Potter's Cay threat to 'tax and security'


Tribune Business Editor


The Arawak Port's top executive yesterday sounded a renewed alarm over the risk to "national security" and tax revenue posed by the continued landing of international cargo at Potter's Cay.

Michael Maura, writing in the BISX-listed port operator's just-released 2018 annual report, said it was in "ongoing" talks with the Ministry of Finance to address a problem that "undermines" the Government's security and revenue objectives.

"The company's [Arawak Port Development Company's] 2018-2019 budget also considers the continued landing of international origin cargo at Potters Cay," Mr Maura told shareholders.

"Discussions are ongoing with the Ministry of Finance in the hope of addressing the issue in the near future. This activity undermines national security, public treasury revenue collection objectives, health and safety standards and the cost of living."

Mr Maura's comments reiterate a similar warning made in APD's annual report several years ago regarding potential security and tax evasion loopholes at Potter's Cay, which is supposed to be for domestic cargo and passenger traffic.

While some observers may argue that APD's concerns are motivated by self-interest, and a desire to secure more income and dominate the market, the agreement that created it in 2011 effectively gives it a 20-year exclusivity on commercial shipping and container facilities on New Providence.

And Potter's Cay lacks many of the security measures needed to prevent the smuggling of contraband, such as drugs and firearms, into The Bahamas, plus ensure that the Ministry of Finance receives all due revenue on goods imported into The Bahamas.

Mr Maura, meanwhile, served notice that APD will continue to pursue its interest in the cruise port management contract and its liquefied natural gas (LNG) bunkering partnership with New Fortress Energy during the current financial year that closes at end-June 2019.

"The LNG could support the fuel needs of New Providence, establish the Nassau Container Port as an LNG bunker alternative for the many cruise ships sailing our waters, and facilitate the transshipment of LNG to microgrid power plants in our Family Islands," he told APD's 11,000 shareholders.

Should either this or the cruise ship initiative succeed, Mr Maura said the financial benefits would be reflected in APD's fixed 10-12 percent internal rate of return (IRR), enabling it to lower the Nassau Container Port's cargo tariffs and give Bahamian consumers access to lower-priced goods.

"The new income derived from these operations, once factored in APD's IRR maximum cap formula, would subsidise the Nassau Container Port general cargo tariff, supporting lower port costs for groceries, building materials and other essential goods," the APD chief said.

"Second, APD is currently focused on business expansion opportunities, which support an increase in the national economy and not a transfer of wealth from one Bahamian entity to another.

"Third, APD dividends to-date have been exclusively dependent on income derived from general cargo throughput, handling, storage and rents. The diversification of APD's business to include LNG bunkering and cruise port operations is expected to mitigate possible future yield declines, arising from future recessionary shocks."

Mr Maura added that APD's shareholders received $5.647m in dividends during the company's 2018 financial year, representing a $648,599 increase over the prior year, with the annual report noting that the Government's 40 percent equity stake has earned it a collective $8.02m since 2014.

Noting Customs' declaration that APD's technology and port facilities investments have helped it increase revenue collections by $100m, APD'S annual report added: "From the Public Treasury proceeds from operation and investment, the Government today receives over 22 percent of every $1 revenue generated by the port company.

"Vessel stevedoring productivity has increased by more than 40 percent, which translates into dollar savings for carriers.... Increased port efficiency has reduced trucker turnaround time from the historical average of 50 minutes to 19 minutes. With more deliveries in a day, truckers have the potential to earn more."