The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A majority Bahamian consortium is predicting that its plans to transform Nassau's cruise port will give the economy a $16bn boost spread over 30 years.

Global Ports Holding, the international cruise port manager, in a July 16, 2018, proposal to the Government said its planned $285.7m upgrade of Prince George Wharf through a waterfront entertainment park would inject an extra $216m into the Bahamian economy in the first year alone.

Global Ports, which has partnered with Nassau Container Port operator, Arawak Port Development Company (APD), and Bahamian investment advisory firm, CFAL, on its "unsolicited proposal", forecast that the project would generate up to direct 1,182 construction jobs and up to 70 permanent posts in port operations by the fourth year.

Mehmet Kutman, Global Ports Holding's chairman, wrote in a letter to the Bahamas Investment Authority (BIA) that this nation urgently needed to improve a "greatly underperforming" infrastructure asset if it was to capitalise on the cruise industry's anticipated growth and increase passenger spending yields to the benefit of local businesses.

"Currently, the Nassau cruise port greatly underperforms as a national asset," Mr Kutman wrote. "Its infrastructure ought to be significantly improved to ensure the growth of the cruise business by providing a more fulfilling passenger experience in Nassau..."

Referring to an economic impact analysis conducted by the KPMG accounting firm, the Global Ports chief said the construction/development phase would generate "a cumulative impact of $285.7m" over a three-year period as a result of investment in Prince George Wharf's infrastructure and building jobs.

"The first year of the operational phase is expected to add an estimated $216m to the economy as a result of expected increases to cruise passenger arrivals, onshore rates and cruise tourist spending," Mr Kutman continued.

"Over a ten-year period (2022-2031), the cumulative effect is projected to be $3.7bn. A preliminary and high-level estimate is that the project will have a cumulative impact of $16bn from 2019 to 2049."

Tribune Business exclusively revealed last year that Global Ports Holdings had partnered with BISX-listed APD and CFAL (formerly Colina Financial Advisors) to submit a proposal for outsourcing the cruise port's management, operations and financing to a private sector entity. Their attorneys are Delaney Partners, the law firm headed by former attorney general, John Delaney.

Their 49-page proposal, obtained by this newspaper, is almost certainly one of the two "unsolicited proposals" referred to by Dionisio D'Aguilar, minister of tourism and aviation, when he confirmed that the contract for Prince George Wharf's management and upgrading will be put out to all-comers via a public tender process or Request for Proposal (RFP).

The Minister explained that the Government had used these proposals to "educate itself" on what it should seek from bidders, but many observers are likely to believe that Global Ports Holding and its Bahamian partners have the "inside track" on rivals as a result of their dealings with the Minnis administration to-date.

The detailed proposal will likely further intensify these suspicions. Global Port Holdings' Mr Kutman said the consortium's proposal included "a waterfront entertainment park to simultaneously capture the growing cruise tourism industry and maximise Bahamian commercial opportunities.

"Allowing a renowned cruise port operator such as Global Port Holdings to address the maintenance, operation and development of Nassau Cruise Port will ensure the facility is optimised to become the premier cruise port in the Caribbean," Mr Kutman added, "allowing The Bahamas to reap the benefits such as job creation, maximisation of revenues, economic growth and budgetary savings for the Government of the Bahamas.

"The consortium would immediately commence the redevelopment of the Nassau cruise port and surrounding facilities. Our goal is to increase the berthing capacity through the extension of the central pier to allow two additional vessels to berth, implement improvements to the arrival facilities to improve the arrival experience, and revitalise the downtown area in collaboration with the Downtown Nassau Partnership (DNP)."

Trams and electric vehicles are also on Global Port Holdings' agenda, with Mr Kutman adding that the consortium planned to "prioritise the involvement of Bahamians in the project". APD would provide "non-executive operations and facility support", with Bahamian investors given an opportunity to participate as equity partners through a CFAL-created investment fund.

The investment advisory firm will create the Bahamas Investment Fund (BIF), which will own a 49 percent stake in Nassau Cruise Port Ltd (NCP), the project vehicle created by the consortium. Global Ports Holding will own a matching 49 percent, with the 2 percent balance held by a specially-created charitable foundation called the 'YES Foundation'.

The minimum investment for Bahamians to participate in BIF was pegged at $1,000, but Global Ports Holding pledged to offer "up to $10m in financing" at BIF's launch - payable over 24 months - to allow small retail investors to participate.

The consortium's YES Foundation will both social programmes for inner-city residents and Bahamian small business owners and entrepreneurs, offering a $5m loan package - repayable over five years without interest - for those entities approved by the Government.

The group's proposal seeks a 30-year lease or "concession agreement", similar to that granted to the Nassau Airport Development Company (NAD) for Lynden Pindling International Airport (LPIA), to operate and manage Prince George Wharf.

To finance the transformation, and provide a return on investment, the Nassau Cruise Port proposes the levy of a $6.50 per cruise passenger "head tax" and port fees equivalent to $2 per passenger.

The Government will receive fees of $0.25 per passenger during the upgrade/construction phase, and $0.50 per passenger during operations, "increasing in line with the growth in head tax".

"The project will fuel widespread economic growth and a more competitive tourism sector," the proposal said. "The operating cost of the Nassau Cruise Port will be assumed by NCP and will reduce the corresponding budgetary strain on the Government.

"It will improve upon the operating efficiency of the Port Authority and transform the Nassau Cruise Port into a world class facility in a cost-effective manner."