Saturday, December 5, 2020

Sources: Global Port Holdings selected in Puerto Rico cruise ship docks deal

By on December 26, 2019

With the signing of the contract with Global Ports Holdings, Puerto Rico would become the first U.S. jurisdiction in which the company becomes responsible for the reconstruction, operation and administration of its cruise docks. (Courtesy)

Negotiations for the concession of the operation and reconstruction of the cruise docks in San Juan continue as planned with the preferred proponent, although the Tourist Alliance will be included as an advisory committee next week, Public-Private Partnerships Authority (AAPP for its Spanish acronym) Director Fermín Fontánez announced.

Caribbean Business sources confirmed that the selected preferred proponent is Global Ports Holdings, a company that submitted to the government an unsolicited proposal to repair, design, build, finance, maintain and operate the docks for a 30-year period.

The infrastructure investment the company would have to make should amount to $250 million, based on a study conducted by the United States Maritime Administration (MARAD).

In its first stage, the company must rebuild the structure of piers 11 and 12, which have been closed for a decade because of their deterioration, and build a new one that can be used to dock cruise ships that are not under a preferential contract. In addition, it must repair the Pan American dock structure that is currently being used by Royal Caribbean cruise line, since its foundations are in an advanced state of disrepair.

On October 21, this newspaper reported the selection by the AAPP of a bidder among the three consortia that competed for the contract: Global Ports Holdings, SACYR and Ports of America. At that time, the agency did not reveal the name of the company selected because the Public-Private Partnerships Act states that this information must be kept secret until the negotiations are over.

In a radio interview (Radio Isla) Thursday morning, when Ports Authority Director Joel Pizá was questioned on whether the negotiations with Global Ports Holdings continued, he answered in the affirmative and did not deny this was the selected company. A second Caribbean Business source with knowledge of the negotiations confirmed that Global was the selected proponent.

With the signing of the contract with Global Ports Holdings, Puerto Rico would become the first U.S. jurisdiction in which the company becomes responsible for the reconstruction, operation and administration of its cruise docks.

Global Ports promotes itself as the largest cruise ship operation company in the world with a presence in 19 ports at 11 countries (the Adriatic and Mediterranean seas, Singapore, Barcelona, ​Málaga, Spain and Lisbon, Portugal). In the Caribbean, the company operates the port of Havana, Cuba; Nassau, Bahamas and Antigua.

Earlier this week, Gov. Wanda Vázquez met with members of the Tourism Alliance, a group that represents several of the main sectors that would be affected by this concession. The meeting concluded with the understanding that the signing would be put off until the contracting parties included the recommendations of the Alliance in the agreement.

Fontánez clarified that the negotiations were delayed for weeks, so it was not possible to sign the contract with the selected company before the end of the year, as was announced with the selection of the preferred proponent.

“The status at this time is the same, we are in negotiations with the preferred one. We have met with different groups individually and we have pressed in that effort in the past few weeks,” the official said.

He also stated that “as part of the policy of dialogue and transparency of the governor,” it decided to incorporate the Alliance as an advisory committee to provide recommendations that allow the final contract “to be the most beneficial for Puerto Rico.”

Labor Secretary Briseida Torres is responsible for coordinating the committee that should have its first meeting next week.

“The interest is that they (the Alliance) can see what is being negotiated as to what affects them. They are not necessarily going to sit down and negotiate with the other party, it is an advisory committee,” Fontánez said .

Daphne Barbeito, a cruise sector activist and spokesperson for the Alliance, told Caribbean Business on Tuesday that she acknowledged that Fontánez had been meeting individually with several sectors to listen to their concerns.

“We have been told that the concerns were being addressed but the lack of credibility that this administration has created and [because] this is such a serious issue, with such an important impact for the island, that we want to ensure that what results at the end is beneficial for everyone,” Barbeito said. At the same time, she stressed that if at the end of the process they understand that the agreement reached does not meet their expectations, they will communicate this to the public.

Barbeito said that contrary to the negotiation of the Luis Muñoz Marín International Airport concession to Aerostar, nothing forces the members of the industry to be heard this time. In contrast to the airport concession, in which there was advanced knowledge of how much the company would invest, there are no clear numbers in the case of the cruise dock negotiations.

No fixed date

As to when they expect to finish the process, Fontánez explained that currently “there is no expectation of time.”

“The negotiations have been delayed and we are not in a position to sign, there are still cardinal points on the table,” he said.

According to the Public-Private Partnerships (PPP) Act, once the negotiations are concluded, the PPP Committee must review and approve the agreement, and then submit it to the Fiscal Oversight and Management Board (FOMB). After being endorsed by the fiscal entity, the final approval by the Alliances Committee is produced and presented to the governing boards of the Ports Authority and the PPP Authority for their endorsement. As soon as the agreement is ratified by these entities, it is delivered to the governor for her signature.

“That is a process that could take 30 to 60 days,” Fontánez said.

Project segmentation ruled out

On the position of cruise lines like Royal Caribbean that oppose the transaction, Fontánez explained that the possibility of dividing the project so that Global obtains the concession of piers 11 to 14, which currently are not under exclusivity contracts, is not on the negotiating table .

“That was proposed at the time and the cruise lines showed no interest. Even now, they have not shown interest in making the necessary investment,” the official stated.

A need and convenience study based on the unsolicited proposal from Global Ports indicates that it is preferable for Puerto Rico to have only one operator for all docks.

The study revealed that the structural condition of all the cruise docks in San Juan Bay requires a multi-million dollar investment to guarantee their use.

“For the government, that investment in the infrastructure of the docks is essential,” he said.

Fontánez pointed out, however, that the concerns of the tourist and commercial sector of Old San Juan must be addressed in the contract that will be finally signed.

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