Trends in the field of port governance in the European Union (as well as the World) are unchanged: ports are saved to the national or local government property, or both together, but management authority complies in accordance with the private corporate governance principles. Only 5% of EU ports use combined state and municipal management form, including Latvia.
In Latvia`s Freeport’s the highest decision-making body is the Management Board which is composed of national and local government nominated members. Meanwhile these members are nominated in different manners, state representatives are nominated from four different ministries and approved by Cabinet of Ministers and four municipality members are nominated by representing municipality. Certainly, politically this delivers major uncertainty, as the nominees represent different parties and different interests. It is understood that such political nomination form, does not comply with the EU’s customary practices while frequent change of board members does not contribute to effective management. Professional advice and a step forward would be, that the members of the Board go through an open selection procedure and are elected for a period of five years, with clearly defined key performance indicators (KPI’s) and executable port development strategy. In assessing the EU experience in which 51%[1] of Port authorities are commercialised entities like “JSC”, “LTD” or similar, this means in the case of Latvia, to reduce the number of board members from eight to five, and exclude automatic grant principle of parity between municipality and state, but at the same time legal interests of both parties should be represented in an entities legal form (share capital). In an ideal situation, it is a JSC with the allocation of shares between the state and local government, where the company’s stock portfolio split between state and municipality has an intra national matter, and stating that the alienation of stocks is a parliamentary decision with at least 80-90% support. In addition to this, the port administration is merely a legal body that manages the port, the fundamental units, as water, land, quayside, infrastructure is owned by the State or local government, in the case of Latvia, the latter two may also include economic operators (entrepreneurs and foreign investors) and fundamental units referred to above shall not be included in the share capital of JSC, respectively, the threat of “privatization of ports” in its root is not viable because the piers and infrastructure which could be privatised was already done long time ago.
Full ESPO research on “Trends in EU ports governance 2016” could be downloaded here
[1] ESPO, Trends_in_EU_ports_governance_2016_FINAL_VERSION
