New firm investing US$600 m in port upgrade

Kingston Container Terminal


THE Government and Terminal Link CMA CGM consortium yesterday signed a concession agreement under which the French company will invest US$600 million to upgrade and expand Kingston Container Terminal (KCT) and operate it for 30 years under the banner of a newly formed company -- Kingston Freeport Terminal Ltd (KFTL) -- before transferring it back to Jamaica.

The investors will also spend US$130 million to dredge Kingston Harbour, a move that Prime Minister Portia Simpson Miller, as well as Transport and Works Minister Dr Omar Davies said would free the country's balance sheet of additional debt.

The dredging will also allow Jamaica to accommodate post-Panamax vessels which will start entering the Caribbean when expansion work on the Panama Canal is completed.

Before signing the deal with Terminal Link President Farid Salem at Jamaica House yesterday, Minister Davies explained that the expansion and upgrading work will be carried out in two phases.

Phase one will see Terminal Link investing US$460 million on reinforcing 120 metres of the berth to meet Euro codes 2004. In addition, 800 metres of the berth will be reinforced to a depth of 15.5 metres.

The US$200-million balance will be spent on phase two of the expansion and upgrading work.

Davies recalled that when he assumed the portfolio in 2012, the divestment of the port was one of three major projects that the Government wanted to implement as quickly as possible.

"Significantly, I remember that CMA CGM had submitted an unsolicited bid and discussions had started. However, the Office of the Contractor General had some concerns about this method of procurement and the process was suspended," Davies said.

"Over time there were other expressions of interest and the decision was taken to invite submissions from a number of global terminal operators. Five such companies responded to our invitation and three were pre-qualified. Of the three, Terminal Link CMA CGM was the only one to respond to the bid invitation.

"The irony of the situation is that we started with one unsolicited proposal, and three years later we are about to sign with the same group," Davies added.

"The negotiations have been long, but I do believe our major objectives have been accomplished. One, we have a global terminal operator linked with a major container shipping line which are the leaders in their field," Davies said.

"Second, we have a multi-user port and we are clear that any legitimate shipping line can participate and utilise the facilities.

"Third, the cost of dredging will be assumed by the concessionaire, freeing the Government from this financial obligation," Davies said.

Salem, in his remarks, pointed out that CMA CGM is the world's third largest shipping company with 445 vessels serving more than 100 ports globally.

He said that his company has a long history of relationship with the Caribbean and described Jamaica as a strategic port for shipping lines.

"We like Jamaica. There is governance and security in this country and this is a good environment for employees and employers," Salem said, adding that his company has ambitious plans for the development of the port.

The use of the word Freeport in the new operating company's name, he said, was strategic, as they intend to attract investment, light industry and processing services.

Welcoming the investment, Prime Minister Simpson Miller reiterated that Jamaica was open for business.

"As Government, we will be continuing our efforts to improve the business climate, adding to recent measures in our global marketing as a place where it is easy to do business," she said.

"This is a major development which will have significant benefits for the country, and is an important component for the logistics hub," Simpson Miller added and commended the members of the divestment team.

Port Authority of Jamaica President Professor Gordon Shirley, who played a major role in the divestment talks, said the benefits of the agreement are that Kingston will remain a regional and international port... in partnership with one of the top-tier terminal port operators that have a very aggressive set of growth plans that they are pursuing.

"It also means that the shipping lines now have a firm time period for the works to be completed in Kingston and they can plan accordingly," Shirley said.

He also explained that the KCT workers who will be employed by the new firm "will be exposed to the best-in-class technology and techniques".

Source: 
http://www.jamaicaobserver.com/news/New-firm-investing-US-600-m-in-port-upgrade_18714798
Published Date: 
Wednesday, April 8, 2015