PwC scores Kingston port divestment contract
Published:Wednesday | August 3, 2011 | 12:00 AM
Port Authority of Jamaica (PAJ) has struck a more than J$300-million deal with auditing and consultancy firm Pricewaterhouse-Coopers Jamaica to handle the divestment of shipment hub Kingston Container Terminal (KCT), one of the region's busiest ports.
The move to privatise the profitable port comes as it embarks on another round of expensive expansion.
Port Authority has negotiated at least two contracts with PwC amounting to a total US$3.825 million (J$333 million).
The larger transaction, US$3.33 million (J$286 million), was endorsed by the National Contracts Commission in June - which described the contract as consultancy for phase two of the divestment - but would need Cabinet approval prior to its award.
The first contract in May 2009 was for US$525,000.
The KCT is run by the PAJ, which is a government public body. Neither PwC nor PAJ returned calls up to press time.
The KCT is currently seeking business from major new shipping lines, and in April, local engineering firm Smada Consultants was selected for a multimillion-dollar contract to expand the port by 14 acres.
Prime Minister Bruce Golding officially announced in February 2009 his administration's intention to divest the profitable but capital-intensive port. The model of divestment is still uncertain, though there have been suggestions that a stock market float was a possibility.
"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 at the time. Shortly after, rival Kingston Wharves Limited - which is owned substantially by National Commercial Bank - expressed interest in buying KCT.
The KCT is projected to earn J$10.4 billion in revenues in fiscal year 2011-12, up 11 per cent over year earlier levels. Capital expenditure was estimated at J$530 million last fiscal year, spent on the KCT and the KCT 5 Western Expansion.
Some J$150 million is projected for expenditure this fiscal year. PAJ is projected to earn $2.17 billion in profit this fiscal year, down from $2.78 billion in 2010-11. It operates with J$14.7 billion in equity.
Having borrowed heavily to finance its infrastructure expansion over recent years, in 2007-08 the PAJ announced plans to refinance US$143 million of the loans on its books in an effort to bring down its spiralling debts, which were estimated to have hit J$34 billion last year amid disclosures that PAJ was short on working capital and facing a liquidity crunch.