By NEIL HARTNELL
Tribune Business Editor
The Nassau Container Port’s (NCP) operator is evaluating whether to bid on a $65 million port redevelopment project in Haiti, as it targets “material financial benefits” from expanding into the Caribbean.
Michael Maura, Arawak Port Development Company’s (APD) chief executive, told Tribune Business yesterday that the BISX-listed port operator would seek to joint venture with “a large global partner” if it proceeded with a Cap Haitien bid.
“The US State Department’s USAID (US Agency for International Development) has committed to a $65 million redevelopment of Cap Haitien Port,” he explained in an e-mailed reply to Tribune Business’s questions.
“Haiti’s National Port Authority (APN), with the assistance of the World Bank’s investment division, IFC, have undertaken a Terminal Operation RFQ/RFP for Cap Haitien port.
“APD is undertaking a business analysis of the Cap Haitien terminal operation to determine if the project makes sense to us. If APD determines the project has potential, we would partner with a large global port operator in an effort to minimise risk.”
Mr Maura was speaking after APD’s 2016 annual report confirmed that it “has and will continue to pursue new business opportunities within and outside the Bahamas”.
He explained that while becoming involved with Family Island port operations would add little to APD’s ‘bottom line’ and shareholder returns, the company had a “responsibility” to support the Bahamian maritime industry’s expansion.
The greater financial rewards, Mr Maura added, would stem from APD’s expansion into the Caribbean, where there were numerous ports with similar cargo throughput volumes to its Arawak Cay operation.
And the extra profitability would help to diversify APD away from near total reliance on its existing port, generating additional income streams that may “mitigate” against future tariff increases for Nassau-based businesses and consumers.
“The cargo volumes of ports within the Bahamas Family Islands are small and will have little impact on our profit growth,” Mr Maura said.
“We, however, feel we have a responsibility to support our country’s maritime port expansion efforts and therefore we will continue to inquire of Government if such assistance is needed.
“As for our interest in Caribbean ports, it is primarily based on the fact that there are a number of ports throughout the region with volumes close to that of NCP. These ports would provide APD with material financial benefits and help to potentially mitigate future NCP tariff increases.”
APD’s annual report confirms that it this year offered to help the Government manage key Nassau and Family Island ports, especially Potter’s Cay, Prince George Wharf and Marsh Harbour.
“We have recently been invited to submit proposals in this connection,” APD said. “We have not yet received word regarding Prince George Wharf.
“In the case of Marsh Harbour Port, APD may be asked to assist with the implementation of the NAVIS port terminal operating system. The addition of the NAVIS software at the Marsh Harbour port would assist Bahamas Customs and the Ministry of Finance with their border control responsibility.”
Commenting on the status of these proposals, Mr Maura said: “We have only just written to government indicating our interest, and have very recently been invited to submit a proposal. We are travelling to Haiti this coming week, and will begin work on these possibilities in early January.”
APD also revealed that last year it pursued achieving the designation of a ‘Recognised Security Organisation’ or RSO, “but following a three-month application process and the submission of the required material, APD was advised by the Port Department that the application was not approved” with no explanation given.
Elsewhere, Mr Maura confirmed that APD was currently applying to obtain land for a secondary Customs inspection facility at the Arawak Cay port.
“We are presently in the process of applying to the Department of Lands & Surveys for the land,” he said. If our application is approved we would expect the facility to be available in approximately a year.
“It would be located on property presently adjacent to the port but, if approved, the land would become part of the port.”
In unveiling the plan, APD’s annual report said: “APD will consider modifications to the Nassau Container Port in an effort to continue its partnership with contraband interdiction efforts.
“A Customs secondary inspection facility is contemplated which will allow Customs to conduct examinations on port property, prior to permitting the container to depart the Nassau Container Port.
“This facility will directly work to mitigate the trafficking of weapons, currency and drugs entering our country.”
Mr Maura, meanwhile, explained that APD was pushing for a Value-Added Tax (VAT) ‘zero rating’ on all port and carrier services supplied to international cargo firms to prevent importers from being ‘double taxed’.
“If importers are assessed 7.5 per cent VAT on international shipping services by the ocean carriers, these carriers will increase their rates on all imports and exports,” he said.
“As it stands today, the importer is charged 7.5 per cent VAT by Customs at the time the Customs Entry is paid. Customs is assessing VAT on the value of the imported goods and the ocean transportation services noted on the bill of lading. If the process remains as is, and the ocean carriers are required to charge 7.5 per cent VAT, the importer will be charged twice (once by Customs and once by the carrier), and the carrier will also increase their ocean freight rates to address the administrative burden.
“The significance of the zero-rating allows the carriers to claim their VAT expense and receive a refund, while not assessing 7.5 per cent VAT on their customers and leaving the assessment of VAT to Customs as part of the Customs entry payment.”