By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

The Grand Bahama Shipyard’s $350m investment in two new dry docks will provide a much-needed economic boost to the island in 2022, government officials confirmed yesterday.

Clint Watson, the Prime Minister’s press secretary, told media during the weekly briefing that the Prime Minister had met with Grand Bahama Shipyard executives to discuss its investment and expansion project.

“The Prime Minister met with principals at the Grand Bahama Shipyard, and Royal Caribbean and Carnival Cruise Lines,” he said. The cruise industry competitors each hold a 40 percent equity ownership interest in the Shipyard, with the remaining 20 percent controlled by the Grand Bahama Port Authority’s (GBPA) Port Group Ltd.

Mr Watson added: “The investment is pegged at hundreds of millions of dollars. It’s expected to begin soon, providing all approvals are in place. Once completed, hundreds of Bahamian businesses will benefit as well as opportunities for direct employment with the shipyard.”

The Shipyard is expected to possess a dry dock that is “the largest in the world” as a result of this expansion, Mr Watson said. Tribune Business understands that up to $80m of the required capital could be raised in the Bahamian capital markets, with the proceeds used to prepare the site to receive the dry docks that are currently being constructed in Asia and will arrive in the 2022 second half.

The Grand Bahama Shipyard’s plans were revealed earlier this year by former prime minister, Dr Hubert Minnis, who said: “I am pleased to announce that Carnival and Royal Caribbean have agreed to a new combined investment of approximately $350m in the Grand Bahama Shipyard.

“To understand the scale of this investment, the House may recall that the original investment - and other investments to-date in the Shipyard - have totalled approximately $250m. The new investment will match this and exceed it by $100m. The proposed infrastructure works will replace the two damaged docks with even larger ones.

“The new docks will be capable of handling and servicing the largest ships in the world. This will result in a notable increase in employment and economic activity on Grand Bahama, and for local businesses throughout Freeport and Grand Bahama.”

Giora Israel, Carnival Corporation’s senior vice-president for port and destination development, told Tribune Business earlier this year that Grand Bahama Shipyard will become “the biggest industrial concern in the Caribbean by far” if it proceeds with the investment to build the world’s largest floating dock.

He added that the Shipyard and its owners were currently exploring the “options and opportunities” to build such a dock in China to replace the one that was lost in April 2019’s accident.

Acknowledging that the COVID-19 pandemic’s devastating fall-out has impacted the ability of the Shipyard’s cruise line shareholders to fund this investment directly, he added that some financing may be raised in The Bahamas to help cover the costs of associated land-based infrastructure work that would accompany the new dock.

Mr Israel, who sits on the Shipyard’s Board representing Carnival as a 40 percent shareholder, with the remaining ownership split 40/20 between Royal Caribbean and the Grand Bahama Port Authority’s Port Group Ltd, said investing in a larger dock was under consideration prior to the April 2019 accident involving the Oasis of the Seas cruise liner.

“Royal Caribbean’s ship was being taken only partially out of the water because the dry dock could not carry such a big ship,” he recalled. “The manoevere had been done before, but this time something went wrong and the dock was destroyed. It was a total loss and had to be cut to pieces and taken out.

“That incident causes a lot of setbacks as we were unable to operate on other ships. The shareholders started the process of recovering the wreck and claiming the insurance proceeds. That process has not been completed.”

The accident meant GB Shipyard lost its status as the world’s busiest cruise ship repair facility, having serviced three-and-a-half times the number of vessels seen by any rival yard. The accident left the company functioning at just 25 percent capacity, especially after Hurricane Dorian damaged another dry dock in late 2019.

Mr Israel, though, said its shareholders had been anticipating “building a larger dock” in response to the increasing size of cruise ships that would have been “the biggest floating dock in the Americas”. Subsequent inquiries confirmed that such a dock has to be built in Asia rather than Europe, but the cruise industry’s enforced COVID-19 closure and billions of dollars in losses has disrupted financing plans.

“We are looking at our options and opportunities to build such a dock in China,” Mr Israel said at the time. “The COVID-19 situation put a strain on the ability of the shareholders to directly fund it. We’re looking at various options and opportunities as to how to build it and fund it. We’re looking at this process.

“We have to talk to the Government in due course as we get more advanced in this process. It [the dock] will definitely be the biggest in the world; by far the biggest in the world. We have a lot of engineers working on it. We have to bring it over from China.

Mr Israel said just 20 percent of the Shipyard’s clients prior to the April 2019 accident were cruise ships, with the 80 percent balance featuring cargo vessels, bulk carriers and naval ships such as Royal Bahamas Defence Force (RBDF) vessels.