Is the Port Authority profitable?

Wednesday, June 11, 2014

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In its first month alone, the Port Authority of Jamaica (PAJ) saw nearly a quarter of the additional cruise ship passengers it expects to receive this financial year.

But preliminary data for cargo movement at its transshipment port, Kingston Container Terminal, was less than two per cent higher in April than in the same month last year.

At the beginning of the financial year, the public entity projected that is would see a 6.5 per cent increase in container throughput at KCT, while cruise passenger arrivals was expected to grow by over 200,000 to 1.43 million.

In April, the 147,000 passengers to arrive at the three major cruise ports represented a 45 per cent jump over year-earlier levels, mainly due to a bump at Falmouth and Ocho Rios.

The forecast formed the basis of financial projections for an increase in operating revenues which would result in a a surplus of $140 million for the year running to next March, up from a deficit of $2.4 billion estimated at March 31, 2014 (excluding fair value adjustments of $3.6 billion).

Container throughput at KCT has been in the doldrums since it lost major shipping lines, such as Maersk, at the 860,000 container moves recorded for the last financial year was considerably less than the over 1 million moves seen three years ago.

The volumes also pales in comparison the port's rated capacity of 2.8 million twenty-foot-equivalent units (TEUs) per annum.

Indeed, the KCT basin and ship channel is to be dredged to accommodate vessels carrying three times as much capacity, which are expected to pass through the Panama Canal when its expansion is completed at the end of 2015.

The capacity of the terminal is also to be increased to 3.2 million TEUs.

But expansion won't likely happen until the Government finalises a public-private partnership with one of three bidders -- Port of Singapore, Terminal Link Consortium and Dubai Ports World.

Negotiations for KCT privatisation are now expected to be concluded by the end of September.

Until then, the government-owned entity will likely continue to struggle just to break even financially.

The PAJ's $34 billion debt represents a major cost facing the company. Interest payments alone are expected to surpass $2.7 billion this year, up from $2.2 billion last year.

In the meantime, renovation and rehabilitation works at the Ocho Rios Pier and the Montego

Bay Freeport is supposed to be done this financial year at a cost of $1.2 billion.




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