Prime Minister Bruce Golding said Wednesday that the government was getting ready to divest the debt-burdened port of Kingston, and already its rival, Kingston Wharves Limited is lining up to buy it.
The Port Authority, though profitable, has $21.7 billion of debt weighing down its balance sheet, and now the Golding administration has taken the decision to cut the port loose - as it is now doing for sugar and Air Jamaica - before it becomes an albatross.
But whereas the latter two operations - both big loss-makers - have had rocky roads in courtship, the port continues to spurt profits above a billion dollars.
At March 2008, however, Port Authority's profits of $1.03 billion, was more than 40 per cent below the 2007 results of $1.76 billion.
Kingston Wharves, a company ultimately owned by Michael Lee Chin through National Commercial Bank, which does a fraction of the business that its neighbour Kingston Container Terminal commands - and has found itself losing business to the state-owned entity - says the two operations would make a perfect fit.
"We have always shared the view that the two entities should be merged and the time has come for it to be given serious consideration," chairman and chief executive officer of Kingston Wharves, Grantley Stephenson told the Financial Gleaner.
"We are definitely interested."
Still to be determined is how much of the port operation Jamaica will retain, the method of divestment, the time frame, and whether the plan is to sell the debt along with the assets.
The Port Authority says it is in the process of recruiting consultants to drive the privatisation process, and that all those matters would be determined down the line.
Consulting services
"The Port Authority of Jamaica has invited tenders to attract the relevant consulting services for work on the privatisation process. Those tenders are being evaluated prior to the selection of an applicant for submission to the National Contracts Commission," Pat Belinfanti, assistant vice-president for public relations said in response to questions from the Financial Gleaner.
"There are various options available in pursuing privatisation. It is too early in the process to answer your questions specifically."
Golding announced the privatisation plan at a ceremony in Montego Bay at Sangster International Airport with Spanish monarch King Juan Carlos and Queen Sofia, who were in Jamaica on an official visit.
"It is the government's view that private sector interests are better able to manage these facilities while still being able to support and conform to the broad national objectives of the country," said a statement from the prime minister's office quoting Golding.
The Spanish already have temporary control of Sangster's for another 25-30 years, under a concession agreement between MBJ Airports Limited and Jamaica.
It's not clear whether Golding chose that ceremony to telegraph to Spain that other big assets were on the market.
Privatisation
"We have begun to put together plans for the privatisation of the Kingston Port," Golding said without elaborating.
The merger and privatisation of the operations of Port Bustamante have been under consideration for some time following calls from the former owners of the facility, the GraceKennedy group. At the time GraceKennedy sold Kingston Wharves to a group of investors lead by the Shipping Association of Jamaica and National Commercial Bank, then Grace official Don Wehby called for the merger. Wehby is now minister without portfolio in the finance ministry.
Having borrowed heavily to finance its infrastructure expansion over recent years, last year the PAJ announced plans to refinance US$143 million (J$10.15 billion) of the loans on its books in an effort to bring down its spiraling debts, which were expected to reach about $32 billion in 2008.
Parliament subsequently rubber-stamped the debt refinancing plans following Cabinet approval.
huntley.medley@gleanerjm.com