Phillips questions secrecy in port concession deal

Phillips questions secrecy in port concession deal

Senior staff reporter

Wednesday, June 05, 2019

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OPPOSITION spokesman on transport and works Mikael Phillips has raised concerns about what he said is the secrecy surrounding the major concession agreements signed between the Government and two private investors in the shipping industry, and has expressed unease with some of the activities under those arrangements.

In his 2019/20 Sectoral Debate presentation in the House of Representatives yesterday, Phillips said the Port Authority of Jamaica (PAJ) has been unable to collect associated revenues from Kingston Freeport Terminal Limited (KFTL), operators of Kingston Container Terminal (KCT), since that 30-year concession agreement was effected in April 2015.

He explained that the PAJ’s agreement with KFTL includes a share in the profits made by the KCT as the agency managing the international ship and port security code modalities at ports around the island.

Phillips said the inability to collect revenues is compromising the capacity of the PAJ to provide the required oversight on the nation’s port security.

“Since the signing of the agreement, the concessionaire has demonstrated an unwillingness to share information even with the Port Authority of Jamaica, which has a vested interest in obtaining such data, both for its own internal accounting purposes as well as to fulfil its role as regulator over the shipping industry,” Phillips stated.

He told the House that an absence of transparency with regard to the concession agreement makes it “impossible for stakeholders to understand the basis on which such practices have become the norm since CMA CGM assumed control of KCT”. KFTL is jointly owned by the members of the Consortium, Terminal Link, CMA CGM.

Phillips noted that while it is expected that there will be benefits to the shipping sector, questions remain as to whether the country got the best deal, and why the agreement document is protected by the Official Secrets Act.

“It is to be observed that the concession agreement for Highway 2000 is a public document that has been available on the regulator’s website for years, and we expect the same for this agreement,” he stated.

Phillips contended that since KFTL took over KCT, the country has had to contend with a “less than stellar performance”, marked by a fall in productivity from as high as 36 container moves per hour to the current average of 24 moves per hour.

“The effect is that to avoid delays in the working of vessels, resources are concentrated dockside to the detriment of operations that serve the local import/export trade. There have been at least two strikes by truckers who suffered huge delays and consequent losses, while seeking to collect and deliver containers at KFTL. The situation at the KCT is not healthy because there is a quiet atmosphere of animosity among the big players, and until the issues I raised earlier are resolved, the condition will deteriorate,” he asserted.

Under the agreement, the PAJ retains ownership of the lands and berth at KCT, while KFTL will finance, design, build, and operate the port, handing back the terminal, including assets purchased by the concessionaire, to the Government of Jamaica at the end of the 30-year period.

According to a question-and-answer sheet published by the PAJ, the concessionaire is expected to invest approximately US$509 million over two phases with the possibility of a third phase, which is to be negotiated.

Meanwhile, Phillips said the agreement which the Government signed with Canadian-based maritime company Ocean has also not been made public and as such, the public has no indication of whether double-digit increases in towage rates to customers, such as the one which was announced by the investor in January, are permitted in the agreement and, if so, at what intervals.

The PAJ signed the 10-year concession agreement with Ocean Towage in June 2018 to improve towage services at the Port of Kingston.

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