The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government plans to complete a formal bid document for outsourcing management of Nassau’s cruise port within the next two to three weeks, a Cabinet minister has revealed.

Dionisio D’Aguilar, minister of tourism and aviation, confirmed to Tribune Business that a formal Request for Proposal (RFP) will be issued to transform Prince George Wharf into the cruise tourism equivalent of Lynden Pindling International Airport (LPIA).

Given that the downtown Nassau dock acts as “the gateway for 3.6 million” cruise visitors per year, Mr D’Aguilar said it needed an overhaul comparable to LPIA under the Nassau Airport Development Company’s (NAD) management, which had “not cost the taxpayer a dollar”.

He added that private investors and capital were essential to finance improvements to Nassau’s cruise product, with the Government viewing upgrades to Prince George Wharf as potentially kick-starting development throughout the downtown and Bay Street areas.

Mr D’Aguilar said the Minnis administration encountered several proposals for Prince George Wharf upon taking office last May, and subsequently asked two groups - who he declined to name - to submit their own plans.

He described this as “an education process”, which the Government used to inform itself of what it should seek from bidders in the “open beauty contest” that will now take place through the issuance of a formal RFP.

“We’re going to put that out to a Request for Proposal (RFP), and that’s under construction,” Mr D’Aguilar said of Prince George Wharf’s management. Asked when it would be ready, he replied: “I would say probably in the next two to three weeks - the middle of the month - if not before.”

Explaining how the Government arrived at its decision to issue an RFP, which will detail what it wants private operators to deliver, the Minister said: “We had a number of expressions of interest, not that we asked for them, but when we came to office we met some in place. “We asked a number of people to put forward their proposals. It was more of an education process for us. It was very, very enlightening. Now, we’re much more equipped and knowledgeable of what to ask for in the RFP, and who the players are.

“We came to office not knowing what to ask for, what could be done, what are the possibilities. Two consortiums put their proposals forward, and at that time we said it was better to put it out to an RFP. We’re much more knowledgeable, and much further along the learning curve.”

Mr D’Aguilar declined to identify the two consortia asked to submit bids, but one of those groups is almost certainly UK-based Global Port Holdings and its Bahamian partner, BISX-listed Arawak Port Development Company (APD), together with investment advisory firm, CFAL (formerly Colina Financial Advisors).

APD made no secret of their interest in its 2017 annual report, revealing that the partners planned to add “additional berths and facilities” to the Bahamas’ busiest cruise port if the Minnis administration gave their project the go-ahead.

Global Port Holdings generated $115m in revenue in 2016, and APD’s annual report said: “In response to the Government’s interest in improving the operational and financial performance of Prince George Wharf, APD is exploring the possibility of a joint venture with Global Port Holdings, the largest global cruise port operator in business today.

“This company is considered the world’s largest cruise port operator with a portfolio that includes 14 ports in eight countries, serving cruise liners, ferries, yachts and mega yachts,” APD said of Global Port Holdings. “Additionally, Global Port Holdings has connections with all the major cruise lines - Carnival, Royal Caribbean, MSC Cruises and so on.”

APD is 40 percent owned by the Government, with the shipping companies and related businesses that relocated from Bay Street in 2011 holding a further 40 percent. The remaining 20 percent is held by public investors.

When asked whether the two groups already asked to submit proposals will have an advantage in a public bidding process, Mr D’Aguilar replied: “Not really, because the RFP will give everyone time to put their best forward.

“There’s a standard number of days you have to give people so everyone has sufficient time to get their information. There will be sufficient time for everybody.” The Minister, though, said he was currently unable to say when the RFP will be released or how long bidders will be given.

Mr D’Aguilar said there were “a number of benefits” to outsourcing Prince George Wharf’s management, although he confirmed that the Government would retain ownership of the key infrastructure asset.

“First and foremost, the Government firmly believes an entity should be created to manage the Prince George Dock,” he told Tribune Business. “It is an important piece of infrastructure that has been starved of funds for many years, is in a state of disrepair and requires substantial investment.

“If we need substantial investment, the Government feels this operating entity should be created to go out and seek funds to upgrade Prince George Wharf into something transformative that would be the catalyst for the redevelopment of Bay Street.

“As we upgrade the Port of Nassau that begins to flow into Bay Street and will start the transformation of Bay Street,” Mr D’Aguilar continued. “This is the gateway for 3.6m foreign visitors to the country.

“I’ve said this many times: It’s important we make this as exceptional as LPIA. LPIA is the gateway for 1.5m stopover visitors and has experienced that transformation. It has a company focused on its transformation, and has not cost the state a dollar. We want to bring a similar transformation to Prince George Wharf.”

Data published by the Central Bank shows that despite a 23.7 per cent increase in cruise passenger arrivals from 2010 to 2016, rising from 3.8 million to 4.7 million per annum, total spending has remained stubbornly at $300 million. This is because per passenger spending yields have fallen from $78 to $64 over the same period, a drop of 18 per cent.

Mr D’Aguilar said there were “many other reasons” to improve Nassau’s cruise product, including the 90 new, larger cruise vessels currently under construction, and which all Caribbean ports are now competing to attract.

“We feel the need to bring about a transformation, remain competitive and, given the importance of this piece of infrastructure to our economy, it behooves us to do what we’ve done with LPIA,” he added. “If we wait for the Government to have funds available, given its limited borrowing capacity it will take for ever.”

Mr D’Aguilar added that any Prince George Wharf management company could recoup its capital, and earn a return on investment (ROI), by levying a passenger user facility fee and other charges similar to those implemented at LPIA.

He added that the RFP process would determine the type of management model employed - whether it was the ‘NAD model’, where LPIA has been leased to the management company for 30 years, or the private-public partnership (PPP) type used for the Arawak Cay port.

“Both assets have been significantly improved, and the cost to the taxpayer has been negligible,” Mr D’Aguilar said.