Jamaica’s main seaport, Kingston Container Terminal (KCT), is to be privatised by way of concession, but the structure of the transaction is still being formulated, according to the divestment agent.
The enterprise team, chaired by former central bank governor Derick Latibeaudiere, “is currently undertaking due diligence to develop the details of the ‘transaction structure’ and will provide its recommendations to the Government as soon as the due diligence process is completed,” said the Development Bank of Jamaica (DBJ).
The bank, which is the state’s primary agent for privatisation programmes, said the transaction was at an early stage and, as such, the terms of the concession had not yet been worked out.
“It is expected that this will be finalised during the bidding and negotiation stages,” the DBJ said, adding that it is working with a 15-month timeline.
KCT is the biggest money spinner for the Port Authority of Jamaica. It is projected to turn over just under J$11 billion among total revenue of J$16 billion expected to be earned across Port Authority’s operations this fiscal year.
Plans for the divestment of KCT were originally floated in 2009 by then Prime Minister Bruce Golding. Latibeaudiere’s team was established seven months ago in January.
Asked what progress has been made to date, the DBJ said the Government has extended invitations to top global container terminal operators to prequalify for the opportunity to operate the KCT.
“A shortlist of pre-qualified bidders will then be invited to submit bid proposals to assume the operation and further development of the port via a long-term concession,” DBJ said via email to Financial Gleaner queries.
“To date, a significant number of the invited entities, including local interests, have confirmed their interest in participating in this transaction.”
Jamaica has used the concession model before for both the toll highway now owned and operated by French construction company Bouygues, and for the Sangster International Airport in Montego Bay operated by the MBJ Airports consortium. The highway is under a 35-year agreement that was negotiated by DBJ; while the airport is a 30-year concession – both of which have been in operation now for a decade.
DBJ said the Government signed off on the plan to negotiate a concession agreement for KCT in March.
It said that as far as possible, the concession will give the preferred bidder the right to purchase the equipment of KCT as part of the package.
KCT is owned by the Port Authority of Jamaica and operated by subsidiary Kingston Container Terminal Services Limited.
It is one of the region’s leading container trans-shipment ports with a capacity of 2.8 million TEU’s or 20-foot equivalent container units.
KCT equipment includes 19 ship-to-shore Gantry cranes, with four super Post-Panamax cranes among them; 30 stevedoring chassis; 28 yard tractors; 30 yard trailers; two 4,000 horse-power tugboats, 73 straddle carriers, 24 trailer trains, four train tractors and nine forklifts, according to information on the port’s website.
The DBJ said the enterprise team’s primary role is to provide strategic guidance and oversight aimed at achieving a successful privatisation/concession.
“The enterprise team is also supported by a project team, comprising representatives from the DBJ, Port Authority, Attorney General’s Chambers and PricewaterhouseCoopers, who are the financial advisers for the transaction, which meets on a weekly basis,” the bank said.
Further development of the KCT is expected to facilitate the passage of Post-Panamax container vessels with a nominal capacity of 12,000 TEUs in comparison to the existing Panamax vessels with a capacity of 4,500 TEUs currently transiting the Panama Canal.
The Port Authority is projecting just under 1.1 million container throughput at KCT this fiscal year, up by 113,598. Of the budgeted J$1.95 billion of capital expenditure, the Port Authority expects to spend J$1.34 billion on the acquisition of container handling equipment for KCT, according to finance ministry disclosures.