By NEIL HARTNELL
Tribune Business Editor
The Prime Minister yesterday slammed the former Ingraham administration for granting a monopoly that complicated negotiations over Carnival Cruise Lines’ new east Grand Bahama port.
Perry Christie, in confirming that the Government is close to “completing negotiations” for Carnival’s new facility, said the “exclusivity” previously granted to Hutchison Whampoa for port ownership/operations in Grand Bahama had created “a vexing challenge”.
“The Government is about to complete its negotiations for the establishment of a new port in eastern Grand Bahama,” the Prime Minister told the House of Assembly yesterday, in relation to Carnival’s proposal.
“The negotiations were made complex because the Ingraham government, by way of a letter in 1994, gave Hutchison the exclusive rights for ports in Grand Bahama.”
The Hong Kong conglomerate is likely to have insisted upon this as ‘protection’ for the significant investments it made in the Freeport Harbour Company and Container Port.
And the then-FNM administration, eager to secure their investment and Freeport’s economic revival, would probably have seen it as a reasonable return ‘trade off’.
Mr Christie, though, disclosed that Hutchison Whampoa’s port ‘monopoly’ had blocked other investors besides Carnival from coming to Grand Bahama.
In what appeared to be a reference to Bahamas Ferries, Mr Christie said the “Symonette brothers” (Craig and Brent) were forced to abandon plans to launch a service between east Grand Bahama and Abaco because of Hutchison Whampoa’s monopoly.
He told the House of Assembly that the brothers “came face to face” with that obstacle, and the significant compensating payments they would need to make in return for Hutchison Whampoa ending its exclusivity.
“It was a vexing challenge for my Government,” Mr Christie said, adding that legal opinions sought by his administration confirmed that the ‘port monopoly’ was “unassailable in law”.
He added that the Government was “obliged to begin negotiations with Hutchison to lessen the rigidity and exclusivity” of its monopoly, and suggested both sides had developed “a formula” that would give Bahamian “greater freedom in establishing businesses in Grand Bahama”.
Mr Christie did not provide details on this “formula”, which was discussed when the Government and Hutchison Whampoa met in London last December.
However, he added that the Government was “in the final stages of decision-making” on this, and Carnival’s cruise port, subsequent to which it will inform the House of Assembly.
Mr Christie, in leading off House debate on a Bill to extend Freeport’s expiring investment incentives for a further three months, also congratulated his government for helping to revive Grand Bahama’s tourism product.
He said the Government’s annual $29 million in subsidies and marketing support for Grand Bahama had been “cut in half”, due to Memories taking over the former Reef Hotel.
Referring to the state of Grand Bahama’s tourism industry when his administration took office in May 2012, Mr Christie said that “any examination of it would have led to the conclusion that things could not have been worse”.
He described the Government’s then-annual tourism subsidy as “significant, if not substantial”, and added: “That is a real challenge. Unless we can fix it, it will continue to be a drag on the Consolidated Fund.
“We began with the tourism product, and we knew we had to lower the extent to which we subsidised the tourism industry in Grand Bahama.”
Several Freeport business owners, speaking to Tribune Business on condition of anonymity, yesterday took issue with Mr Christie’s description of the tourism ‘subsidy’.
They argued that it should not be characterised as such, given that Freeport was a net contributor to the Treasury via its generation of more revenue than spending by Nassau. This, in turn, is being disputed by the Government.
Mr Christie said the Government had “significantly decreased” its tourism subsidy to Grand Bahama by doing “more with fewer dollars”, while also being aided by Sunwing’s arrival.
The company, a subsidiary of TUI, the world’s largest tour operator, is a vertically integrated operation that is much better able to control its costs, since it is travel agent, airline and hotel operator ‘all in one’.
“We looked at it and realised we had a winner,” Mr Christie said of Sunwing. “We realised we had to take advantage of it.”
The Prime Minister, meanwhile, bemoaned the lack of private jets calling on Grand Bahama, interpreting it as a sign that the island attracts few high net worth visitors.
Pointing to the thriving private aviation markets in Nassau, Abaco and Eleuthera, Mr Christie said: “The challenge presented is: ‘Where are they?’, and why are they not in Grand Bahama?
“That is a reality that the Hawksbill Creek Review Committee had to deal with, and McKinsey has to deal with.”
Mr Christie also criticised Grand Bahama International Airport’s relatively high landing fees and other costs, adding: “It’s cheaper to fly people into West End and bus them to Freeport.
“When you have a situation like that, it’s very difficult for business persons.”
The Prime Minister, though, declined to go into specifics on the outcome of two days’ worth of talks that he and the Government held with Mediterranean Shipping Company (MSC) in Geneva last week.
While the two sides had reached unspecified “agreements in principle”, Mr Christie alluded to their incomplete nature and ‘commercial confidentiality’ in declining to divulge more.
“We are greatly encouraged by the meetings we’ve had, the discussions we’ve had, by the agreements in principle we arrived at, all of which must lead to the actual implementation and execution,” Mr Christie said.
The Prime Minister also provided little information on when the Government planned to disclose the Hawksbill Creek Agreement Review Committee’s report, and the economic study on Freeport and Grand Bahama that has been conducted by Oxford Economics. He said these would only be released “at the appropriate time”.
Mr Christie added that training opportunities, leading to careers for young Bahamians, had featured heavily in talks with MSC.
“We have to use the system of apprenticeship much more effectively in our economy,” he said.