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Growing Interest in Puerto Rico’s Cruiseship Docks

By on December 21, 2018

Editor’s note: The following originally appeared in the Dec. 20, 2018 – Jan. 2, 2019, issue of Caribbean Business.

The 20- to 30-year public-private partnership (P3) that includes $360 million to $500 million in private capital investment and management of Puerto Rico’s cruiseship ports entered the final stage when Global Ports Holding, Puerto Rico Cruise Terminals Partners and San Juan Cruise Terminal Partners were announced as qualified consortiums for this full-concession agreement.

“Qualified bidders were notified and, on Nov. 30, were given access to the requests for proposal [RFPs]. It contains financial, technical and operational elements, among others. The RFP process lasts until March 2019,” said Ports Authority Director Anthony Maceira Zayas. Although he recognizes this concession will have a positive effect on the visitors’ economy, he could not provide an estimate of the economic impact they expect to obtain from this lucrative business.

“This figure will be known at the time of receiving the proposals. However, the estimated capital investment is over $300 million. This would be a combination of private investment and recovery funds,” said Maceira Zayas, who explained that he works hand in hand with the Central Office of Recovery, Reconstruction & Resilience (known as COR3) to handle the arrival of millions of dollars to repair much of the Port’s system in Puerto Rico, which was battered after the passage of hurricanes Irma and Maria.

(Courtesy)

“To better manage the maritime transportation system as a whole and make ports more attractive to maritime businesses and investors, maritime industry experts’ input indicates the need for consolidating ownership and oversight of the [island’s] nine main ports,” reads both the draft and final version of “Transformation & Innovation in the Wake of Devastation: An Economic & Disaster-Recovery Plan for Puerto Rico,” the document that seeks $906 million in federal funds to repair ports in San Juan, Peñuelas, Guánica and Fajardo.

“The people of Puerto Rico are wonderful, but the inept politicians are trying to use the massive and ridiculously high amounts from hurricane / disaster funding to pay off other obligations. The U.S. will NOT bail out long-outstanding and unpaid obligations with hurricane-relief money,” tweeted President Donald J. Trump on Oct. 23.

Days later, Axios reported that White House officials have told congressional appropriators and leadership that the U.S. president does not want to give Puerto Rico any more federal money for its recovery from Hurricane Maria. “This is because he claims, without evidence, that the island’s government is using federal disaster-relief money to pay off debt,” said the story that was published Nov. 11 by Jonathan Swan. Maceira Zayas did not want to comment directly about these public assertions during his interview with Caribbean Business.

“The process of requesting recovery funds is a continuous one that we are working through COR3 on a daily basis. In addition, a few weeks ago, the executive director [Omar Marrero] was in [Washington] D.C. with the director of the P.R. Federal Affairs Administration, …Carlos Mercader discussing [among other subjects] the issue with port facilities,” he replied.

Last September, Maceira Zayas assured that his public corporation was “working on a legal process and mathematical formula, so once the federal funds begin to be received, the private entity may be able to function as a grant manager.” This way private investment is reduced and Ports’ income from the concession to manage the piers and surrounding areas is greater.

“The detail of the formula is part of the RFP that for the moment is only available to participants,” said the Ports director, who could not be precise about the amount of money received from the federal government, if any.

Puerto Rico Gov. Ricardo Rosselló and President Donald Trump (Courtesy)

Redundancy from La Fortaleza?

Although the proposed P3 model is a full concession, which will provide the proponent that obtains the agreement absolute control over the cruiseship ports and their surroundings, the First Lady of Puerto Rico, Beatriz Rosselló, announced Oct. 5 a million-dollar investment to improve the appearance of the San Juan docks under La Fortaleza Es Para Ti program.

“We have one of the best tourist destinations in the Caribbean and, for the next high season, after the passage of Hurricane Maria, the dock area will be the launching point for tourism in Old San Juan. We are focused on improving the visitor experience and injecting life into the business. The lighting projects have already started thanks to an alliance with the Puerto Rico Electric Power Authority and the Tourism Co.,” Rosselló explained in a press release.

Is this a process unlinked from the P3? Caribbean Business asked.

“It is not a detached process; quite the opposite. The renovation of our docks is a short-term solution that seeks to improve the first impression our tourists receive in what the [P3] is running. The works carried out by Ports are accounting for the [P3] process to avoid dislocations,” said Maceira Zayas, who could not say how much money has been invested in these improvements and to what effect, if any, this construction has had on the business model selected for the P3 project and its final value.

On Dec. 5, Gov. Ricardo Rosselló Nevares announced that Puerto Rico was recognized by CNN Travel with the Critics Award for Cruises for the best base port in the United States.

“This award is evidence of the great effort made by the Ports Authority and the Tourism Co. to boost the tourism sector and the economy that comes from this industry,” said the chief executive, who forgot to mention his wife’s efforts to convert Old San Juan into “the door to Puerto Rico.”

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