Port operations

Approval

What government approvals are required in your jurisdiction for a port operator to commence operations following construction? How long does it typically take to obtain approvals?

See questions 15 and 26. Any further approvals that are required depends on the relevant legislation and agreements. Tenders, and therefore also the resulting agreements, often contain deadlines by which operations must start, failing which penalties may be incurred.

Hong Kong is one of the few major international ports in the world that does not have a port authority. Port facilities here are generally financed and operated by the private sector under a lease agreement, although the government ultimately is the landlord (with most Hong Kong leases expiring, at the latest, in 2047). The government’s role is to undertake long-term strategic planning for port facilities and to provide the necessary supporting back-up land and navigation channels infrastructure. A new government entity, the Maritime and Port Board was recently formed by merging the previous Maritime Industry Council and the Port Development Council in 2016, with the mission to formulate strategies and policies to enhance Hong Kong’s status as an international transportation centre and spur further growth in the maritime service cluster. However, this entity is primarily advisory and hence has relatively little responsibility (eg, it has no control over port land use planning or regulation).

No new port facilities have been developed in Hong Kong since the late 1990s, the last container terminal to be built having been CT9, which opened in 2003. There was a plan to build CT10; however, following a preliminary feasibility study for CT10 at Southwest Tsing Yi as well as the Study on the Strategic Development Plan for HKP2030, this plan was shelved on the basis that the project was not financially or economically viable. This was largely because the latest throughput growth forecast for the port was slower than previously projected and the yield per container was also lower: about 75 per cent of the port’s throughput comes from transhipment (barge and ocean-to-ocean), which attracts a lower handling fee and comparatively lower economic benefits than import/export shipments, which used to be a dominant portion of the port’s business. The development cost for CT10 was an estimated HK$60.9 billion (at 2011 prices), and it was expected that the economic and financial returns could not fully recover the investment costs within the 50-year evaluation period.

However, in 2013 a new luxury cruise terminal KTCT opened (see question 15) to try to capture the growth of the regional cruise market.

Typical services

What services does a port operator and what services does the port authority typically provide in your jurisdiction? Do the port authorities typically charge the port operator for any services?

See questions 2, 5, and 23.

Access to hinterland

Does the government or relevant port authority typically give any commitments in relation to access to the hinterland? To what extent does it require the operator to finance development of access routes or interconnections?

See question 27. Terminal operators have not been required to fund access routes.

Suspension

How do port authorities in your jurisdiction oversee terminal operations and in what circumstances may a port authority require the operator to suspend them?

See question 5. In addition to statutory requirements, operators will also be bound by the terms and conditions of their agreements with the government. The government obviously has a key role to play in ensuring the security of ports (see question 15) and preventing crime.

Terminal services are conducted under licences, leases, concessions, permits or certificates granted by the applicable regulatory body. Failure to comply with relevant laws and regulations may result in financial penalties or administrative or legal proceedings including the revocation or suspension of its concessions, leases or licences. There are also various environmental and safety standards applicable under Hong Kong laws and regulations. Failure to comply may result in penalties and other sanctions.

Port access and control

In what circumstances may the port authorities in your jurisdiction access the port area or take over port operations?

This will depend on the terms and conditions of the agreement between the operators and the government and the relevant legislation (if any). Also, see question 33.

Failure to operate and maintain

What remedies are available to the port authority or government against a port operator that fails to operate and maintain the port as agreed?

Common law and equitable remedies are available subject to the terms and conditions of the agreement between the parties. There may also be statutory remedies available as set out in project specific legislation.

Transferrable assets

What assets must port operators transfer to the relevant port authority on termination of a concession? Must port authorities pay any compensation for transferred assets?

Most concessions and leases granted by the government will expire, by the latest, in 2047.

As noted in question 2, the port operators are only required to return the leased land, and not other assets, to the government, unless there are additional conditions of grant in their agreement with the government.