The Port Authority and Cayman Islands Government completed the signing of a framework agreement to construct a cruise ship berthing port in George Town on Wednesday, a little over a week after it announced it was moving ahead with a new builder, a construction team that included GLF Construction Company and Cayman-based Royal Construction Ltd.
The quick success to getting a signed framework agreement – something that did not occur in the year after the Port Authority originally chose DECCO as the port developer – “pleasantly surprised” Port Authority Chairman Stefan Baraud.
“I was a little concerned,” he said. “But these guys have a good sense of the project and I think their enthusiasm is properly gauged. They’re excited to be involved, but at the same time they know there’s a lot of work ahead.”
Mr. Baraud said the framework agreement sets out a four-month time period for negotiations to lead to a contract. The key to those negotiations will be coming to an agreement on a feasible financial model to fund the construction.
Premier McKeeva Bush said negotiations ended with DECCO, a Dart Group subsidiary, because the government couldn’t agree to the length of term of a lease of the new port facility that would give the developer the opportunity to recoup its investment and earn a profit.
“It’s not that their plan wasn’t workable,” Mr. Bush said. “They wanted 99 years and I could not give them that.”
Under the DECCO proposal, ministerial council for tourism Cline Glidden had indicated the cost of the project could be as high as $300 million. However, Mr. Baraud said the project would now be scaled down from the DECCO plan. He said a preliminary engineering estimate for the construction of two cruise berthing piers for four ships, along with the reclamation of eight acres of sea to use for passenger disembarkation and construction of infrastructure for government agencies such as Customs, Immigration and Port security was $141 million.
Mr. Baraud said GLF agreed to a lease of 30 years or less and that depending on factors such as the ultimate scale of the project and the financing terms, it was possible that there wouldn’t be the need for a lease at all.
“Cheap money is what is necessary for the project,” he said, referring to the kind of financing terms sought.
Mr. Baraud said the cruise lines had originally suggested two acres of reclaimed land per cruise ship berth, but as part of the scaling down of the project and the desire to limit the length of any lease to the facility given to the contractors, it might be possible to reclaim less land to reduce costs. Another possibility was for GLF to take an equity position in the project, he said.
The next step in the process is to start working on the financial feasibility and business model for the project. Mr. Baraud said Tully Cornick and Henk de Zeeuw from KPMG had been engaged as financial advisors for the Port Authority. One part of the process will be starting discussions, probably early next year, with the cruise lines to discuss the possible fees that could be paid on a per passenger basis to help repay the cost of construction.
Parallel to the financial model negotiations, a number of other things would be dealt with, including the geo-technical studies. When the decision to go with GLF/Royal was announced last week, the government stated that DECCO had agreed to assist in the project by making its completed work packages available to the Port Authority. However, Mr. Baraud said that since the scale of the project had now changed, some of those studies – such as the environmental impact study – would possibly no longer be usable.
Mr. Baraud discounted claims that GLF wasn’t capable of taking on the Cayman cruise berthing project.
“They’re a massive group, with a lot of work experience that is very relevant to what they’re doing here,” he said.
Royal Construction Managing Director Howard Finlason said GLF, which is headquartered in Italy, is working on one of the largest marine projects ever undertaken, the Venice Lagoon defence from high waters. He said the Royal Construction website (www.royalconstructionltd.com) had a link under partnerships to the GLF website, which listed some of its major infrastructure projects in the US and internationally.
Mr. Finlason said he was pleased to have reached the framework agreement stage so quickly.
“Now it’s full speed ahead to try and get a contract signed,” he said.