The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Arawak Port Development Company (APD) yesterday said it will close its 2016 financial year “within 50 containers of budget”, while calling for repairs to the harbour’s breakwater “sooner rather than later”.

Michael Maura, chief executive of the BISX-listed Nassau Container Port operator, said the decline in container throughput volumes had likely “bottomed out” during the 12 months to end-June 2016.

He told Tribune Business that while it was currently in the process of finalising the budget for its next financial year, APD anticipated that twenty-foot equivalent units (TEUs) volumes would be boosted by projects such as the Atlantis renovation and The Pointe.

And he conceded there was “the possibility” that APD could offer to repair the Nassau harbour breakwater itself, relieving the Government of this burden in return for reduced - or returned - tax payments.

Mr Maura pointed out that 25 cents of every $1 collected by APD went to the Government, and suggested that the repairs would take two years to effect.

The Nassau Container Port operator thus indicated its willingness to take up a suggestion from a recent Caribbean Development Bank (CDB) report, which advocated that APD assume responsibility for breakwater repairs from the Port Department.

Pegging the repair costs at $20 million, the CDB’s recent study of 12 Caribbean ports recommended that APD and the private sector take the lead, and in return be relieved of certain tax and fee payments to the Government.

Mr Maura, meanwhile, told Tribune Business it was “pretty incredible” how close APD’s 2016 financial performance was likely to come to its projections.

“It’s amazing how close we are,” he said. “I think we’re going to come within 50 TEUs of budget, which is pretty incredible.

“When you consider the fact a year ago we were sitting around a table and reacting to the issue with Baha Mar, and the slowdown and so forth, and what that meant to volume at that time, we expected the impact would be roughly 10 per cent, and it’s ended up being about that.”

APD, in its 2015 annual report, warned: “Our TEU volumes are currently on budget as at August 31, 2015. However, we are doubtful of any project cargo volumes this year. The main project, Baha Mar, is at a standstill and the Hilton and Albany projects are in the very early stages.

“Due to this, we do not foresee any significant project volumes during financial year 2016. With the current Baha Mar situation, we feel that total market volumes will be around 61,500 TEUs for 2016 or 6,880 under the 2015 TEU volumes of 68,380 TEUs. Our total revenues as at August 31, 2015, are ahead of budget by $360,000 or 55 per cent.”

APD also effectively delivered a profit warning to shareholders for the current financial year, predicting that net income would be down 48 per cent to $3.526 million - some $3.227 million below last year’s $6.753 million.

APD’s financial results for the first nine months show it is tracking forecast and possibly better, with net income for the period to end-March only 34.3 per cent down year-over-year, standing at $3.349 million compared to $5.096 million.

“I definitely believe we have bottomed out,” Mr Maura told Tribune Business, referring to the port’s TEU volumes. “I don’t think things are going to get any worse from a volume perspective.

“We’re looking to the next 12 months being better than the prior year. Our budget [for the 2017 financial year] will be complete within the next 30 days, and we’re hoping there’s some good news coming from Baha Mar, with someone in place to finish the project by the end of the year.

“Atlantis’s renovation has just begun and will bring some volume,” he added, along with the The Pointe’s $200 million hotel, residential and lifestyle development next to the British Colonial Hilton.

APD’s container volumes already seem to have seen a rebound after the end of Baha Mar construction comparatives, with May volumes up by 3.8 per cent to 5,480, compared to 5,279 last year. This, though, was the product of an extra sailing in May 2016.

Mr Maura acknowledged that repairs to the Nassau harbour breakwater were becoming more important with each passing year, given the impact of frequent storms.

“What we have seen over the last five years is Mother Nature has begun to break down the breakwater,” he told Tribune Business.

“We’ve begun to see areas or gaps appear in the breakwater, and when you get those big storms passing north of New Providence and swells, it does send a good surge into Arawak Cay itself, and does move the ships and impact operations.”

Mr Maura added that “a huge break” in the breakwater, around 100 feet in length, existed just west of the lighthouse and resulted in impacts to the eastern end of Arawak Cay when waves crashed against it.

“That’s an area we hope is addressed sooner rather than later,” Mr Maura told Tribune Business, acknowledging that the issue had been raised with the Government and Port Department.

“The challenge always come down to funding,” he added. “It is something we do discuss. At some point, something has to be done, but no one has presented us with a plan yet as to what’s going to be done to correct the situation.”

The CDB report said “financial constraints” were preventing the Port Department from effecting the necessary repairs, and recommended that the responsibilty be transferred to the private sector and APD.

“There is the possibility or opportunity for the Government to sit down with APD and say we need your assistance to correct this issue with the breakwater,” Mr Maura said.

“We pay a base fee to the Government of $41 per TEU. We pay a Business Licence, pay real property tax. Approximately 25 cents of every $1 we collect goes to the Government.”

He added: “The concern we do have is that Mother Nature has now established a chink in the armour, and every single time she sends a storm our way it makes that breach a little wider.

“It’s not something we can sit back and forget about. It gets worse every year. It’s something that has to be addressed.”

Mr Maura said breakwater repairs should be carried out within the next few years, and would likely take two years to complete - six months for engineering works, and a year to finish the construction.