The Port Authority of Jamaica last night confirmed that Danish firm A P Moller’s management contract for the Kingston Container Terminal (KCT) will expire without renewal next February, clearing the way for the state agency to finally privatise the KCT.

Without giving a timeline for the privatisation, the Port Authority said the decision was taken because privatisation offered more opportunities to raise capital for further expansion, and not because it was dissatisfied with the performance of APM.

However, last night, a highly placed source disputed that argument, saying that there has been growing frustration inside the Port Authority with the performance of APM terminals.

APM succeeded GraceKennedy as managers of the port in 2002.

According to the Port Authority, the privatisation should not result in any job losses at the port. “It is not anticipated that workers will be laid off,” vice president of public relations Pat Belinfanti told the Observer. The current staff complement is 982, comprising permanent, contractual and casual employees.

“It is proposed that a new Port Authority subsidiary be formed that will own the KCT assets and manage operations in order to facilitate the privatisation process,” he said in an e-mail response to the Observer’s queries.

“Regarding privatisation,” he said, “one option for example could be to have the assets of the KCT valued and shares issued with the new company going public on the Jamaica Stock Exchange. Another option could be to seek a concessionaire for say 30 to 50 years and sell the equipment and lease the land. The intention is to arrive at the best possible option for privatisation”.

A top level managerial staffer at the port who asked that his name be withheld told the Observer that it was widely believed that billionaire Michael Lee-Chin, the largest single shareholder of neighbouring Kingston Wharves with 44 per cent, intended to buy KCT and merge the operations of the two.

“The need to privatise has been recommended for the last 10 years at least, [but] there’s never been any great haste to do it because it has always been a cash cow for the government,” said the source. “For many years they’ve been trying and only now when a) the government finally realises it’s losing money, and b) private people want it, and c) their neighbour and competitor, Kingston Wharves, where Lee-Chin is the biggest single shareholder, is private, is it happening.”

When APM took over from GraceKennedy, its mission was to enhance the efficiency at the port, but after an extended contract and a multi-million-dollar expansion project, the port is still losing revenue, primarily due to a less than optimal throughput.

For the calendar year 2006, the throughput was 1,983,072 TEUs (twenty-foot equivalent container units), declining slightly in 2007 to 1,807,925 TEUs. The major goal of the fifth phase of the expansion project was to increase handling capacity and throughput to 3.2 million by year end.

According to an August 9 Business Observer report, transshipment volumes, which account for more than 90 per cent of cargo handled at the Kingston port, fell from 2.02 million TEUs during the fiscal year that ran to March 31, 2007, to 1.725 million TEUs in the last fiscal year.

Belinfanti maintains, however, that all the developed lands at the terminal and all 19 cranes are used in the company’s normal operations, suggesting that there is no short-fall in throughput.

In late 2005, the Port Authority signed a five-year contract with Maersk, a subsidiary of AP Moller, giving it permission to use the facility as a regional transshipment hub. That contract, government said, would generate an estimated $13 billion in business over the period.

However, last October, Maersk pulled out of Jamaica.