The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Arawak Port Development Company (APD) is projecting a 40.2 per cent net income increase for its 2015 financial year, while raising security and tax evasion concerns over Potter’s Cay and Family Island ports.

The Nassau Container Port’s BISX-listed operator used its 2014 annual report to forecast a strong financial year for its shareholders, projecting that revenues will also increase 8.1 per cent year-over-year for the 12 months to end-June next year.

Revenue for the first two months of APD’s 2015 financial year was already trending in line with expectations, even though container throughput volume at Arawak Cay was 258 units behind projections.

However, APD also warned that the absence of “proper border security protocols” at Potter’s Cay, together with the practice of clearing imported cargo destined for Nassau at Family Island ports - rather than at Arawak Cay - created an increased risk of “fraud and smuggling”.

In particular, APD suggested there was growing evidence that weaker security measures at Potter’s Cay “is a direct contributor to the high crime rate in New Providence”, harming the tourism industry.

Still, the financial projections will likely make pleasant reading for APD’s shareholders, 20 per cent of whom are Bahamian institutional and retail investors.

For their company is projecting that net income for the 2015 financial year will increase by almost $1.5 million over the previous period, breaching the $5 million barrier for the first time.

“For the 2015 fiscal year, we are forecasting gross revenue of $27.844 million or 8.1 per cent over the prior year actual revenue, while net income is projected to be $5.07 million or $1.455 million over the 2014 actual net income of $3.616 million,” APD told its shareholders.

“On June 8, 2014, we had our first rate increase since commencement of operations, with landing fees increasing from $120 per TEU [twenty-foot equivalent unit] to $148 per TEU.

“Our TEU volumes are currently about 258 TEUs under budget as at August 31, 2014. However, we are optimistic of increased project cargo volumes this year. Our total revenue as at August 31, 2014, is ahead of budget by $382,000 or 8 per cent. Total expenses for the aforementioned period are flat against budget.”

Putting container throughout volumes into context, APD said TEUs passing through Arawak Cay for the first two months of the financial year - to end-August 2014 - were 2.16 per cent behind projections.

Looking further ahead, APD added that it expected to complete construction of a Bahamas Electricity Corporation (BEC) substation at Arawak Cay this financial year, while Customs is expected to rent warehouse space at its Gladstone Road Freight Terminal (GFT).

The BISX-listed port operator said that its minimum annual rent payment to the Public Treasury for 2015, based on 50,000 TEUs at $40.94 per container, will be $2.047 million.

Detailing the common interests shared by the Government (a 40 per cent shareholder in APD) and itself, the port operator unveils several proposals in its annual report that it believes will maximise revenues for the Treasury and its own “inherent value”.

To “maximise cargo volume throughput at Nassau Container Port in order to maintain a port tariff at its lowest level”, APD urges that all international cargo inbound to New Providence should be first landed - and cleared - through its Arawak Cay facility.

Explaining why, APD’s 2014 annual report says: “During the year we were challenged with foreign-origin cargo circumventing Nassau Container Port.

“Goods shipped from Florida by sea were cleared in a Family Island while en route to Nassau, avoiding Nassau Container Port and thorough Customs screening.

“Additionally, bulk auto carriers are permitted to berth at Prince George Wharf and discharge an estimated 4,000 vehicles annually, avoiding Nassau Container Port security inspection and fees. These recurring events have been communicated to the Government over the past year.”

APD said permitting New Providence-bound cargo to be cleared through a Family Island port before coming to the capital “unintentionally encourages illegal activity”.

Requiring all such cargo to go through APD’s port, it added, would “address fraud, revenue leakage, smuggling threats and realise maximum return on investment from Bahamas Customs cargo inspection systems”.

And, when it came to Potters Cay, APD called for Customs to require a cargo manifest from all ships, plus adopt border security protocols. This, it added, would further “reduce opportunities for fraud and smuggling”.

“While the majority of cargo represents legitimate trade, some persons use mailboats to tranship new goods from Family Islands, a process of which vessel operators may be unwitting,” APD said. “A manifest would alert Customs/Royal Bahamas Defence Force to potential fraud and other criminal activity.

“The Bahamas is dependent on tourism, the progress of which is, in turn, dependent of the perception of safe destination environments. Ports lacking access and cargo inspection controls provide criminals with easy access to weapons, ammunition, money and drugs, which fuel crime.

“There is much to suggest that the absence of effective security at Potters Cay is a direct contributor to the high crime rate in New Providence that is inimical to tourism growth and sustainability.”

APD also urged that transit sheds outside its port facilities be closed to maximise the effectiveness of Customs’ resources, while Family Island ports receiving cargo-carrying vessels had to comply with International Ship and Port Security (ISPS) standards.

APD said this was “critically needed” in the Family Islands to “mitigate the risk of contraband entering” the Bahamas through weak maritime and border controls.