Published On: Thu, Mar 17th, 2016

Council of Ministers approves proposal on port concession

PortWILLEMSTAD - The Council of Ministers approved a proposal by the Minister of Economic Development, Eugene Rhuggenaath on a proposal, which should lead to a new concession for the stevedoring operations at the port. With this proposal the negotiations, between Curaçao Ports Authority (CPA) and Curaçao Port Services (CPS), which were discontinued by the CPS on February 23, can continue.

Minister Rhuggenaath indicates that he is aware of the great interests at stake in this case and therefore has had intensive consultations with all stakeholders, including parliament, on the proposal. The government now can provide the CPS requested clarity regarding the direction the government wants to the port to take. “It's up to CPS to study the proposal and let us know whether this provides sufficient basis to continue the negotiations.”

The offer which will now be submitted to CPS assumes a concession for only the container port at the Brion Wharf. The proposal is further based on a term of 20 years. During that period, CPS will invest 50 million guilders in the harbor cranes and the quays and the rates will remain unchanged. The agreement will be monitored through a newly established structure of supervision and regulation on the implementation of tariffs and operational and financial commitments in the concession.

The current agreement with CPS dates from 1991 and was last renewed automatically in 2011. Based on this agreement CPS has the right to carry out stevedoring work at all (future) Curaçao ports. CPA is responsible for making investments in, for example cranes and quays. This division of responsibilities between CPA and CPS is disproportionately disadvantageous for CPA and / or the Land. Also, the right of exclusivity means that the economy is dependent largely on this single provider of services in the port.

In the port policy which was drafted on February 4, 2015 states that the port should start functioning based on the landlord port model. That means that CPA is the owner of the land and is responsible for the basic infrastructure, including quay walls, and CPS for the 'superstructures' (quay surfaces, buildings and cranes). CPS then leases a part of the port area and the operational side of the business is entirely in their own hands. Since the investment in the superstructure is substantial, such contracts have a duration of 20 to 30 years.

This model is the most widely used model in medium and large ports. This setup provides the space to allow multiple private companies in the market by giving each a site in the harbor. Because of this competition prices may decrease. The port authority will monitor the conditions as agreed in the concession, including fees, maintenance and investment obligations, key performance indicators (KPI), etc.

Rhuggenaath indicates that now the Council of Ministers has created clarity, it is up to CPA and CPS to reach a new concession.

Given the deplorable state in which the cranes and docks are in, it is time to reach an agreement. In addition, CPA has been asked to approach an international expert in the short term which must evaluate the overall processing chain within the port and to formulate on the basis of the outcomes the KPIs regarding the operation and the quality that can be incorporated into the new concession agreement and to design an effective supervisory framework, including an independent regulator. The Minister expects that this will have a positive impact on costs and thus is good for the whole society.

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