COMPETITION FOR SLOVENIANS With the construction of the bulk cargo terminal, which will have a depth of 18.5 metres, the Port of Ploce will become competition for the Port of KoparThe launch of one of the key Croatian economic projects is expected by this autumn - the construction of the new Port of Ploce. The Ploce Port Authority and the Port of Ploce Company (Luka Ploce d.d.), will launch the reconstruction of the Port of Ploce and the construction of three new modern terminals for large ships using the public-private partnership model, which will be used in Croatia for the first time, with the support of Croatian Government, the World Bank and the European Bank. 267 million euro are to be invested in the project that will see the construction of port infrastructure and the acquisition of equipment, slated to be completed by 2014. The chief advocate of the project, significant to the development of the entire Croatian south, and one that would make Ploce a large regional port, is the director of Luka Ploce d.d., Ivica Pavlovic.

"This project is necessary to maintain competitiveness and to secure the future and development of the Port of Ploce. It consists of investments into the port infrastructure amounting to 91 million euro and investment into port equipment amounting to 176 million euro", says Ivica Pavlovic. "The investment into the new port infrastructure includes the construction of a terminal for loose cargo, a multi-purpose container terminal for the construction of which a loan to the Ploce Port Authority has already been approved by the World Bank in the amount of 58.8 million euro, by the European Bank in the amount of 11.2 million euro, while Croatian Government has secured 20.9 million euro through the Port Authority. The Port of Ploce will buy the equipment using its own funds. We will invest 50 million euro in the first three years alone to equip the terminal for loose cargo, and a further 30 million euro in the second phase.

PORT OF PLOCE has seven companies in its ownership portfolio, employing more than 1000 people, making this the most important company in the countyWe will invest 11 million euro in equipping the container terminal, and a further 26 million euro in the replacement of the equipment in the existing port. Besides this we will, together with our business partners, invest about 70 million euro in the old port in the construction of a new terminal for liquid cargoes", Pavlovic pointed out. He has served as director of the Port of Ploce since 1990. In the decades before, Sea Captain Pavlovic worked as a harbour guide. The port infrastructure will only be paid off during the period of depreciation, which means that with this model of financing, never before used in Croatia, the state will have no expense at all. "In Europe the period of infrastructure depreciation is from 50 to 80 years. We agreed to have the depreciation last 50 years. During that period, through concession fees, which are to be paid by Luka Ploce d.d., and the revenue that the new terminal will earn from the use of ships and the coast, the state too, i.e. the Port Authority, will profit. When all of the terminals are operational, the Port will pay the Port Authority annual concession fees of 3.5 million euro", said Pavlovic. According to him the port will raise its turnover from 4 million tonnes to 8 to 10 million tonnes a year, and shipping agencies and control houses will employ a great many people. "We feel that production zones ought to be set up in the Port of Ploce, that new jobs should be secured by assembling the materials that come to the port, by labelling goods, repackaging, as it is in large ports around the world. States give incentives to investors in these kinds of zones, like Rotterdam which earns 11 percent of the Dutch GDP. The port itself earns the least, because the world's largest refineries are in Rotterdam, that is where fish from South America is sorted, sugar and tea is sorted and packed in bags there, it is the site of the aluminium and copper exchange, it is a trade hub in which goods is transferred from large ships to smaller ones. In order to have this happen in Ploce some Croatian laws need to be amended. With about 1000 employees and seven wholly-owned companies, Luka Ploce d.d. is the leading company in the county, especially if one takes into consideration that unemployment in the Neretva Valley stands at 35 percent", Ivica Pavlovic points out. The Port of Ploce, which is still in the majority ownership of the state, will become a private joint-stock company. "Since we need to invest 50 million euro in equipping the loose cargo terminal, we have to do a recapitalisation through a new issue of shares. Our creditworthiness is between 20 and 30 million euro, there are 10 million of our own funds from current revenues, and we will collect 20 million euro through the new issue of shares.

Through the investment in the equipment for the two new terminals and the liquid cargo terminal with our business partners, and through paying the concession, we will demonstrate that we are financial capable of being the concessionary, as is sought of the Port of Ploce by the World Bank. Recapitalisation is therefore for us necessary, because without a new issue of shares that are no new concessions. Without new concessions the Port of Ploce would disappear. The old port no longer offers ships the service it needs to, ships are ever larger, norms are increasing in speed, draughts are all the deeper. The port as it is today cannot be competitive with Kopar or Rijeka or some foreign ports", says Ivica Pavlovic, who served in 1999 as maritime affairs minister in the government of Zlatko Matesa.

IVICA PAVLOVIC has been at the head of the Port of Ploce since 1990; here with colleaguesThe concession and the number of years is in line with the number of years to pay off the investment. The concession on the container terminal with an area of 40,000 square metres is 25 years, and if the Port itself builds another 150,000 square metres of storage area, which is an investment into infrastructure, it will get a concession on a further 20 years, meaning a total of 45 years. The concession on the loose cargo terminal is 45 years. The concession on the old port would last 30 years, and the Port will spend 26 million euro on the reconstruction of dilapidated equipment. The largest investment for the Port of Ploce is into the loose cargo terminal, the construction of which is slated to start in 2008, while the construction of the container terminal starts this year. "Equipping both terminals will cost the Port of Ploce about 80 million euro in total. For the port to be competitive, it must have good berthing, that will have depth. But the port must also have equipment for the loading and unloading of freight. In the current port at the loose cargo terminal ships of up to 60 thousand tonnes are loaded, with a draught of 13 metres and a norm of 10 thousand tonnes a day. At the new loose cargoes terminal, ships of 200,000 tonnes will be loaded, the draught will be 18.5 metres and the daily norm 40,000 tonnes. That is the kind of port that can compete with Kopar, as there already is a loose cargo terminal of that kind there", Ivica Pavlovic pointed out. "There is currently no container terminal in the Port of Ploce. We do container transport using only a single mobile crane and the norm is 10 to 12 boxes an hour. The boxes are lifted to a conventional shore where there is no space and the base has not been adapted. The new container terminal should initially have 40,000 square metres, and would be expanded to 150,000. The daily unloading norm will then be 50 boxes an hour. We intend to extend the shore of the container terminal if there are requests from our shippers, among the largest companies in the world Maersk SeaLand, MSC and Evergreen. Then we will be able to receive the ships of the largest generation that ply the line from China and Japan and which are currently able to make harbour at one or two ports in the Mediterranean", Ivica Pavlovic explained.

The Port of Ploce will by terminal capacity be the second port in the Mediterranean. Ports like that of Ploce, that in Trieste, Liverpool and Manchester, are no longer in fact involved in port business. A port is above all space. Ports are now situated outside of cities, once they were in centres. Large areas have been secured for the construction of terminals outside of the town and the old port where large ships cannot berth because of their length, their draught and because large cranes cannot be installed there. A new port needs to be built in Ploce. One of the seven daughter companies, Luka Ploce Trgovina (Port of Ploce Trade), and its partners will build a third terminal for liquid cargo and refuse treatment at the old port. "We need to expand capacities for the unloading of liquid cargoes, in which large oil companies would assist us financially", says Ivica Pavlovic.

IVICA PAVLOVIC, director of the Port of Ploce, announced recapitalization of the company to be followed by a reduction of the share of state ownershipThe public-private partnership of the state sector, the Port Authority and the private sector, the port operational companies, is a practice present around the world. Luka Ploce d.d. will like most ports in the world be a private one. The state currently holds a stake of about 61 percent, but that will soon change. The state is protecting its interests through the Port Authority, manages the maritime demesne, and in the entire port area of the Port of Ploce manages the movable mechanisation.

There are four models of concessions in ports, but the partners in Ploce at the terminals agreed to apply two of them. The first is public-private partnership based on the BOT model in which the public sector builds the basic infrastructure and gives the concession, and the concessionaire builds the operational infrastructure and procures the equipment for operation. The BOT concession model will be applied on the project of the existing port and the liquid freight terminal. The second is public-private partnership based on the EOT model in which the public sector builds the infrastructure and the concessionaire procures equipment for operation. The EOT concession model will be applied to the container terminal and the loose cargo terminal. "The transport of rock for the construction of a container terminal has already started", Pavlovic pointed out. "HAC deposited rock from the Zagreb - Split - Ploce Motorway and had to pay the Croatian Forestry Authority (Hrvatske sume) for the space used. This rock is now being transported to the Port of Ploce. HAC does not pay for the stone, and the Port of Ploce will not have to buy the 2 million cubic metres of rock it will need. The first phase of the construction of the container terminal and the loose freight terminal is scheduled for 2009. Companies from Bosnia & Herzegovina will benefit most from the new port in Ploce. In the new, equipped, port in Ploce, the Zenica steelworks (Zeljezara Zenica) and Metalsteel will have to import 1.5 million tonnes of ore or coal a year, and will save 15 to 20 million dollars a year on freight charges. The greatest benefit is for the economy of Bosnia & Herzegovina and for Croatian companies in the hinterland. If two terminals were to be built, the saving to the economy of Bosnia & Herzegovina would be about 40 million dollars", Ivica Pavlovic emphasised.