(Jamaica Gleaner) The Port Authority of Jamaica will receive an upfront payment of US$75 million equivalent to the value of the equipment at Kingston Container Terminal (KCT), which are to be handed over to the new concessionaire Kingston Freeport Terminal Limited for operation.
The Port Authority will also be paid a fixed US$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, chairman and chief executive officer of the Port Authority, Professor Gordon Shirley told the Financial Gleaner.
He said the upfront fee represents the market value of the assets at KCT.
Shirley said the concessionaire will acquire the equipment, and that the Jamaican government would reacquire whatever equipment is on the property when the concession is terminated.
Kingston Freeport is the vehicle being used by the Terminal Link-CMA CGM consortium to operate the port under a deal with the Port Authority to finance, expand, operate and maintain KCT. The port is to be transferred back to Government at the end of the 30-year concession period.
“The government will also benefit from the payment of income and other related taxes,” according to agreement signed at Jamaica House on Tuesday. The concessionaire was represented by President of Terminal Link and Executive Officer of CMA CGM, Farid Salem.
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 the latter’s expansion. The port of Kingston was last estimated to be around the eighth busiest in the Caribbean but the expansion under the concession is expected to push it into the top five.
Under the US$510 million (J$59 billion) 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. As Prime Minister Portia Simpson Miller said in Parliament two weeks ago, the government will not provide a guarantee for the transaction.
During the concession period, 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.
The port will be equipped with 14 gantry cranes and 60 port riders, an extension that will turn Kingston into one of the Caribbean’s five top ports, the shippers said. Further development of the KCT is expected to facilitate the passage of Post-Panamax container vessels with a nominal capacity of 12,600 TEUs in comparison to the existing Panamax vessels with a capacity of 4,500 TEUs currently transiting the Panama Canal.
The CMA CGM Group said the new terminal will offer a deeper draught where larger vessels will be accommodated and that the additional equipment will allow for the development of transshipment operations via secondary lines in the entire area.
The terminal, where CMA CGM accounts for about 35 per cent to 40 per cent of market share, will be opened to all shipping lines benefitting from the same quality of services and treatment without discrimination, the group said.
“This investment is part of the CMA CGM Group global development plan” in the maritime sector, including acquisition of “new vessels more adapted to markets, as well as the creation of logistics platforms and the volume increase development in ports – for instance in the French Antilles,” it added.
At the signing of the concession agreement, Minister of Transport Works and Housing, Dr Omar Davies, recalled that in the initial move to divest the port, CMA CGM had submitted an unsolicited bid and discussions had started. However, the Office of the Contractor General expressed concerns at the time and the process was suspended.
