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‘Financial Constraints’ Hit $20m Harbour Repair

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Port Department’s “financial constraints” are preventing it from carrying out a $20 million repair to Nassau harbour’s breakwater, and threatening to undermine operations at the Caribbean’s most efficient report.

A newly-released Caribbean Development Bank report has recommended that institutional reforms transfer the legal responsibilities for such activities from the government-run agency to Arawak Port Development Company (APD).

The report, entitled ‘Transforming the Caribbean port services industry’, said such reforms would allow the Nassau Container Port’s BISX-listed operator to cease paying port dues to the Port Department.

And, with that burden removed, APD may be in position to reduce the tariffs it charges at the Arawak Cay-based port.

Outlining the only challenge or ‘operational bottleneck’ faced by APD and its port facility, the CDB report said: “The breakwater is exhibiting some minor fractures, which results in downtime during north-west winds.

“Rehabilitation of the breakwater falls under the responsibility of the Port Department. However, the Port Department has not been able to carry out rehabilitation works due to financial constraints.

“In the Bahamas, the port authorities are failing to carry out fully their responsibilities as stipulated in their respective agreements with the port operators.”

The CDB report said that, as a result, the harbour breakwater was not providing “the desired nautical protection”. It placed the repair cost at around $20 million.

“Currently, APD pays port dues to the Port Department for activities including dredging, pilotage, and maintenance of the breakwater,” the report said.

“However, due to financial constraints, the Port Department is unable to perform its activities. Hence, the activities are carried out by APD (or outsourced by APD).

“Consequently, the tasks could be formally transferred to APD, thereby removing APD’s obligation to pay port dues to the Port Department. This could, in turn, lead to lower tariffs at the port.”

The CDB report ranked the Nassau Container Port as the most efficient port in the Caribbean by some distance, placing it well ahead of its nearest rivals in Trinidad & Tobago and Suriname.

The Bahamas was ranked as either the top, or joint top, Caribbean port in the areas of productivity, labour, infrastructure, information technology and autonomy.

“The port of Nassau in the Bahamas is the most efficient port in the (12-strong) sample. This should come as no surprise, given the newness of the port and private sector leadership,” the CDB report said.

“The port of Nassau represents a mature island port. The port is functioning highly efficiently. This could warrant the shift of additional responsibilities to the private sector.

“According to the Caribbean Shipping Association’s 2015 productivity report, the Nassau Container Port reaches an average 24.62 berth moves per hour. This productivity puts NCP comfortably ahead of other ports in the region.”

APD was established as a private-public partnership (PPP) under the former Ingraham administration, with the Government and privately-owned shipping industry each holding a 40 per cent equity stake.

The private sector, though,has retained management control, with the remaining 20 per cent equity held by Bahamian public investors following the initial public offering (IPO).

“The port of Nassau is an example of a port in which the labour unions have limited power and hence labour costs are low and productivity levels high,” the CDB report said,

“The container port of Nassau is a prime example of a well-developed modern island port. The involvement of the private sector has been key in moving from a situation of six stevedoring companies without modern facilities to a modern facility with one stevedoring company. The former stevedores are still involved but limited to yard management.”

The CDB report estimated that container throughput at the Nassau Container Port will increase by 45 per cent in the decade leading to 2025, rising from 136,800 twenty-foot equivalent units (TEUs) to 198,400.

That represents a 3.79 per cent compound annual growth rate, slightly higher than the 2.4 per cent growth achieved during the port’s formative years.

Tropical Shipping was said by the report to handle 50 per cent of container volumes, with Mediterranean Shipping Company (MSC) and Arawak Stevedoring handling 30 per cent and 20 per cent, respectively.

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