By NEIL HARTNELL
Tribune Business Editor
THE Nassau Container Port (NCP) yesterday said it plans to allocate $7.5 million to capital projects and debt repayment, as it eyes diversification into cruise ship services.
Michael Maura, chief executive of port operator, Arawak Port Development Company (APD), told Tribune Business that had already "expressed interest" in the Government's plans to redevelop and upgrade the Prince George Wharf terminal.
He explained that expanding APD's services into cruise ship operations would also help to mitigate volatility associated with the Arawak Cay-based port's cargo volumes, the BISX-listed port operator having projected a 2.5 per cent year-over-year decline for its 2018 financial year following a record 2017.
APD's twenty-foot equivalent (TEU) container volumes were 13.35 per cent ahead of budget for the year to end-June, and Mr Maura said the port was also seeking to partner with Bahamas Customs and the Government to boost the latter's revenues, crackdown on criminals and improve the import process.
Subject to government approval, the APD chief said it planned to develop a Vehicle Terminal as a 'one-stop shop' where imported automobiles could be licensed and inspected. And the proposed Cargo Inspection Facility would permit in-depth examinations to take place at the port, clamping down on smuggling and tax evasion.
Outlining APD's plans to Tribune Business, Mr Maura said: "We plan to allocate approximately $7.5 million towards the retirement of debt and planned capital expenditures, with the remainder supporting cash reserves, potential new business development and shareholder dividends."
While the APD board has yet to determine the size and timing of a dividend, Mr Maura said the port operator continued to target new business opportunities to increase earnings and shareholder value.
"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 Maura disclosed that APD's TEU import volumes for the 12 months to end-June 2017 exceeded projections by more than 8,000, coming in at 70,277 compared to 62,000. They were well ahead of 2016's 61,779.
"The increase in cargo volumes were driven primarily by Hurricane Joaquin and Matthew-related construction materials; vehicle imports of 16,864 compared to budget of 12,192 and prior year of 11,975," Mr Maura said.
"The remobilisation of the Baha Mar project also contributed to the increase over prior year. APD budgeted conservatively for 2017 due to little GDP growth and the stalled Baha Mar project. As a practice we do not budget for post-hurricane cargo volumes."
Adopting a conservative approach to APD's current financial year, Mr Maura added: "As we look at 2018, we have budgeted import TEUs of 68,500, which represents a 2.5 per cent reduction in volumes. We will also not benefit from the Baha Mar bad debt and extraordinary port storage enjoyed in 2017."
Besides Prince George Wharf, Mr Maura said the port operator was also examining projects closer to home. "Subject to Government approval and finalising the details, the company will develop a Vehicle Terminal to include Bahamas Customs and Department of Road Traffic offices to provide the import business community - and public - with the ability to both clear and license vehicles at the port as a 'one-stop-shop'," he explained.
"Subject to government approval and finalising the details, as part Bahamas Customs' on-going efforts to combat criminal activities, APD will construct a Cargo Inspection Facility. This facility will serve as a substantive component of Bahamas Customs' enhanced risk management programme.
"Freight containers, vehicles and general cargo designated for a comprehensive examination will be processed by this facility while remaining at the Nassau Container Port," Mr Maura continued.
"It is contemplated that this facility will contain modern contraband detection equipment. The introduction of this facility to the trade process is intended to eliminate existing delays and procedure for recognised firms which have a history of compliance and transparency.
"The investments in Customs and Road Traffic facilities directly influence legitimate trade and enhance Customs' contraband detection efforts. Combating illegal trade directly supports legitimate business and economic growth."
Turning to APD's financial performance, Mr Maura said the company beat 2017 budget expectations by 15.2 per cent and 8.1 per cent, respectively.
"Total revenues were $32.5 million compared to budget of $28.2 million and prior year of $27.1 million, driven by the increase in import volumes and unbudgeted Baha Mar storage-related revenues of $700,000," Mr Maura said.
"Total expenses for fiscal year-ended 2017 were $15.9 million compared to budget of $17.3 million, and prior year of $17.2 million. The reduction in expense compared to prior year was in large part due to bad debt recovery of $700,000, directly related to warehouse rent collected from Baha Mar, and expense reductions compared to prior year of approximately $370,000 in repairs and maintenance."
Mr Maura said the latter primarily related to the Arawak Cay port's cranes, plus a fall in legal and professional fees of about $320,000. "In 2016 we would have incurred consultancy expenses relative to our company ICT systems, legal work relating to Baha Mar, and tax advisory services," he explained.
The APD chief also confirmed that the port operator "does not charge for hurricane relief items shipped to Nassau [that are] consigned to NEMA and other qualifying relief organisations. The revenues derived from hurricane-related imports would have been driven primarily by insurance settlements".