The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The world's largest cruise port operator is in talks with the Government to take over management and operations at downtown Nassau's Prince George Wharf.

The approach by UK-based Global Ports Holding was confirmed by its potential joint venture partner, BISX-listed Arawak Port Development Company (APD), in its 2017 annual report.

APD, the Nassau Container Port's (NCP) operator, said the two companies planned to add "additional berths and facilities" to the Bahamas' busiest cruise port if the Minnis administration gave their project the go-ahead.

Work will begin in the 2018 first half if all approvals are received, with APD confirming it had decided to "pursue the partnership" with a company that generated almost $115 million in full-year revenues for 2016.

Dionisio D'Aguilar, minister of tourism, confirmed to Tribune Business that the Government was talking to the Global Ports Holding joint venture, but indicated that a deal was some way off.

"They're still very much in the preliminary stage," Mr D'Aguilar said briefly from London, when contacted by Tribune Business about the status of negotiations.

APD, though, was not shy in letting its shareholders know about the potential benefits should the joint venture succeed in its ambition to take over Prince George Wharf's management.

"In response to the Government's interest in improving the operational and financial performance of Prince George Wharf, APD is exploring the possibility of a joint venture with Global Port Holdings, the largest global cruise port operator in business today," the Arawak Cay port's operator revealed.

"The partnership contemplates enhancing Prince George Wharf's cruise wharf to include additional berths and facilities. If approved by the Government of the Bahamas, the project would commence during the first half of 2018."

APD's just-released annual report disclosed that Global Port Holdings approached it to joint venture because it wanted to have a Bahamian partner. It indicated that the UK-domiciled port operator made the initial approach "for the management and operation of Prince George Dock" to the Government by itself.

"This company is considered the world's largest cruise port operator with a portfolio that includes 14 ports in eight countries, serving cruise liners, ferries, yachts and mega yachts," APD said of Global Port Holdings.

"Additionally, Global Port Holdings has connections with all the major cruise lines - Carnival, Royal Caribbean, MSC Cruises and so on. Desiring to have a Bahamian partner, they have approached APD to partner in the venture precisely because of the company's awarded and widely-recognised excellence in the maritime industry and publicly-headed leadership."

Michael Maura, APD's chief executive, revealed to Tribune Business last week that the company had "expressed interest" in Prince George Wharf's redevelopment as part of a strategy to diversify income streams away from sole reliance on cargo operations.

But the tie-up with Global Port Holdings, which operates the cruise ports in Singapore, Barcelona, Lisbon and Venice, was never disclosed until APD's annual report was released.

Explaining APD's rationale, Mr Maura told Tribune Business last week: "The Ministry of Tourism and the Ministry of Transport have expressed a desire to make improvements to Prince George Wharf," he told this newspaper. "APD has expressed its interest in this project and await project details.

"By diversifying APD's business, and expanding APD operations and services to the cruise industry, this would serve to reduce the impact on financial performance resulting from the occasional decline in cargo imports.

"The addition of a new revenue stream to APD also serves to distribute APD's cost of operations across both cargo and cruise, which potentially reduces the tariff on groceries and other core imports. This serves to lower the landed cost of goods in New Providence."

Mr D'Aguilar and the Government are especially eager to upgrade the downtown Nassau tourism product, with Prince George Wharf representing one of the main projects, given that it is the cruise industry equivalent of Lynden Pindling International Airport (LPIA) - the main gateway to the Bahamas.

The Minnis administration has also demonstrated an enthusiasm to privatise and outsource functions that can be better performed by the private sector, in a bid to reduce the Government's $430 million annual subsidies to state-owned enterprises (SOEs), and Prince George Wharf is an asset that fits into this strategy.

Global Ports Holdings' port assets are concentrated in the Mediterranean, apart from Singapore, and taking over Nassau's cruise port operations would represent its entrance into the Caribbean market - opening up the possibility to expand its reach throughout the region.

Nassau's cruise port, though, would likely be the most lucrative target given that some 3.521 million passengers called upon it in 2016 - a number far higher than rival Caribbean ports. For the year to August 2017, some 2.469 million cruise passengers arrived in Nassau, a 4 per cent increase upon the prior year's 2.373 million.

But, given that APD is 40 per cent owned by the Government, the latter is effectively 'negotiating with itself' on the proposal by the Global Port Holdings joint venture and other initiatives planned for the Arawak Cay port.

APD, meanwhile, said it was also exploring the possibility of establishing a liquefied natural gas (LNG) bunkering and distribution facility at its Arawak Cay site as Bahamas Power & Light's (BPL) fuel supply needs - and the demand for cleaner energy - evolved.

The BISX-listed port operator said initial projections suggested that such an LNG facility would boost its annual income by more than $650,000, and generate extra import volumes equal to 4,000 twenty-foot equivalent units (TEUs).

It added that 20 jobs would be created, with the extra income - as with the cruise ship venture - potentially diversifying revenue streams and eliminating the need to raise cargo tariffs, aiding Bahamian consumers when it came to retail prices.

"With the indication that the country was ready to move to LNG for electricity generation, and subject to the agreement by Bahamas Power & Light, the decision was made to advance discussions for an LNG facility at Nassau Container Port to distribute to the BPL Blue Hill generating plant via pipeline," APD's annual report said.

"In comparing the merits of traditional container cargo with LNG throughput, this thrust made good sense for several reasons. Establishing the LNG component is projected to add the equivalent of 4,000 TEUs to Nassau Container Port volumes, bringing an annual increase of over $650,000 to APD's income.

"This income could be compared to processing cargo for a new mega resort construction project each year," it continued. "This represents a highly desirable business development without capital intensive investment in new equipment and expanded container storage space, as compared to building a small compact unit.

"Moreover, incorporating LNG in the business mix is projected to add about 20 new jobs and obviate the need to raise tariffs, thereby subsidising the containment of grocery costs."

APD's plans mirror almost exactly the LNG supply proposal from New Fortress Energy, which the former Christie administration was on the verge of agreeing to until the May 10 general election intervened.

The Minnis administration elected not to proceed with the deal left for them, and BPL's new Board of Directors has recently issued a new tender or Request for Proposal (RFP) for fuel supplies for the electricity monopoly.

Explaining why Arawak Cay was a better LNG bunkering site for Clifton Pier, APD said: "Adding any new installations at the latter site can only destabilise the already severely compromised environment of south-west New Providence. No new additions will allow for the much-needed rehabilitation of that ecologically sensitive area that is so valuable to eco-tourism."

APD's annual report also confirmed that it has resubmitted its application to the Government to acquire 15 acres of land along its southern boundary, in a bid to "enhance security and ease of doing business at the port".

"If government accedes to the request, it is intended that the acreage be divided into three plots," APD said. "On one plot we will establish a facility to be staffed by Customs and the Road Traffic Department for processing and storing 1,000 vehicles. The vision is for a one-stop shop that gets the vehicle imports off the lot and properly licensed in a single, well-coordinated operation.

"The second plot is intended for building a highly-sophisticated Customs inspection facility to be modelled after the US Customs state-of-the-art installation at the Port of Miami. The goal is a comprehensive and thoroughly modern unit, with a focus on heightened risk assessment and risk management protocols to address fraudulent declarations and the detection and handling of illegal drugs and weapons contraband.

"The third plot will provide the opportunity to do a seasonal removal of excess equipment to increase efficiencies, for example remove chassis from out of the ISPS area. It is projected to take 12-15 months after build out to achieve benefits, and 18 months for full benefit."