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Cruise Lines Miss Out On Port Project

How the new waterfront could look, according to Global Ports Holding’s plans.

How the new waterfront could look, according to Global Ports Holding’s plans.

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet minister yesterday said he wanted to increase passenger spending in Nassau by at least “20-30 percent”, urging cruise lines “not to be fearful” after their port bid was rejected.

Dionisio D’Aguilar, Minister of Tourism, reassured the cruise lines they will not face excessive port fees or berthing/itinerary disruptions as a result of the government selecting Global Ports Holding’s rival $250m bid as Prince George Wharf’s preferred operator/manager.

He told Tribune Business that concerns over the potential conflict of interest resulting from the cruise lines owning the Nassau port operator, while also being its main customers, were “the main reason” why the industry’s alliance with the Bahamian investor group, Cruise Ports International, was turned down by the government.

Comparing such a situation to “the airlines running Lynden Pindling International Airport”, Mr D’Aguilar said questions would inevitably arise at times as to whether the cruise lines were acting in their - or the Nassau cruise port’s - “best interests”.

He added that selecting the cruise line-backed bid would also have been “unacceptable to the Bahamian people”, given rising concerns about whether it has too much power over The Bahamas given that the majority of the economic benefits appear to be retained by the industry itself.

Asked why the government selected Global Ports Holding’s offer, Mr D’Aguilar told this newspaper: “We thought it was far more transformative, far more iconic. We felt this proposal allowed for, offered the best possibility to as many hard-working Bahamians as possible to become shareholders.

“It’s a concern of every Bahamian to have the cruise companies running your port. It’s like the airlines managing the airport. It’s concerning. Are they looking out for their best interests or the best interests of the port? That was the main reason. We don’t think having the cruise lines run the port would be acceptable to the Bahamian people. I don’t think they’d buy into that.”

Mr D’Aguilar, though, immediately moved to reassure the cruise industry that he was not trying to diminish its importance. And he emphasised that their Nassau business and calls would not face any disruption, financial or otherwise, once the government concludes management/operator agreement terms with Global Ports Holding.

He added that the government would “retain” certain rights under any deal with the UK-listed, Turkish-headquartered port operator, including berthing policy and the pricing of any passenger facility fee (PFF) charges that will provide the revenue stream necessary to finance the Nassau cruise port’s redevelopment and repay investors/financiers.

“We’ve recently allowed Disney to go into south Eleuthera, and the Carnival deal in Freeport,” Mr D’Aguilar said in reference to the cruise lines’ private ports and islands. “So we recognise the importance of the cruise companies. They are an integral player, and we will give them assurances not to be fearful.

“The Bahamian government retains the rights to the berthing policy. We will give the legacy cruise companies preferential treatment and, on the pricing, they’re the customer and we will be very mindful of their comments. The government will not abdicate in totality it’s right over the setting of passenger facility fee charge (PFC).”

The cruise ships currently pay $18 per passenger “head tax” to the Public Treasury, now that rebates ceased from June 30 last year, plus an estimated $3-$4 per head in docking fees. This takes the total levy imposed on them to around $21-$22 per passenger.

“The new charge will not be materially off that,” Mr D’Aguilar told Tribune Business. “The Government will still get its $18, and there will likely be an incremental charge or increase to fund this substantial investment. Every proposal proposed to increase that charge.”

Mehmet Kutman, Global Ports Holding’s chairman, yesterday pledged that the cruise port’s management outsourcing would result in no change to the government’s $18 per head tax take.

And he suggested that the cruise lines typically overplayed the issue, pointing to financial filings with the US Securities & Exchange Commission (SEC) which showed that port charges typically accounted for just 1.5 percent of their annual costs.

“These port charges are being made a big issue by the cruise lines but they shouldn’t be,” Mr Kutman said. He added that Nassau “deserves” to be charging as high or close to Havana, a port Global Ports Holding also manages, and which it wants to get to a $75 fee by 2022.

The Global Ports chair said Nassau fees would not go so high, but argued that The Bahamas as a destination was generally being “undersold” when set against the quality of its tourism product. Only the air fares, Mr Kutman added, were expensive.

Mr D’Aguilar reiterated that port-related fees and charges were “a very sensitive issue” for the cruise lines, and any changes in Nassau would only be undertaken after a period of consultation and “benchmarking” against what is charged by rival Caribbean ports.

“We will ensure it remains affordable, reasonable and give them [the cruise lines] advance notice if there are to be increases, which will be benchmarked with other destinations,” the minister said. “We will have a passenger facility charge in much the same way as the airport, but it will not be significantly greater than what it is now.”

Expressing hope that the Nassau cruise port’s “transformation” will yield economic benefits for all downtown merchants and vendors reliant on the sector, Mr D’Aguilar said he was aiming to boost per capita passenger spending beyond the current $70-$100 level.

“Obviously we would like to increase that 20-30 percent or even higher,” he said. “Another thing we need to take into consideration, but which we seem to ignore, are the crew of the ship. With 3.6m passengers coming to Nassau every year there are probably 2.5m crew.”

Mr D’Aguilar, arguing that The Bahamas must be “ingenious and creative” to get cruise ship crew “off the boat”, said many were likely to currently “talk down the destination”.

Global Ports Holding, which effectively kick-started the bidding battle to take over Nassau’s cruise port through the “unsolicited” management proposal it submitted to the Government last year, had to see off two rivals - the $125m offer by the Port of Nassau Partnership, featuring an alliance between Bahamian investors and the cruise lines, and the $225m proposal from a consortium headed by Bahamian investment house, Providence Advisors.

Tribune Business understands that the choice eventually boiled down to the duelling Global Ports Holding and Port of Nassau Partnership bids, with both asked to give Cabinet presentations the week before last.

Besides the “conflict” over any cruise line involvement/ownership of Nassau’s cruise port manager, this newspaper was told that another concern related to the fact that the Port of Nassau Partnership’s $125m bid was half the investment value of the sum Royal Caribbean alone is pumping into its private island, Coco Cay.

As a result, there were fears that the cruise line-backed bid would do “just enough” to keep Nassau a viable port of call - something that fell short of the “transformation” deemed necessary by the Government and downtown stakeholders to preserve the city’s cruise tourism competitiveness.

Ed Fields, the Downtown Nassau Partnership’s (DNP) chairman, hailed Global Ports Holding’s selection as “a great day for The Bahamas” and compared the cruise port’s redevelopment to the overhaul of Lynden Pindling International Airport (LPIA) one decade ago.

“It is a great day for The Bahamas, and having had the privilege of serving on the LPIA board when it oversaw the NAD (Nassau Airport Development Company) development, this announcement can be seen in a similarly positive light with similar expectations,” Mr Fields said.

“It will remove from the capital the constant criticism with respect to the experience at Prince George Wharf, and will become both the gateway into the city and a significant catalyst in its redevelopment.”

He added: “The DNP, first and foremost, is extremely pleased that, at long last, a decision has been made to move forward with the port development.

“We are also pleased that Global Port Holdings was selected based on what we see as their vision for the port’s development and its integration into the overall revitalisation of downtown.

“Global Ports Holding reached out to the DNP, as they had done with an array of stakeholders, even prior to the RFP being initiated - when they offered an unsolicited proposal - and we are comfortable that they will be good partners in the redevelopment of downtown Nassau.”

The government’s political Opposition were much more muted in their reaction to the Global Ports Holding announcement, adopting a “wait and see” approach until all details of the agreement were made public.

Fred Mitchell, PLP chairman, in what he described as “initial reactions” said: “We need to see the absolute details.” He urged that there be “no participation” from any shareholder in Arawak Port Development Company, the BISX-listed container port operator, although he did not make clear whether this just referred to owners of the shipping companies that hold a collective 40 percent of its equity or also included the 12,000 Bahamians that have another combined 20 percent.

Urging that it emulate “the NAD model”, and that there be “no sale of the port” itself, Mr Mitchell also said that “Bahamians at large must have shares and the financing provided to buy the shares.”

He added: “Bahamian vendors are a must, and appropriate access for taxi drivers and other Bahamian transport interests.” Almost all Mr Mitchell’s concerns were addressed at yesterday’s unveiling of Global Ports Holding’s selection.

Comments

realitycheck242 1 year, 5 months ago

"Global port holding and CFAL are designing a fund that will own 49 percent of the shares in the port. We are keen towards ensuring that local people can buy into this fund. There is a minimum subscription of $1,000, so we are going to be providing interest free loans of up to $10m for local people to get a stake in the port.”

Save your pennies people now is your chance to get lil peace of the port pie and stop complaining

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TheMadHatter 1 year, 5 months ago

Sounds good. Another thing that needs to be seen to be believed though. We will more likely see an article 2 months from now that say the offering has been oversubscribed and sold out without any prior article saying "now you can come and buy your shares".

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Well_mudda_take_sic 1 year, 5 months ago

You got it! As for CFAL forming a fund though which 49% ownership will be offered to the public, one only has to ask: Why must ownership for the Bahamian public be through a CFAL controlled fund? I will tell you why. CFAL intends to skim an enormous fund management fee off the top of the dividends paid to the minority shareholders, i.e. the Bahamian public. LMAO

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pingmydling 1 year, 5 months ago

It has been suggested that 4 'c's adventure should be getting the contract.

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John 1 year, 5 months ago

this is neither funny nor appropriate!

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DWW 1 year, 5 months ago

Actually I think it is somewhat amusing

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TheMadHatter 1 year, 5 months ago

Amazing. This is the first serious piece of good and sensible news out of this government. Congratulations and kudos to the the Minister.

My face gah hurt by tonight though, cause i gah be slapping myself all day to make sure i'm awake and not dreaming.

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bogart 1 year, 5 months ago

LOOKING DEAD GOOD....,!!.....MINIMUN PORE BAHAMIANS....OPPORTUNITY TO MAKE ...MINIMUM...SUBSRRIPTION....$1,000.....REALLY CANT BEAT DAT DEAL....really......"Near 50% of Bahamas 'Cannot Make Ends Meet'"...Tribune Friday, May 18,2018........Central Bank an report...just prior tp 4.5% VAT increase........'VAT collection up in govt 'snapshot'" Nassau Guardian Tuesday, October 30,2018......Bahamians some 5,400 lectricity off....."UNEMPLOYMENT CLIMBS" "Jumps from 10% to 10.7%...More than 25K without jobs" Nassau Guardian Tuesday, Jamuary 22,2019....PORE people gets worser an worser....salaries dont increase....regressive VAT....pore porer...more Charitables bless dere hearts to be helping pore people 70,000 trying to find food ..thankful.....stay alive....by Charities....3,500 meals grateful by pore... weekly...charitaries....volunteers....richly rewatded in dere hearts.......but lil porer in dere pockets helping pore............. plus seeking hungry bellies weekly... SEEMS OBVIOUS ....DIS CAN FOR...WE BE PORE BAHAMIANS OVA DA HILL....SOUTH SIDE..CAN MAKE DESE .........EXCELLENT INVESTMENTS IN DERE BIRTRIGHT...........ON DA ODDER SIDE OF DA HILL..PRINCE GEORGE ....$1,000 investment ...easy !!!

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MaryMack53 1 year, 5 months ago

This is the best news we've heard all year. Great investment, good track record, and proven success. Our government is truly locking a deal for our future generation. This is what I call Sustainability.

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Well_mudda_take_sic 1 year, 5 months ago

And why hasn't Neil Hartnell nor D'Aguilar bothered to remind us who exactly are the majority (controlling) shareholders of Global Ports Holding? LMAO

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John 1 year, 5 months ago

Asked why the government selected Global Ports Holding’s offer, Mr D’Aguilar said: “It was far more transformative, far more iconic. We felt this proposal allowed for, offered the best possibility to as many hard-working Bahamians as possible to become shareholders.

Just hope that no measures will be implemented to further restrict the access/use of the downtown/port area by Bahamians. And hopefully, the plans will incorporate the local 'peddlers hair braiders/ etc in a regulated and controlled manner that is complementary to the transformation that is expected to take place and not exclude Bahamians to the contrary. As ships grow larger and larger and become more self-sustaining, efforts must be made to not only draw more passengers off the ships but get them to spend more and ensure that The Bahamas and the Bahamian peoples dem benefit from these thousands of voyages to the country every year. An industry that is putting Billion$ in other people's pockets.

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concerned799 1 year, 5 months ago

Why must the presence of the cruise ships be taken as a "given" to begin with? Our only options are what "form" of cruise tourism to permit?

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pingmydling 1 year, 5 months ago

John--- must be the baptist cause he sure is holier than thou. When did you get to decide whats funny and appropriate? -- Protect us from the thought police.

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John 1 year, 5 months ago

still not funny or appropriate.. and that's based on common sense and decency..no thought police needed or baptism...simply common sense, but hey maybe you don't have that characteristic..common sense.

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DWW 1 year, 5 months ago

If you don't laugh at the absurdity of life you are probably psychopathic or crazy or both

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Islandguy 1 year, 5 months ago

And the money tree ripe and dropping fruit on govment. PM s away and the mice they play.

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concerned799 1 year, 5 months ago

Would it not be simply better to just commission a study to see if we were better of canceling all cruise based tourism and then channel tourism revenues and visitors toward land based hotels (as there would then be no cruise ship product in the Bahamas)?

How have so many years passed without everyone being able to see what the "alternative" is for the Bahamas? Why on Earth would the cruise companies want to surrender more dollars to shore and lose out on their end? That is also a huge conflict of interest and thus why they should all be kicked out post haste in my view.

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DWW 1 year, 5 months ago

Because the vast majority of the world doesnt want authentic or new they want McDonalds and disney spoon fed. That's why. Commerce is market driven not by divine intervention. People want safe simple vacations where they dont have to think and hurt their head.

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pingmydling 1 year, 5 months ago

Hail to the Baptist, promulgating Orwell's "1984". Sense is definitely not common in your neck of the woods.

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realitycheck242 1 year, 5 months ago

The land area they plan to reclaim in this photo can be filled in with the debris from the demolition of the Post Office building and the Clarence A Bain building

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John 1 year, 5 months ago

The Pointe also plans to dredge to make a harbor/marina so that will be additional landfill.

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BONEFISH 1 year, 5 months ago

The government acceptance of the proposal of Global Ports Holding is one of their best decisions to date. Their proposal was the best of the three in my opinion.

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realitycheck242 1 year, 5 months ago

Agreed ...the philosophy of a PLP government would never have allowed this transformation to take place.

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DWW 1 year, 5 months ago

I suspect fweddy missed out on the arawak cay deal and is maybe bitter like me for making a stupid decision

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