Cayman’s cruise and cargo port will cost just under CI$200 million to build, government revealed Monday as it formally announced the Verdant Isle group as the preferred bidder for the project.
The group, which comprises cruise companies Carnival Cruise Line and Royal Caribbean as well as local construction companies McAlpine and Orion Marine, will fund the project through capital from the two cruise lines and a loan from FirstCaribbean International Bank.
In return, they will be allowed to levy a passenger fee of around US$8-per-head for every cruise visitor to the islands. That charge will come from a mix of the cash that currently goes to the tender operators and a small share of the government head tax.
Based on an estimated two million passenger arrivals per year, the arrangement could be expected to net them around US$400 million (CI$333 million) over the 25‑year-life span of the project, though that may be reduced depending on a profit-limitation clause that is still being negotiated.
Government will take approximately US$2 per head less in the taxes it collects from cruise passengers but expects to make up the shortfall in net revenue through increased arrivals. This, together with the tender fee of US$5.25, which will no longer be applicable to ships that use the berthing facility, means the amount each passenger pays will remain roughly the same, US$18 per head, inclusive of port and environmental taxes which remain unchanged.
Premier Alden McLaughlin said he believed government had secured a great deal for the Cayman Islands.
He emphasised that no contract would be signed until the process to verify a petition calling for a people-initiated referendum had been completed.
And he gave, for the first time, an explicit assurance that government would proceed with a referendum if the campaigners are found to have met the threshold of obtaining signatures from 25% of the electorate.
The premier also claimed that at least 600 signatures submitted by the campaigners had been discounted by the Elections Office on the basis that they were duplicates or did not belong to registered voters. Cruise Port Referendum Cayman campaigners said they believed the premier was referring to signatures that they had already highlighted as invalid when they submitted the petition.
McLaughlin acknowledged, however, that the referendum group had submitted a “substantial buffer” and may still hit the target.
Even so, the premier said he was convinced that the majority of people in the Cayman Islands wanted the port project to go ahead and that the government would prevail if a referendum is called.
Monday’s announcement was described as a “significant milestone” in a project that has been in procurement for some six years. But McLaughlin acknowledged that there was much work to do before construction begins.
An updated environmental impact assessment on the final design, geotechnical studies of the harbour and the finalisation of the contract are among the next steps. The premier said he believed work would not begin until next summer at the earliest.
The construction of the port is expected to take two-and-a-half years to complete.
Though three bidders were shortlisted for the project, only Verdant Isle put forward a final bid that met the deadline and terms of the bid process.
McLaughlin said the winning consortium involved “trusted world-class companies” with decades-long links to the Cayman Islands.
He said every government elected since 2000 had a port as part of their election manifesto and insisted the project was badly needed for the future of the industry.
“This is a moment that the majority of the people in our islands have been aiming to get to for at least 20 years, if not longer,” he said.
Highlighting the “unique financial structure”, he said the deal ensured no risk to the government, and that no single cruise company would control the pier. Funding from other cruise lines, who had signed letters of intent offering part financing to the project, will not be required. Instead they have agreed passenger guarantees with Verdant Isle in exchange for priority berthing rights at the new pier.
McLaughlin said the model means the cruise lines are financially invested in the long-term success of the Cayman Islands.
The project involves no upland development other than modernisation of the existing facilities. The final design reduces the environmental impact by moving it to deeper water and involves a coral relocation project, the premier said.
He said he understood the frustrations of those who had criticised the government for not revealing more details of the project sooner. But, he said, critical issues like the exact cost, the design and the financing model were left to the bidders to determine in their submissions.
“While there have been a small number of opponents who were willing to do or say anything to cast doubt over this project, most Caymanians who have expressed their concerns or asked questions have done so for perfectly understandable reasons,” he said. “They are concerned that if the country is to embark on this project then we must get it right – the right design, the right costs and the right balance between the economic benefits and the environmental impact.”
He said he hoped that, having heard those details, people would now throw their support behind the project.
“I am confident the chosen bid option gets it right,” he added.
Tourism Minister Moses Kirkconnell said the announcement was a significant step forward for the country and insisted that new piers were necessary to cater to larger cruise ships, many of which do not typically use tender services.
“The evolution of the mega-ship has changed the face of cruising in the Caribbean. We are faced with a choice of either preparing to enhance this reality or accepting that we will be left behind,” he said.