Puerto Rico’s cruise ship berths to benefit from expansion and upgrade

2022-08-27T10:31:21+00:00 August 27th, 2022|Ports|

Puerto Rico is to establish a public-private partnership to overhaul the island’s cruise ship berths as part of a $425 mill project to boost its tourism sector.

The US dependency’s Governor, Pedro Pierluisi, said at a recent press conference that the project aims to transform Puerto Rico into the Caribbean’s main cruise ship destination by modernising, repairing and expanding nine berths located in San Juan to receive larger vessels and thus more passengers.

“It’s an extremely important day for tourism in Puerto Rico,” said Carlos Mercado, executive director for the island’s Tourism Company.

San Juan Cruise Port — operated by London-quoted Global Ports Holding (GPH), — will be responsible for overseeing the project as part of a 30-year deal with Puerto Rico’s Ports Authority that took five years to come to fruition.

Under the contract, the island’s government will receive annual payments representing at least 5% of the operator’s gross income, according to Associated Press.

Part of the deal stipulates that the number of berths currently able of serving four cruise ships simultaneously will double to eight. The berths, battered by hurricanes Irma and Maria in 2017 and that have seen decades of wear, as the first one was built in 1970, will be modernised.

“We haven’t been able to compete on a large scale with other jurisdictions,” Pierluisi said.

Joel Pizá, executive director of Puerto Rico’s Ports Authority, said the berths are currently not designed to receive larger ships of 5,000 pax or more at a time.

He also revealed that the agency is $350 mill in debt, which makes it hard to issue bonds to repair and improve the berths, despite federal officials identifying serious structural deficiencies that would require more than $200 mill to fix.

“This is the reality,” he said. “Capital investment is more than needed at this moment.”

The maximum docking fee and passenger fee are not expected to change as part of the deal, officials said.

Previous private/public partnerships have led to private companies taking over management and operation of the island’s main international airport, some highways and the transmission and distribution of power, among others.

Puerto Rico hosted a record number of cruise ship passengers prior to the pandemic, only for the berths to be closed for 16 months. However, the government reported more than 420,000 pax handled in fiscal year 2021/2022, a 23% recovery, compared with the 2018/2019 fiscal year

This fiscal year, officials expect more than 1 mill pax — roughly 80% of pre-pandemic traffic — with eight new cruise ships scheduled to visit the San Juan port for the first time, AP reported.

GPH was recently awarded the concession to manage San Juan’s cruise port and became the third largest port operation in its portfolio. The company also operates cruise ports on Antigua and Nassau, Bahamas.

The cruise port operator said that it expected to commence  early next year, subject to the satisfaction of the closing conditions, including financing. The company was selected as the winner of a competitive procurement process managed by the Puerto Rico Public/Private Partnership Authority for the cruise port’s concession.

Under the agreement, GPH will pay an upfront fee of $75 mill to the Puerto Rico Ports Authority and invest $100 mill in improving port facilities and infrastructures. The initial investment phase will primarily focus on critical infrastructure repairs at piers 1 and 4 and Pan American piers, as well as upgrades of the terminal buildings and the walkway.

GPH has also committed to investing an additional $250 mill in a second phase that will involve  cruise port’s expansion by building a new cruise pier and a homeport terminal capable of handling the world’s largest cruise ships at piers 11 and 12.

The company plans to finance the investments through private capital, it said.

“The addition of this fantastic location to our cruise port network marks a further important step in our growth strategy and will grow cruise passenger volumes across our network to over 16 mill passengers per annum,” said Mehmet Kutman, GPH CEO.