The Tribune

• Public to get 20% in Marsh Harbour, Cooper’s Town

• North Abaco port has 120-slip marina possibilities

• PPPs to last 25 years with variety of fees mulled

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is eyeing a combined $100m investment to transform Abaco’s two commercial shipping ports into facilities that meet global best practices and standards.

The public-private partnership (PPP) tender documents for both the Marsh Harbour and Cooper’s Town ports, which have been seen by Tribune Business, reveal that bidders on the former must show they have combined equal capital and access to debt financing of “at least $60m”. For Cooper’s Town, the figure is slightly less at $40m in collective equity and debt funding.

Several sources, speaking to Tribune Business on condition of anonymity, have described both figures as being on the high side. The sum sought for Cooper’s Town almost matches the $41m investment in its initial construction, which was completed by China Harbour Engineering Company (CHEC).

The tender documents, known as Requests for Proposal (RFPs), reveal that the Government wants the ownership structure for both Abaco port PPPs to mirror that which was put in place for BISX-listed Arawak Port Development Company (APD), operator of the Nassau Container Port. APD revealed to Tribune Business it has submitted a bid to take over management and operations at the Marsh Harbour port only.

For both the Marsh Harbour and Cooper’s Town ports, the RFPs stipulate that a combined 20 percent equity ownership will be “offered for sale to the general public” although it does not specify whether this will be via an initial public offering (IPO) or other method.

The remaining 80 percent ownership interest will be split evenly between the Government and winning PPP bidder, with each holding 40 percent. This split matches APD’s structure, where the Government and shipping industry each hold a 40 percent stake.

Meanwhile, among the expansion opportunities identified at the Cooper’s Town port is a 120-slip marina together with international and domestic warehouses, although no such opportunities were identified at Marsh Harbour, which remains the island’s prime commercial shipping port and cargo point-of-entry despite the devastation inflicted by Hurricane Dorian.

Both RFP documents state that each port will be leased to the winning bidder for a 25-year period, in an attempt to ensure they get a return on their upfront capital investment, with the Government wanting them to employ a workforce that is 80 percent Bahamian at a minimum.

“The Government recognises the importance of the transport sector, particularly the transshipment of goods internationally and domestically towards the further development of The Bahamas,” the Marsh Harbour port RFP said.

“Additionally, with regard to the projected annual growth of maritime transport by 3 percent, as well as the importance of enhancing the country’s capacity to transship the requisite goods between international and domestic ports, the Government of The Bahamas seeks the efficient and effective management and operations of the Marsh Harbour Port via a public-private-partnership arrangement.

“In particular, the Government seeks to lower the cost of living for Bahamians by reducing the cost of imported and exported goods; expand Bahamian ownership in the economy by creating new investment opportunities; broaden the ownership base in the transport (shipping) sector in The Bahamas; and facilitate public and private sector collaboration in The Bahamas.”

The RFP continued: “To achieve the aforementioned objectives, the Government has determined that the Marsh Harbour port occupying 16 acres of property in Marsh Harbour shall be jointly managed by the Government [and] a consortium of private sector business entities operating in The Bahamas.

“The Government is satisfied that public-private partnership management of the port is in the best interest of The Bahamas in general and, in particular, the community of Marsh Harbour. Moreover, the Government acknowledges that the development, operation and maintenance of modern port facilities is vital to the economic sector of The Bahamas.

“Therefore, interested bidders will be expected to further develop, manage, operate and maintain the port as a modern cargo port terminal facility offering International, domestic, and warehousing services for receiving and berthing ships, and transferring cargo and persons thereto with due diligence, care and skill.”

The winning bidder will have the right to appoint a majority four, out of the seven, directors who will sit on both the Marsh Harbour and Cooper’s Town Boards. While the private sector will have the right to select the chairman, he/she will have to be approved by the Government.

The Board will also be able to propose a variety of tariffs and fees, including security; gate; landing; and utility charges, plus demurrage levies on equipment that is landed by the shipping carriers and charges for the storage and detention of cargo, containers and vessels. No indication was given, though, as to the likely amount of each charge or fee, and whether any maximum limits will be imposed.

Daphne DeGregory Miaoulis, the Abaco Chamber of Commerce president, told Tribune Business it was “massively important” that Marsh Harbour’s port, in particular, be brought back into compliance with international security and other standards after being devastated by Hurricane Dorian.

However, she agreed that it was “a catch 22” because the introduction of new and/or increased fees to pay for the redevelopment, and give the winning bidder a return on its investment, threatens to further burden Abaco households and businesses already struggling with inflation and the cost of living crisis.

Mrs DeGregory Miaoulis acknowledged that the Marsh Harbour port had been “at risk” prior to Dorian, most notably in summer 2019 just prior to the Category Five storm, when it failed its International Ship and Port Security (ISPS) “mock” inspection and was found in non-compliance with International Maritime Organisation (IMO) policies.

Such defects, if discovered during a formal inspection, could have resulted in the port being closed down. Ships transporting cargo between Florida and Marsh Harbour would have had to discontinue their services, with cargo freight having to be sent first to Nassau before being transferred to smaller vessels such as mail boats for onward shipping to Abaco - an exercise imposing increased costs and time.

With Dorian’s impact on the Marsh Harbour port still lingering, Mrs DeGregory Miaoulis said: “It’s just a mess. It’s horrible to deal with that. Everybody tries to do their best but they are working in really sloppy conditions. Everything is on the open. It’s dusty, dirty, it’s an absolute mess when you have to go down there. Security, efficiency, all of these things are at risk with the conditions at the port as it is now.

“You cannot hold anybody individually responsible. The companies are trying to do their best. Customs are trying to do the best they can, but they have to go to work in an environment that’s a mess on a daily basis. When you think about people having to deal with that as a means of employment, it’s dispiriting. Then you want them to have a good attitude. How are they supposed to have a good attitude whee=n they deal with a mess.”

The Abaco Chamber president praised Tropical Shipping for investing in a Marsh Harbour warehouse where Customs and other services are all contained “in-house”. However, she said “absolutely there would be” push back to the port PPP if it resulted in the imposition of significant fees on businesses and consumers.

“We cannot afford any more increases,” Mrs DeGregory Miaoulis told Tribune Business. “If they’re significant it’s really going to hurt our economy but, by the same token, we cannot go without having it [the port] rebuilt. We need it, but can we afford to have another cost involved in it?

“It is a ‘catch 22’. There’s no right answer. You’ve got to pay to play. Percentage wise how much more are we going to be going up? But we need our port, and whatever it takes to rebuild our port.... We need a first class port to ensure the island continues to develop and we need to pay for it.”