Dutch State considers taking a stake in the Port of Amsterdam

Dutch State considers taking a stake in the Port of Amsterdam

Arnold van Steenderen
09 September 2015

In a letter to Parliament, Dutch Minister of Infrastructure and Environment Melanie Schultz van Haegen confirmed that the Dutch State is currently considering to acquire an ownership interest in the Port of Amsterdam. All stocks in the Port of Amsterdam are currently being held by the Municipality of Amsterdam.

Traditionally port authorities in the Netherlands have been government agencies of the municipal government of the city or town in which the port is located. As part of a wider trend of privatisation, the Dutch national government and local governments have retreated from performing port related activities themselves in the belief that enterprise-based port management would allow for greater flexibility and efficiency through more competition and a better response to consumer’s demands.[1]As in many key international ports, the ‘landlord’ port model is applied in large and medium-sized ports in the Netherlands. In this model the port authority owns the basic port infrastructure, leasing it out to operators, mostly on a long-term concession basis, while retaining all regulatory functions.

Due to reforms during the last 15 years the landlord port authorities are now public limited companies and no government agencies anymore. Although legal title to the land in the port areas rests with the municipal government, the port authorities have leased this land in perpetuity for free and may generate revenue through sub-leases and concessions with private parties, such as private port operators. The master lease agreements with the municipal governments therefore allocate the economic ownership of the land to the Port of Rotterdam respectively Port of Amsterdam. Despite the fact that several public service obligations have been delegated to the harbourmaster division of these independent port authorities (‘Port of Rotterdam’ and ‘Port of Amsterdam’), these are highly commercialized entities. The Port of Rotterdam, for example, is commercially engaged in several foreign port development and port management projects in Brazil and Oman (Porto Central and SOHAR Port and Freezone).

Public influence on the decision making of these companies is primarily accomplished through the ownership interests in these companies by national and/or local governments and through agreements that government agencies have concluded with the ports, e.g. on the proper performance of the delegated public service obligations and on the determination of port tariffs in order to prevent abuse of a dominant position of the ports the ports enjoy because of their economic ownership of land in the port area. To date the Dutch State has only acquired a 29.2% ownership interest in the Port of Rotterdam. The remaining 70.8% is owned by the Municipality of Rotterdam. This acquisition took place in 2006 in return for considerable financial investments by the national government (EUR 726 million)

In order to make an expansion of the port area possible. The expansion was realized by reclaiming land from the North Sea (‘Maasvlakte II’) on which two modern and fully automated container terminals were built.

At the time the rationale behind the acquisition by the Dutch State in the Port of Rotterdam was solely based on financial considerations: a return on investment. However, the current policy considerations for maintaining this ownership interest are of a different nature. In 2013 the Port of Rotterdam was added to a list of permanent acquisitions of the national government, which are regarded as a strategic choice to safeguard Dutch security and/or economic interests. For instance, Schiphol Airport, the Dutch Railways (Nederlandse Spoorwegen) and certain public utility companies can be found on this list.[2] The justification of the Dutch State’s acquisition of shares in the Port of Rotterdam therefore developed from a financial necessity into a strategic choice to safeguard the national interest of proper management of ports that are of great importance to the Dutch economy.

Conceivably this reasoning equally applies to an acquisition of ownership interests by the national government in the Port of Amsterdam as this port claims it is Western Europe’s fourth largest transhipment port.[3] The municipal government of Amsterdam, the current sole stockholder, has already said that it supports a partial transfer of its ownership interest to the national government. In reply, the Dutch national government indicated that it will investigate whether an acquisition of an ownership interest in the Port of Amsterdam would indeed serve the national public interests[4], as was previously asserted by the national government in relation to the Port of Rotterdam.

Rotterdam, 9 September 2015

Arnold J. van Steenderen and Sebastiaan H. Barten, Attorneys-at-law

[1] Theo E. Notteboom, ‘Terminal Concessions Revisited’, Marit. Pol. MGMT, vol.29, no.1, page 1-15.

[2] Ministerie van Financiën, Nota Deelnemingenbeleid 2013, 18 oktober 2013, p. 30.

[4] Letter from the Minister of Infrastructure and Environment to Dutch Parliament, dated 18 May 2015.