Stakeholders question Puerto Rico port’s public-private partnership

An aerial view of San Juan Bay’s cruiseship and cargo ports three days after Hurricane María struck Puerto Rico, Sept. 24, 2017. (CB photo)

Cruise association head, travel industry rep call for transparency

Editor’s note: See page 4 of the Sept. 5 issue of Caribbean Business for the full report.

SAN JUAN — The company that won the concession for the cruiseship piers at the San Juan ports is expected to be announced any day now, but the founder of travel agency Cruceros To Go, Daphne Barbeito, said that for many members of the visitor’s economy, important questions remain unanswered. 

“This privatization [of the piers] wrongly managed, without the due protection on the part of the operational services that are provided locally, is going to have dire consequences from the porter and artisans, to the travel agents and the Old San Juan merchants,” said Barbeito, the former chairwoman of the American Society of Travel Agents, Puerto Rico and U.S. Virgin Islands Chapter, and member of the Puerto Rico Hotel and Tourism Association board as well as of the Confederation of Tourism Organizations in Latin America.

“This is going to have an [enormous] impact, and no one knows what is in the document,” she added.

Barbeito argued that the first problem she sees is a lack of transparency. This includes not being able to see the request for proposals issued by the Public-Private Partnerships Authority (PPPA), and the Tourism Co. (PRTC) not meeting with travel agents, cruise lines, Old San Juan business owners or tour operators.

Barbeito’s grievances are similar to those of the Florida-Caribbean Cruise Association president, Michele Paige.

“Last year, the Government of Puerto Rico initiated a public private partnership procurement (PPP) process for the redevelopment and operation of the San Juan cruise piers. The FCCA welcomes the government’s initiative to both improve and grow the cruise facilities in San Juan to ensure competitiveness in the market; however, the FCCA finds it unfortunate that the PPP process has seemingly completely bypassed cruise lines’ participation on the design of future port improvements, despite cruise lines’ port development and operations experience,” said Paige, who heads the organization that represents the cruiselines that roam the Caribbean.

Members of the tourism industry were only shown the request for qualifications, which Barbeito said left important information out. She would like answers on who is going to serve as intermediary for the cruiselines and how prices would be affected, and stressed that changes, especially in the competitive Caribbean market, could impact the number of cruiseships that dock in San Juan. 

“This is a fact. The first ones that are going to be affected are the transit [cruises]. As we know, transit is very flexible,” Barbeito said. “The transit side is going to have an immediate effect. The homeporting side is going to take a bit more time because the schedule is done two years prior and entails other logistics. [Changes in] homeport are going to take longer but, without a doubt, it is going to see and impact,” Barbeito said.

For her part, Paige struck a more conciliatory tone, and argued that there was still time to seek the cruiselines’ input and integrated it in the P3 process. 

“The FCCA does have a long-standing and close relationship with Government and Authorities in Puerto Rico, and our Member Lines, which represent the vast majority of the cruise traffic in San Juan, are interested in not only maintaining the level of business in San Juan, but also are exploring avenues for growth in deployments,” the FCCA president said.

She added, “To ensure the cruise lines are able to continue calling successfully and growing in Puerto Rico, it is vital that they have from the Port Authority and new Port Operator a continued direct channel of communication with Government to communicate cruise lines’ port infrastructure requirements and the requirements to promote a better guest experience, a guarantee with the stability and reliability in future port fees including freedom to select service providers, proper maintenance of the cruise facilities, and the safe and efficient movement of cruise guests around the destination.”

As a travel agency owner, Barbeito also focused on her industry and assured changes would impact the about 200 agencies certified in Puerto Rico. She argued that beyond tourism-related business, the concession could adversely affect the quality of visitors’ experience. 

Central to the concern is the possibility that the awardee to manage piers 1,3 and 4 and 11-14 would contract a tour operator that would then have a monopoly, a problem the San Juan ports has had in the past. Also, tourism stakeholders fear changes to the port’s infrastructure that could dissuade tourists from venturing outside the pier area. As an example, Barbeito mentioned ports that are arranged like shopping malls, with stores and restaurants, rather than encouraging tourists to explore the destination. 

When questioning the soundness of privatizing the San Juan piers to pay for Port Authority debt, Barbeito mentioned the failed privatization of the Mayagüez ports, which had to be reversed.




Growing Interest in Puerto Rico’s Cruiseship Docks

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.”