The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Nassau’s main commercial shipping post is eyeing a further revenue boost that will help contain goods prices for Bahamian consumers after it produced a 22 percent profits increase for 2024.

Michael Maura, Arawak Port Development Company’s (APD) chairman, told Tribune Business that the 60 mega watt (MW) cruise ship ‘shore power’ project will introduce a “new type of cargo” to the port through the liquefied natural gas (LNG) that will arrive at its berths by ship.

This LNG will then be transferred to the ‘shore power’ plant via an underground pipeline running through APD’s property, providing the Nassau Container Port’s BISX-listed operator with another potential income stream via a throughput fee based on the volume of fuel sent through.

Mr Maura explained to this newspaper that the new revenue streams will further aid APD to cover its operating costs and, in so doing, mitigate against the need to increase tariffs and fees levied on the shipping and trucking industries. As a result, inflation and the price of imported goods will be contained, as he described the ‘shore power’ project as “a win” for both APD and the wider Bahamian economy.

“I think this plant offers opportunities for our electricity industry as well as our economy,” Mr Maura told Tribune Business. “The other macroeconomic element that, in some ways, is not seen as obviously is that this plant will run off of LNG.

“That LNG will arrive at Nassau Container Port. That ship will connect to a pipeline run underground to the power plant which will be approximately 700 to 800m feet away from the berths. From a Nassau Container Port perspective, we would have spoken of APD’s desire - and I’m still chairman - of wanting to work on how to attract new cargo.

“That’s significant, because at APD we rely on cargo revenues to cover our costs of business. By introducing a new cargo type it adds a new layer of revenue, but the benefits that come with that are not solely to APD,” Mr Maura continued.

“It’s a bridge to getting a bill for the LNG that’s moving through the pipeline across APD to the power plant just outside Nassau Container Port. From that APD will earn additional revenue, which helps to cover the cost, and that will mitigate against tariff increases. This is a win for Nassau Container Port and a win for the local economy as far as the cost of goods is concerned.”

Mr Maura provided no details on the amount of additional LNG-related revenues that APD may earn annually, or when these will kick-in or the ‘shore power’ plant be constructed. He previously confirmed that both APD and Nassau Cruise Port, the latter of which he is chief executive for, are both part of the Island Power Producers consortium selected as the preferred ‘shore power’ bidder by the Government.

His comments came as APD revealed profits for the year to end-June 2024 increased by almost $2.2m year-over-year, surging from $9.687m in 2023 to $11.848m. The outcome, though, was almost entirely due to a $2.3m year-over-year decline in depreciation of the container port operator’s property, plant and equipment values, which reduced from $5.361m in the prior to $3.057m.

Dion Bethell, APD’s president and chief financial officer, told Tribune Business in messaged replies to its questions that the reduced depreciation - which is effectively an accounting or ‘paper’ treatment - stemmed from an “accelerated” write-down of the value of two older cranes that were still operating during the company’s 2023 financial year.

Without the boost from reduced depreciation, APD’s operating income was essentially flat year-over-year - even declining slightly by 2 percent or just over $350,000 - from $18.678m in 2023 to $18.312m for the 12 months to end-June 30, 2024.

Total revenue stood at $35.676m, as opposed to the $35.839m earned in the prior year, while total expenses rose slightly to $17.364m as compared to $17.161m recorded for 2023. However, Mr Bethell confirmed to this newspaper that total comprehensive income for the 2024 financial year had beaten the company’s own $10.37m target by 14.3 percent.

The $35.676m revenue top-line was also ahead of the $33.7m forecast by 5.9 percent, he added, representing a near-12 percent swing from what was predicted to be a 6 percent fall-off. And earnings before interest, depreciation, taxation and amortisation (EBITDA), or operating income, beat APD’s budget by 9.9 percent.

“Vehicle volumes were up, which contributed to the landing fees and security fees surpassing the prior year by $600,000 or 4 percent, and $125,000 and 4.4 percent, respectively,” Mr Bethell said. He added that terminal handling income increased by 9.4 percent year-over-year, rising from $4.871m to $5.327m, while other income more than tripled to grow by 250 percent or $173,000.

The APD president said the latter increase was due to an enhanced valuation being placed on the company’s holdings in the Bahamas Investment Fund (BIF), the vehicle that holds the 49 percent collective Bahamian ownership interest in the Nassau Cruise Port.

As for the Nassau Container Port’s main business streams, Mr Bethell said twenty-foot equivalent unit (TEU) container volumes were slightly higher by 0.3 percent at 70,735 when compared to the prior 2023 year. However, they were down 1.8 percent against forecast.

Vehicle imports, which totalled 19,750, were some 26 percent higher than the prior year and exceeded APD’s projections by 9.7 percent. However, bulk or aggregate imports - which stood at 340,987 tons - finished the 12 months to end-June 204 some 9 percent and 12.8 percent down on the prior year and forecasts, respectively.

Explaining the drop in APD’s container storage fees, which almost halved to $1.871m compared to the prior year’s $3.595m, Mr Bethell said: “Prior year storage fee income was unusual and was not expected to reoccur in the current year.

“The carriers did a better job in the current year in managing their container inventory, which led to the reduction in storage fees in the current year. Despite the storage revenue in the current year being positive [compared] to budget by $354,000, we have no control over this number and it can fluctuate from year to year. 

“The company continues to pay attention to and manage its overall cost. We’ve embraced technology and streamlined processes to help with efficiencies and project costs, implemented energy saving measures to help control the electricity cost, and promote a culture of cost consciousness across the company.”

Asked about the boost that APD has received from its investments in the Nassau Cruise Port and government bonds, Mr Bethell confirmed: “We’ve seen an uplift in other income due to the unrealised gains from our investment in the Bahamas Investment Fund (cruise port) and continue to see a reduction in overall finance cost with the interest income on the bonds.”

As for wider issues impacting APD and its operations, he added that the BISX-listed port operator was unaware of any further progress on repairing Nassau harbour’s deteriorating breakwaters since its meeting with the Government in October 2023.

“It’s always concerning and extremely urgent to be addressed as disruptions to port operations continue due to the deterioration of the breakwater. [There have been] no further updates since the meeting held in October 2023 where the Government shared their findings and proposed plans,” Mr Bethell said.

As for the pandemic-related inflationary pressures, he added: “It seems as if the worst of the post-COVID supply chain disruptions has passed, but the economy still faces other challenges including climate, energy price pressure and global conflicts.”