17 April 2015

[170415.EN.SEA] Minister: Privisation Best Way to Exploit Jamaica's Big Shipping Asset

THE expected privatisation of Jamaica's main port by the CMA CGM Terminal Link 30-year takeover of Kingston Container Terminal (KCT) raised questions, but also got quick answers in an exhaustive article in the Kingston Gleanor.

To the question of why privatise KCT, considered to be Jamaica's prime asset, Public Works Minister Omar Davies told the Gleanor that the concessionaire is a global terminal operator linked with a major container shipping line, leaders in the field.

CMA CGM Terminal Link's portfolio currently consists of interest in 14 terminals and it has handled more than 12 million TEU in 2014, he said.

Second, KCT will be developed into a multi-user port, and third the capital cost of dredging will be assumed by the concessionaire, freeing the government from that obligation, he said.

Under the deal the Port Authority of Jamaica will receive an immediate payment of US$75 million to cover the value KCT equipment.

The Port Authority will also be paid a fixed $15 million per year on a quarterly basis as lease for the port facility, and a variable fee of eight per cent of gross revenues payable monthly.

With a 2,400-metres of wharf, an 80-hectare (197 acres) surface and 15.5-metre draught, KCT can now dock 4,500-TEUers, but with planned increase from its present capacity of 2.8 million TEU it is expected to rise to 3.6 million TEU, run 14 gantry cranes and 60 port riders, as well as being able to dock 12,600-TEU ships.

Said Terminal Link president Farid Salem: "The government will also benefit from the payment of income and other related taxes."

Port Authority chairman CEO Gordon Shirley also said the concessionaire will acquire the equipment, and the Jamaican government will reacquire whatever equipment is on the property when the concession is terminated.

Kingston Freeport Terminal will dredge the access channel to the Kingston Harbour and the basin of the KCT to allow for the handling of larger vessels, which will transit the Panama Canal after its expansion is complete next year.

Drewry ranks Terminal Link 11th worldwide and expects it to be in seventh or eighth place by 2017. Kingston port was last rated eighth in the Caribbean, but with the canal expansion next year, it is expected to be in the top five.

Looking at the map, the distance from Kingston is 650 miles (1,040 kilometres) to Panama, from which explodes a starburst of trade lanes, with Jamaica dead centre, making it ideal as a transshipment hub - if Panama dreams come true.

The Jamaica Port Authority will retain responsibility for maintenance dredging of the channel and for putting in place regulations and policies in support of the development of the Greater Port of Kingston and other ports across Jamaica.

Under the US$510 million agreement, transfer of operating control of the port will follow the financial close of the transaction, which is expected to be completed within six to eight months after the signing.

The Port Authority is worth about $58 billion by assets. KCT accounted for about $10 billion of its $20 billion revenue base at FY 2014, said the Gleanor.

Source : HKSG.

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