Government held a press conference Monday to outline details of the planned cruise and cargo port project. Premier Alden McLaughlin, Deputy Premier Moses Kirkconnell, Chief Officer in the Ministry of Tourism Stran Bodden and Project Manager Peter Ranger gave details of the project and answered questions from the media.
McLaughlin said they had been unable to give crucial details about the cost, funding formula and final design until now, because those specifics were all determined as part of the bid process.
Here, we summarise the key information from the press conference.
Who won the bid?
Verdant Isle Port Partners were announced Friday as the preferred bidder for the port project. Verdant Isle is a company set up for the project comprising construction firms McAlpine Cayman Ltd., Orion Marine Construction, the Carnival Corporation and Royal Caribbean Cruises Ltd.
Why was its bid selected?
Though nine companies submitted outline proposals when the bid process opened in 2017, only three were shortlisted in the final round of proposals. Of those three, only Verdant Isle met the deadline. According to the Central Tenders Committee, it received a ‘pass’ on all criteria and a total bid score of 78.18 out of 100.
What will the project cost?
Verdant Isle put forward three alternate proposals with different specifications. Its principal bid was budgeted at CI$229.6 million, with alternate ‘value’ options at $207.9 million and $196.5 million. Government opted for the least expensive option.
Who is going to pay for it?
The upfront costs will be funded by Verdant Isle with 40% coming from direct capital from the cruise lines and 60% from a bank loan.
What is in it for Verdant Isle?
Verdant Isle gets access to the passenger revenue streams for the 25‑year life cycle of the project. Its income will come from a per-passenger fee of US$8.05 per head for year-round vessels and US$6.05 for seasonal vessels. Based on an estimated two million annual passengers, the company could be expected to net somewhere between US$12 million and US$16 million annually – more if passenger numbers rise beyond two million.
So cruise passengers will pay for the port?
Every cruise passenger that comes ashore in the Cayman Islands is already charged around US$18-a-head, being a mix of taxes and tender boat fees.
Under the new formula, they will be charged roughly the same, with government taking slightly less tax and the tender fees disappearing with the arrival of the dock.
The amount going to the Port Authority and to the Environmental Protection Fund will remain the same.
So government gets less tax revenue?
Under the proposed funding formula, government will make US$2.32 less per cruise passenger. Government leaders said Monday they expect the net revenue to be higher because of an increase in overall cruise passenger numbers compared to the alternate scenario of not having a dock. Premier McLaughlin said he believed government had struck a unique deal that secured the future of the cruise industry without any financial risk to the government.
What happened to the funding from the other cruise lines?
Disney and MSC had signed letters of intent to provide loan funding to the winning bidders. Ultimately, that option was not taken up by Verdant Isle. Instead it has agreed ‘passenger commitments’ with those cruise lines to bring a certain number of visitors each year in return for priority berthing rights.
What about the referendum, could that still happen?
Verdant Isle and government have a ‘preferred bidder’ agreement, not a signed and sealed contract. Premier McLaughlin said nothing would be finalised until after the verification process is complete. If the campaigners hit their target number, he said a referendum would take place.
“We respect the constitution. If they do get the numbers, then they will have a referendum. The sooner the better,” the premier said.
So government supports a referendum now?
Not exactly. The government still sees this as a potentially costly delay in getting this project over the line.
McLaughlin had some strong words for some of the campaigners, who he believes are politically motivated, and indicated that it would require every one of the necessary 5,292 signatures to be verified before a referendum would be called.
He said he understood some of the concerns about a lack of information on the project, but suggested now the information had been provided, people would be satisfied with the deal on the table.
“I have no doubt,” he said, “that even should we go to a referendum that it will be won overwhelmingly in favour of us completing the project and placing our islands in the best possible position to maintain and grow an important part of our economy.”
Is the new design more environmentally friendly?
A detailed map of the new design has not been provided at this stage. The Compass has requested this and will publish when we receive it. Government says the footprint of the piers is more environmentally friendly than the original design, analysed in a 2015 environmental impact assessment. The piers are pushed into deeper water, resulting in less dredging and less coral damage. The facility consists of two finger piers resting on pilings to “allow marine life to move freely underneath’ (see diagram).
Will there be another environmental impact assessment?
Baird, the authors of the original EIA, have been retained to update the document with reference to the new design. Polaris Applied Science, the company that worked on coral restoration at Eden Rock after a cargo ship ploughed into the reef there in 2016, has been hired to work on a coral relocation plan.
It was not clear if the cost of relocating coral was included in the $196.5 million budget for the port.
Peter Ranger, the project manager, said the next step would be to submit documentation to the Environmental Assessment Board and for a scoping study to take place outlining the differences with the 2015 design and what new studies would be required.
Is there any retail development?
There will be no “upland development”, according to Tourism Minister Moses Kirkconnell. He said the shops and businesses of George Town would benefit from the dock, rather than any cruise line owned retail development – a formula that has been used in other locations. “This will be the anchor for the George Town revitalisation,” he said.
What about the Royal Watler tenants?
The Royal Watler terminal will come down as part of the project, but a similar square footage of retail space will be retained. The existing tenants will get preferential rights in bidding for space in the new terminal, Kirkconnell said. This process will be run by the Port Authority along similar lines to the process used for concessions at the airport, he said.
What are the benefits of the project?
Tourism Minister Moses Kirkconnell claimed the “evolution of mega-ships” in the Caribbean meant Cayman had to build a pier that could accommodate them or risk the decline of the cruise industry. He said building a pier would protect existing jobs and create new ones.
“With more cruise passengers there will be a need for more taxi drivers and tour operators, more staff will be needed in retail establishments and restaurants, and obviously hundreds of construction jobs will be needed in the build out,” he said.
Was China Harbour ever involved?
It is understood that China Harbour was one of the three shortlisted bidders but did not submit a detailed bid in time for the final deadline.
Who will run the port?
The Port Authority retains control and ownership of the port, and the revenue streams will revert fully to government after 25 years.
Is a cargo port included?
The port design does include space for a new cargo dock, as well as a new dock for tender boats. It is understood that the cargo plans were scaled down slightly from what was originally envisaged to keep the costs under control.
The full details and design specifications for the cargo port are not yet available.
What happens next?
The next step is to agree to a final contract with Verdant Isle, recommence the EIA agreement and obtain permit permission for early works, including geotechnical studies of the harbour. After that, a presentation will be made to caucus before Cabinet considers awarding the final contract. Depending on the result of the petition verification process, a referendum could be squeezed in at some point after September. McLaughlin said this would happen before the end of the year if it is necessary.
So when will building of the port begin?
No one was willing to commit to a specific start date, with so many moving pieces to the puzzle. The final contract negotiations could be lengthy and the EIA process, which involves public consultation, could push things back further. A referendum may also shift the timeline. McLaughlin said he believed the second half of next year was a fair guess for the likely start time if all goes according to plan. Construction is expected to take 2.5 years.
Unanswered questions? Still got questions about the port project. Email [email protected] and we will try to get them answered.