The changes to the port fees will take effect on October 1, 2010. The ministerial signature clears the way for the IPOs of HaifaPort and Ashdod Port
The Israeli Finance and Transportation Ministers signed last week the ports user rates reform, regulations to reform the service fees charged by Israel's ports. The ministerial signature clears the way for the IPOs (Initial Public Offerings) by Israel of the two main ports companies: HaifaPort Company Ltd. and Ashdod Port Company Ltd.
The reform comes 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.
Deputy Budget Director Amit Land said that following the reform, Israel's ports will begin working much more rationally. "I believe that the system of incentives created by the reform will improve service and will ultimately also increase the ports' competitivenes”.
The main change in the newly approved regulations will involve the cancellation of wharfage fees, which today contributes 50% of the ports' income, about NIS 1 billion 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. These fees also discriminated between imports and exports: The ports charge 1.02%of the cargo's CIF value for imports, maximum US$250 per ton and 0.2% of the FOB value for exports, maximum US$250 per ton.
Instead, a new usage fee will 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 NIS 485 for 20' container to NIS 555 per 40' marine container. By the end of the 10-year reform period, they will drop to NIS 135 for 20' container to NIS 147 per 40' container.
According to the rules 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 NIS 75 off per container for ships entering the ports between 11 P.M. and 6 A.M.