of international consulting firms experienced in the implementation of ports all around the world. They will verify that Concessionaire complies with all the requirements in the Concession Agreement which includes complete verification of design and supervise all construction activities. The Independent Engineer will also ensure that the Government of Timor-Leste fulfils all its obligation set out in the agreement on time for the smooth progress of the project.
During the construction phase, it is estimated that over 500 jobs will be created, of which the large majority will be for Timor-Leste citizens and permanent residents. This is another commitment from the Concessionaire and the Government will ensure that this will happen no matter who are the companies that will be hired by the Concessionaire to build the Port.
Finally, implementing the project as a PPP is bringing to Timor-Leste what will be the largest private investment in public infrastructure sector to date in the country, sending a signal to other investors that Timor-Leste is an attractive place to do business.