The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet minister is voicing fears that the COVID-19 pandemic may have derailed ambitions to give 20,000-plus Bahamians an ownership stake in the new $250m Nassau Cruise Port.

Dionisio D’Aguilar, minister of tourism and aviation, told Tribune Business he was concerned that the small retail investors targeted by the cruise port’s ownership structure are all now “in economic survival mode” and may lack the necessary disposable income/savings when the time comes to invest.

And he also agreed with Mehmet Kutman, chairman of Global Ports Holding, the cruise port developer’s parent company, that passenger volumes may not return to 2019 levels for two to three years.

Describing the COVID-19 fall-out as “a big rut in the road, rather than a bump in the road” for Bahamian tourism in all its forms, Mr D’Aguilar nevertheless said Nassau Cruise Port Ltd’s decision to press ahead with Prince George Wharf’s transformation will generate jobs and foreign currency inflows at a time when they are desperately needed.

He added that it would also “secure the viability” of Nassau’s cruise port for when passenger volumes rebound, and provide a new and refreshed destination to attract the industry and its vessels during their recovery phase.

“In the absence of tourism dollars coming in, we’re going to need as many construction projects bringing in foreign direct investment, and this project brings in some of that while allowing Bahamians to invest,” Mr D’Aguilar told this newspaper.

“I don’t know if that is going to pan out now because everyone is in economic survival mode, and it is uncertain whether they will have enough dollars to invest. The way we structured it, Bahamians have an opportunity to invest in it. That was pre-COVID -19, and this is now post-COVID-19.”

The minister, though, pointed out that “all infrastructure projects in The Bahamas have turned out to be good investments”, pointing to the Nassau Airport Development Company (NAD) and Nassau Container Port (Arawak Port Development Company) as examples.

“I know there may be a tendency for people to stay in their comfort zone, but this is a good project to invest in. It’s our core industry, and one of the gateways to the country,” Mr D’Aguilar said.

Nassau’s cruise port, once completed, will have a balanced ownership structure where Global Ports Holding and the Bahamas Investment Fund each hold a 49 percent equity stake. The two percent balance will be owned by a foundation, mirroring the ownership structure at the Bahamas Telecommunications Company (BTC).

The Bahamas Investment Fund, administered and created by CFAL, will be the vehicle through which Bahamians invest in - and own - a piece of the cruise port. They will buy shares in that Fund, which in turn will hold the 49 percent ownership interest in the port’s operating company.

Anthony Ferguson, CFAL’s principal, previously told Tribune Business that investment from Bahamian investors would likely only be sought towards the end of 2021 when construction on the port is nearing completion.

This may give Bahamian savings and disposable income sufficient time to recover from COVID-19, with Mr Ferguson explaining that The Bahamas Investment Fund would likely seek between $30-$35m in total local equity investment when it is placed.

Global Ports Holding previously said it is aiming to attract “20,000-plus” Bahamian retail investors to invest in the Fund, and has even offered to lend Bahamians the money so they can acquire shares in it.

Placing the focus squarely on the “small man” as opposed to major institutional investors, the equity offering’s “bottom up approach” will ensure every Bahamian receives the first $1,000 they subscribe for. Mr Ferguson also told this newspaper that “no one is going to own 5-10 percent of it. It’s just not going to happen”.

Mr D’Aguilar, meanwhile, said the decision by Global Ports Holding and its Bahamian subsidiary to proceed represented “a ray of good news in a sea of bad” amid the ongoing lockdown and fears that this nation - as well as the world - could endure the sharpest and deepest economic depression since the 1930s.

“I wouldn’t say this a bump in the road,” he told Tribune Business, “I would say this is a big rut in the road, but once we get to the other side the viability of Nassau Cruise Port will be assured. God knows we need a project like this to create employment and bring in some funds. The level of investment is quite substantial.

“That is a snippet of goods news in what is otherwise a sea of doom and gloom. But it’s inevitable that cruise passengers will return in large numbers because The Bahamas is so close, and I think in the next two to three years it will return to pre-COVID-19 levels.”

Mr D’Aguilar conceded that Global Ports’ Mr Kutman was “probably right” when he said cruise industry passenger numbers will not return to 2019 levels until 2023, adding that he, too, was “a fairly conservative person so I agree with him”.

The minister, however, added: “I don’t think there’s any doubt that the cruise industry is going to return. It may come back in a different iteration, but it’s going to come back. There are 200 cruise ships looking for a port to come to.

“Certainly the current pandemic has stalled or retarded their growth in the short-term, but in the long-term as memory of this fades and as cruise companies take steps to ensure passengers have a safe, COVID-19 free experience, the demand for cruising will return.

“The cruise companies are very agile and capable of morphing into what they need to be to attract the travelling public. It’s a fairly inexpensive way to see the world, and people will flood back to it over time once they see it’s safe again,” Mr D’Aguilar said.

“That bodes well for Nassau Cruise Port. We’re the busiest port in the Caribbean, and as a new port everyone is going to want to come.” Global Ports Holding is projecting that the $250m redevelopment will be completed in April 2022, and The Bahamas’ proximity to Florida - especially for the three to four-night cruises - means this nation is likely the best-placed destination once the industry rebounds.

Mr D’Aguilar said he anticipated that Prince George Wharf’s redevelopment will take into account the relevant COVID-19 health and safety checks, such as temperature readings and other tests.

Emre Sayin, Global Ports Holding’s chief executive, said the company was already working with governments and the cruise lines to develop the necessary health and safety measures and implement them. These could include quarantine rooms, checking the temperature of every single passenger, and the wearing of face masks.

“This might result in us providing extra services with extra fees because these procedures will be quite involved,” Mr Sayin said.

Meanwhile, Renward Wells, minister for transport and local government, put the brakes on Bahamas Paradise Cruise Line’s planned resumption of voyages to The Bahamas in mid-June by saying only the Competent Authority - meaning the Prime Minister’s Office - could decide when this will take place because the country’s borders remain closed.

Mr Wells said: “As you know, the Competent Authority under the emergency orders is the entity that is making those decisions. There have been requests from a number of cruise lines as to whether or not they can resume services. The Government of the country is looking as to what time that can happen, but it is not going to happen before we actually open up the economy.”

Bahamas Paradise Cruise Line announced on Monday that the Grand Celebration will resume cruises to The Bahamas on June 13, and the Grand Classica on July 10. However, the tourism industry’s re-opening - together with The Bahamas’ borders - is only scheduled to occur in the sixth and final phase of the economy’s re-opening. The Bahamas is currently in the first phase, meaning that the resumption of cruise tourism appears a long way off.

Mr Wells added: “They may like to resume in June. Obviously, as the Prime Minister constantly says, we’re going be guided by the medical professionals as to whether or not we’re going, and when we’re going, to open the economy.” Tribune Business tried to reach Bahamas Paradise Cruise Line for comment but was not successful.