Questions about the fairness of Nassau cruise port RFP may be justified.
Award of Nassau cruise port re-development to Arawak Port Development could mean reemergence of import cartel.
The proposals for the re-development of Nassau’s cruise port are in, and three contenders have emerged. Despite the request for proposals process closing on December 7th, there are already concerns that the deck is stacked.
Talk of the involvement of UK-based Global Port Holdings(GPH)and its Bahamian partner, BISX-listed Arawak Port Development Company (APD), together with investment advisory firm, CFAL (formerly Colina Financial Advisors)has been ongoing after it was revealedthey submitted an unsolicited proposal in July 2018.
Besides GPH, it has been reportedthat another contender is the Bahamian group, Cultural Village (Bahamas). This group is ledby Gerald Strachan, the former Family Guardian president, along withex-tourism minister, Vincent Vanderpool-Wallace. It is believedthey have partnered with a group of cruise lines, primarily involving Royal Caribbean, under the moniker Cruise Port International Ltd.
Finally, another Bahamian investment house, Providence Advisors, headed by Kenwood Kerr, has alsopartneredwith another group to submit a bid.
Minister of Tourism, Dionisio D’Aguilar, asserted that the government hadentered this process with three main objectives: 1) the improved operation of the port, 2) to bring significant investment to the port, and 3) to allow significant Bahamian ownership in the port.
According to the Request for Proposals (RFP), each potential bid-winner has been asked to submit proposals that detail the design, construction, operation, financing and investment in the Nassau cruise port “to provide for the success and growth of the industry in The Bahamas.”
Beyond the cruise port, the RFP also calls for contenders to provide plans for redeveloping parts of Bay St to enhance tourists’ experiences by increasing the tourism offering, improving traffic and circulation, and engaging the merchants and vendors in the area to improve customers’ access to their properties.
Despite calling for a 21-day post-RFP selection process, up to last week there was no indication that the committee of civil servants and industry experts that is supposed to be responsible for making the decision had been chosenand very little of the RFP or the decision-making process was known to the public, sparking statements of concern from business leaders and civil society.
Can we trust that the selection process will be fair? What other realities may influence the selection process? And, are the government’s objectives as articulated by the Minister of Tourism the right ones?
A Fair Process?
Min. D’Aguilar has hit back at critics of the cruise port’s RFP process, calling the accusations of lack of transparency and fairness “absolute rubbish.”
Citizens for a Better Bahamas (CBB) Chairman Lemarque Campbell questioned the RFP processon the basis that neither stakeholders nor the public have been involved or informed of the government’s vision for the port or the specific criteria for a successful bidder.
“That raises serious concerns,” Campbell told Eyewitness News Online.
Actually, we do have some indication of how the government arrived at vision and criteria.
They used the Global Port Holding/Arawak Port Development (GPH/APD) proposal as the model, andthis may be a part of the problem.
Clause 10.1 in the RFP notes: “The RFP is being issuedby the Government following upon an unsolicited proposal submitted to it for the project. The unsolicited proposer is seeking the exclusive right to design, build, operate and maintain the Nassau cruise port.
“The Government acknowledges that the project, having arisen out of the unsolicited proposal, has been of considerable benefit for the development of the Government’s aspirations for the facility becoming a world-class cruise port.”
D’Aguilar defended this revelation, arguing that if the fact that the GPH/APD connection was not clearly articulatedin the RFP, the government would be accused of handling the process unfairly.
The minister is probably right, except that his statements and past relationships may compoundthe claim of unfairness.
Beforethe RFP process, D’Aguilar consistently referenced APD as the model he would like to see implemented at the cruise port.
On January 3rd, 2018 D’Aguilarsaid the Arawak Cay container port is a good example of what he envisioned forthe Port of Nassau.
Specifically, he referenced government’sminority interest with a private entity responsible for the container port’sday-to-day operation.
Similarly, in April 2018,D’Aguilar said the Government was assessing various public-private partnership (PPP) and management models, pointing to the ’10 per cent Internal Rate of Return’ minimum that was a key component ofAPD’s set-up as anotherexample.
In a number ofstatements made about the re-development of the Nassau cruise port a pattern of references to APD as the model for the what the government intended to accomplish emerges.
This pattern, coupled with the use of the unsolicited proposal to structure the RFP, and the minister’s prior relationships might give the bidders, stakeholders and even the public reason to pause.
In addition, D’Aguilar and Mike Maura, APD’s Chief Executive Officer and Chairman, have served on at least one corporate board together and are connected through one vocal business advocacy organization.
The minister may well be conducting this process with the highest integrity, butthe appearance of impropriety should be avoided.
ADP, Cruise Ships, LNG Bunkering, andThe Government
There is one other dimension to the questions raisedabout the RFP process that has yet to be mentioned—the relationship between APD, the proposed Liquified Natural Gas (LNG) bunkering at Arawak Cay and the acquisition of the cruise port.
In November 2017, the APD annual report laid bare the connections between these three projects in a cycle of self-sustaining revenue.
The GPH/APD partners assumed that their acquisition of the cruise port would move ahead unhindered, stating that they planned to add “additional berths and facilities” to theNassau cruise port if the Minnis administration gave their project the go-ahead, according to reporting from local daily.They expected that work wouldbegin in thebeginning of 2018, depending on the speed with which they could attain the necessary approvals.
D’Aguilar, whileconfirming that the government wasin talks with GPH/APD,claimed that a deal was some way off.
“By diversifying APD’s businessandexpanding APD operations and services to the cruise industry, this would serve to reduce the impact on financial performance resulting from the occasional decline in cargo imports,” according to the report.
The acquisition of cruise port was just part of the larger puzzle.
A plan to diversify the company’s income involved not just the cruise port but, at the time, exploring the possibility of establishing a LNGbunkering and distribution facility at Arawak Cayto service the large industrials in the region, the cruise ships that come to Nassau and forBahamas Power & Light’s (BPL) fuel supply.
Though Shell North America was eventually awardedthe BPL generation contract, Maura, APD’s Chairman and D’Aguilar’s fellow board member,pledged to “ramp up” their LNG bunkering project, especially as cruise ships turn to LNG for their fuel needs.
By taking a step back, perhaps one can see what seems to be the reemergence of the import cartel.
If APD is given the contract to re-develop the cruise port, it will have a monopoly on the import of goods and people, and the means to fuel the vessels that transport them.
Thisis a reemergence because we know who is behind APD. In fact,it is Min. D’Aguilar that provides a most telling clue.
In reporting by a local daily on February 14, 2018, D’Aguilar opined that thelamentable condition of East Bay St. could be attributed tothe flight of shipping companies following their relocation to Arawak Cay. Because of this, the area was now “dormant and underutilised.”
We have come full circle.
For leaving what Minister of Works, Desmond Bannister, referred in to 2017 as “old, decrepit buildings, many shutdown and unoccupied,” APD may be rewarded by the government with another monopoly.
Who knows—this may be in the best interest of The Bahamian people. The government owns 40% after all. And, while that doesn’t encourage confidence in a fair process,this is where we are.
Whether it is the use of GPH/APD’s proposal to structure the RFP, Min. D’Aguilar’sconsistent references to APD as the exemplary model or his connections, the questions surrounding the selection process for the cruise port’s re-development will likely not stop.
And, if anyone’s starting to get a feeling of déjà vu as the East Bay St. shipping merchants return to fix the mess that they may very well be responsible for creating, there is reason enough to feel that way.
Aside from the questions of fairness and political economy, there is something else we should be concerned about: policy.
Min. D’Aguilar said that the government’s focus was threefold—1) the improved operationof the port, 2) to bring significant investment to the port, and 3) to allow significant Bahamian ownership in the port.
The second and final part is this series will tackle if the government’s objectives as articulated by the Minister of Tourism are right ones? If not, what should be our focus as we move to alter the landscape of Nassau significantly?