Premier admits hurdles to port progress

| 30/10/2015 | 63 Comments

(CNS): The government still faces two significant hurdles before it can move its plans for a cruise berthing facility in George Town on to a request for proposals. The premier has admitted that the financing for the project and then persuading the FCO to give the project the greenlight based on that financing model as well as the environmental issues are hurdles that the CIG will need to pass before the dredging starts.

The government is convinced that Seven Mile Beach will not be harmed and the threat to coral reefs, wrecks and marine habitat in George Town Harbour is not seen by Cabinet as important enough to stop the project. This was illustrated by the premier’s recent comments that the government must choose between the economy and the environment.

Government has claimed it will aim to reduce the negative impact on the environment but has now backed moving the project to the next step, even though the environmental impact assessment makes it clear that there is very little mitigation that can protect the reefs.

This next step is to work out how to pay for the project, but with cost estimates ranging from anywhere between $150 million to over $300 million, government will need a serious commitment from the cruise lines. Government has insisted that the piers will remain in the hands of the public via the Port Authority and there will be no retail facilities leased to the cruise lines. This means the only way to finance the project will be through an increase in passenger taxes and numbers.

Even if the Cayman Islands Government can secure the substantial increase in fees that will be required to cover the costs, the project will require some form of borrowing as the Port Authority will not be collecting the hiked fees until the project is completed, which could take up to three years.

Given the potential price tag of more than $300 million, if a deal can be worked out where the cruise lines commit to the necessary fee increase and increased port calls, the UK will have to be convinced that the public purse is not at risk and that the project will be self-financing. However, at present the head tax of $14 per passenger is used by government as part of budgeted revenue and with 1.6 million passengers per year, it would create a significant hole for government to plug from elsewhere.

Speaking at Monday’s press briefing, Premier Alden McLaughlin said that the deal would need to pass these hurdles. However, he was hopeful that government would succeed in reaching the construction phase and said government would follow the process to get there.

“This is the approach we have taken with all of our infrastructure projects – the airport, the landfill, the revitalization of George Town and yes the cruise and cargo port. In everything we do, in every project we are shepherding along, we are doing so methodically, using best practice methods and at all times being open and transparent,” he said.

“The process with respect to this project is not concluded; it merely continues to the next stage. And as I have said before, there will be no dredges in George Town Harbour tomorrow, next week or next month. Instead, we will proceed carefully to ensure the minimum environmental impact as well as discussing with the cruise lines their participation in the financing so as to ensure the success of the project as well as to guarantee the long-term viability and benefit of the industry to local people and businesses,” the premier added.

How long it will take before the dredging starts depends on the deal reached with the cruise lines and how well CIG then presents its case to the British Foreign and Commonwealth Office, McLaughlin said, adding that he believed all the elements were in place to allow government to make a deal and begin the project before the general election in May 2017.

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Category: development, Local News

Comments (63)

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  1. Anonymous says:

    This sounds familiar:
    https://www.youtube.com/watch?v=gJtYRxH5G2k

    Is the Port our “stadium”? It seems very similar: private companies (the cruise lines and jewelry companies) use scare tactics to try and convince the government to spend almost incomprehensible about of public money to support their commercial ventures. First, they use the soft-sell, the economic argument that there will be a net beneficial effect on ancillary businesses living on scraps falling off the table. This is the same argument for public support (funding and tax concessions) for stadiums, casinos, and hosting games like the Olympics and the World Cup. But time after time, these effects never happen and the government / public are saddled with incredible debt and unintended and ignored side effects: infrastructure strain, crime (stadiums, casinos) and in our case unpredictable and irreversible ecological damage to the harbor, reef, and beaches, leading to even less predictable consequences to other things like stayover tourism. And like casinos, the cruise ship customers’ every need is provided for ‘in-house’, reducing to almost zero the ‘trickle down’ economic benefit we were promised.

    When the economic benefit argument comes up short, they try more aggressive scare tactics like threatening to move the team elsewhere or taking their cruise ships to a different port. Amazingly, they are trying this crap during the ‘courting’ stage. Before we have spent any money and could still tell them to go to hell. If they are threatening this now, imagine how much more threatening and demanding they can and will be after we have spent 200 (300?…500?) million dollars on a port that is completely dependent on them coming with their cruise ships to help pay our loan payments for the next 50 years?? A couple of years from now, they will say: “well, you know Cuba is open now, competition is hot, so if you don’t reduce or give us a cut of the headtax you counted on to pay off the ridiculous debt you incurred, we’ll just stop coming at all….” Or maybe “thanks for the dock, but now we need new roads, expensive attractions, and other things for our passengers or we’re still leaving.” And after the docks are built, there is NOTHING they won’t be able to demand because we will have no negotiating power, and we never will again, because we have crushing loan payments to make and will do anything to keep even a few dollars coming in.

    Here is the position we should be taking, before we have spent any money: You are the idiots building $1.5 billion ships the size of aircraft carriers. You are the ones that set the price of your product, gain all the revenue, and you are the ones that need places to bring them. So, building the docks to park them is YOUR problem. Build it into your ticket price. If you want to build a dock here, we might let you, if you pay the entire cost, PLUS give the people of the Cayman Islands $100,000,000 to improve the infrastructure to support this mess, to compensate for the lost revenue during construction, lost stayover tourists, and the irreversible environmental damage. Alternatively, we will gladly take all the ships and passengers that do not want to be in the same port with your Oasis class ships, and in the meantime we will improve our stayover tourism product by making the island just a little less crowded.

  2. UK Driftwood says:

    Just waiting for the Breitling shop at Kirk Freeport to open and to see all the Caymanians running and managing the shop.
    Because with all the thousands of fat cruisers in GT this is the way forward or is this type of work not good enough and will all the sales staff be foreigners on work permits and this is the true picture…

  3. Anonymous says:

    Didn’t the auditor general determine that around $1 Billion dollars has gone missing?

    Has this money been located?

    Now what could be done for the country if the money wasn’t spent on the pier?

    Cayman could position itself as an elite small cruise ship destination.

    WOW that would be amazing and a real proactive marketing plan for the country.

    No the downtown retailer related to the Minister and the rum cake king want a pier.

    It was only an idea.

    • Anonymous says:

      Where can we find that Auditor General report? If you are going accuse be prepared to support it with facts.

    • Anonymous says:

      Oh dear 9.53, get a grip will you? He said nothing of the sort. What he said is that certain future liabilities have not been taken into account in assessing the true state of Cayman’s finances. Nothing about “missing” money. But there is still time….

  4. Anonymous says:

    very scared of ppm or any caymanian government being in charge of such a huge expensive complicated project…….
    these clowns can’t even widen smith road without making a pigs ear of it……

  5. Joe B says:

    Caymanian leadership has never been successful in the past in anything they did. Smart money is on the never being successful in the future. Its not the things they do or should have done. Its the quality of the people doing it. The shit has not yet hit the fan from things already done and all eyes are on what they want to to now. The next big step in Grand Cayman will come after they finally realize that they are not the experts they claim to be and do something about that. Just like most of the modern world.

    • Anonymous says:

      Looks like gowernment is reaping exactly what they’ve sowed. They’ve allowed expatriates to take away 90 percebt of our people’s jobs now the expatriates are clearly intent on running the country.

  6. Anonymous says:

    While we are on the subject of difficult projects and the many hurdles that have to be negotiated… How are we doing on installing the new speed limit signs on West Bay Road?

  7. Anonymous says:

    The Premier is deliberately misleading the public at best or possibly woefully lacking in the understanding required to properly administer and make decisions on a national level at worst. Look at our public transport system, how on earth can he contemplate a project of this magnitude when the general public can’t even avail themselves of a reliable public transport system because the politicians are too afraid to rock the boat and lose the votes of a few taxi drivers and bus operators? Look at the current waste management system, how on earth can he consider proceeding with this project when there is no effective waste disposal facilities to handle the consequences of this shortsighted plan of blindly chasing after mass tourism? Across the globe we have examples of the negative impact that mass tourism has had on ecosystems and local communities yet this is all conveniently ignored. Instead of the country’s best interests, the interests of a wealthy powerful few are protected. It is appalling, once this project is completed and Cayman is transformed into a sick dystopia there will be no way to reverse what will prove to be the most irresponsible and reckless decision taken by an elected government, the environment both above and under the water will be damaged with no benefit to the public at large. Think of all the low wage imported labour for the construction, the usual culprits will benefit but not society.

  8. Vote Kirky 2017 says:

    Seven people at a fish fry not going to pay for it. That much I do know.

  9. Anonymous says:

    Speaking of accounting degrees you might want to get some facts together as well. One of the most common ‘falsehoods’ spread by the pro dock people is that the tendering service gets $5.50/head. Did you know that the truth of the matter is that almost 400,000 of the current arrivals are in fact self tendered by the smaller ships that still have the ability to do so rather than use the local services. The local business has never serviced all cruise arrivals. When you start recalculating around the truth it becomes even more of an economic disaster for Cayman to press again.

    • Anonymous says:

      Cns and save cayman had documents that showed the tender fee of 5.50 in 2012

      • Dan Brown says:

        It’s the head count part of the equation the poster is contesting not the fee. Ie , 5.5 , 1.2 million of the total 1.6 Million landings.

        • Anonymous says:

          so with maybe $5 million of landing fees will take about 100 years to pay off the 500 million dollar port. Not including interest. In fact, 5 million wont pay the interest (especially with rates about to increase worldwide), so in fact we will NEVER pay off the dock. Ever.

    • People For A Dump Free G.T. says:

      Did you also know that they count all passengers as “arrivals” even though many refuse to disembark? Can’t say I blame them, if I was to see that dump as we cruised in I wouldn’t be getting off either.

  10. Rp says:

    Who is going to lend us 300m when we’re 600m in debt plus another 1.3b unrecognized debt?

    This will not happen! There are only two choices for financing:

    1) cruise ships – but they will ask so much more in return for such an investment that we would not accept their terms.

    2) Dart – probably not as predatory as the cruise ships but still not acceptable to us given the control he will exercise.

    So? Where are we gonna get this 300m guys? From Mac’s Chinese friends?

    • Anonymous says:

      If lending to this project the Chinese would need less than $300,000,000.

    • Anonymous says:

      We’re going to send mac back to vegas to gamble it for us… The Lord will provide. So glad.you counted the ever loving mr dart out.

    • Anonymous says:

      Reality Check! the project will not cost $300m as that was a cost from the past when there was a huge upland retail development involved in the project. The real cost will be no more than $200m of which the cruise lines will contribute funding of 40-50% which reduces the borrowings down to $100-120m which is manageable with new CIG revenues generated by the project development.

      • Anonymous says:

        7:42 If the cruise lines do put money into this they will never accept anything but being a majority stakeholder. Unlike CIG they have to answer to shareholders who tend to get a bit upset if they don’t see decent returns on company investments.

        • Anonymous says:

          And hence in practical terms that would be a 100% sell out to foreign companies. Which is what will happen in the end if the deal goes through however it is structured.

      • Anonymous says:

        Reality check 7.42 no CIG project has ever been bought in on time or at budget and the estimates are $150 to $300m. Obvious Kirkbot just deciding for yourself that CIG can afford it. Not your money Bobo!

      • Anonymous says:

        Deeper waters means deeper construction costs for the project. People are fully aware of the games being played no project of this magnitude will be delivered at 150-200 million as claimed by the pro port group and listed in the original OBC. The pro port folks need to “put money where their mouth is” and help to finance it the project it’s such a good deal for Cayman.

  11. Anonymous says:

    You don’t need an accounting degree to understand that without the cruise lines having to pay anything extra, just taking the $5.50 per person that comes as a tender fee, if you make that a berthing fee you are talking about over $12.5m a year. So without even raising the cost of coming to Cayman to the cruise companies you can pay off the project in 20 years or less at the current projected cost. If it hits $300m (which it should not since all the other projects that were $300m had way more dredging, upland development, hotel, casino etc) then it will be more like 25-30 years but still within the realm of reasonable financing terms.

    • Dan Brown says:

      I hope you don’t have an accounting degree because 1.6 million x $5.5 tender fee sure as heck isn’t $12.5 million or anywhere near it. And if you think you can finance $150 million capital cost, let alone $300 million, off a $ 8.8 million revenue stream and repay it in 20 years once you allow for interest you are delusional ( passing lightly over the fact that no one is guaranteed the passenger numbers for the next 20 years)

  12. The Queen says:

    None of you all are touching my bottom.

  13. Tee'd Off says:

    How many golf courses could be built for the price of this dock facility?

    As always Cayman studiously ignores the real money.

  14. Anonymous says:

    Anyone that argues that this government has not gone through this process in the most open and transparent way is a fool.
    Would you rather go back to the Mac days where no one knew what was going on?

    • Neo says:

      The only thing that’s transparent is that they don’t care about how the Caymanian people feel about this project..

    • , says:

      It’s not even about politics it’s about Cayman, it’s people, their money, and the future for generations to come. We shouldn’t have to settle for one idea (Mac’s) or the other (Alden’s). They don’t represent the ideas and views of everyone, and this affects everyone. It’s not the case that we should just have a dock regardless of the cost or consequences.

  15. Anonymous says:

    It’s not so much hurdles as steps or stages but at least its moving forward

  16. Anonymous says:

    Your biggest hurdles are your own people Mr Premier. We want a referendum and if we have to write to the FCO to make our objections heard, then we will do so should you deny us.

    • Anonymous says:

      Write to the FCO to object about this? LOL, best of luck with that!!!!!!!

      The UK doesn’t give a toss about these islands and Carnival already has professional lobbyists pushing them for the dock.

    • Anonymous says:

      The aye’s have it, anonymous. Understnd that the nays are a minority that very simply don”t have a chance at depriving the rest of us in your greedy self interests.

    • Raymond Ditmars says:

      I wonder why our leadership is against a referendum. Is it because they know the people are against this pie-in-the-sky budget-busting project?

      • Anonymous says:

        9:41 More likely a real fear that a ‘NO’ vote might prompt the cruise lines to say, “OK, XXXX you we’re going somewhere else.” The cruise industry is evolving so quickly at present that there is still a very real possibility that, whatever happens with the dock, Grand Cayman could suddenly find itself off the cruise itineraries.

        • , says:

          Dock or not, Carnival and others will still dump you as has already been proven elsewhere before Cayman. For them, it’s not about Cayman having a dock, it’s about them making $. Wherever it comes from. You are fools if you believe the cruise lines will ever throw you a lifeline.

  17. Anonymous says:

    You would have thought, that maybe before all the fuss was made, that they would have got the finance and greenlight (as least verbally) from the FCO before committing and going public and voting? I know that politically they will wish to blame UK if UK says no, but it still all seems ar$e about face to me…and a crap project overall…If Alden wants to leave a monument to his reign, let it be that he got the education system sorted…not this white elephant.

    • Anonymous says:

      You should go back and actually read the business case which was started from UDP last term and then completed now and look at the steps set forth. This government is following exactly the process it needs to be.

      • Anonymous says:

        Yes 11.36, totally ignoring PWC’s point that THERE IS NO GOOD BUSINESS CASE for this, without much more study. Now who should I trust, mickey mouse politicos of all kinds who have shown time and time again that they cannot add up, or one of the largest and most professional advising companies in the world. Tough one. Let me think on that.

  18. Mark says:

    Like what they did last time they was in, Too many project being started all at once. Schools still needs to be finished, Airport started, Bypass needs to be completed, Smith Road needs to be done, Crewe Road needs to be started and now the Dock. Try and finish some of them and they will have more money Coming in. IF I was the government I would build the dock at Spotts beach. They Way Government is still charging 14 Dollars per passenger when they come here, and if the tourist want to see GT or EE they will pay the additional cost as well for the trip……..HELLO this is call bring more revenue to the country not just Government but more people. Once people makes money they are will to spend it as well. But nobody never listens. Finish a project first. or would the government prefer to start it like GAB and UDP finish it?

    That I my two cents

    • Sunrise says:

      I have been asking the same question Mark, but so far no pro port or save Cayman have answered!! Was any studies done for a pier to be constructed in the Spotts area? Now we have already spent over four million dollars and still don’t know where the financing is coming from!!! Or is it that they already know but is not being transparent about this? Maybe CNS can update if there were any studies done at Spotts? I still say this location will be more beneficial for the majority of locals!! But the real question here is: do we count for anything else besides a vote?

  19. Revelations 3:45 says:

    The numbers simply do not add up. PWC stated that the data was inconclusive in the OBC. Cruise lines will not pay 100% of costs without full ownership of the facilities and full upland development for its owned and operated retail shops which will not be allowed.

    So how does this project pay for itself and move forward to get support from the FCO? How can thet cruise lines guarantee the numbers over 30-50 years and not include “force majeure” clauses that are standard and stipulated in contracts to protect itself?

    There are more risks and questions than answers which this government cannot ignore if it is truly operating in the best interests of Cayman.

    • Anonymous says:

      You must have bought the cribs notes or skim read through. The final summary from PWC states that in both the best and worst case scenarios the project benefits outweigh the costs.

  20. Anonymous says:

    “and at all times being open and transparent.”

    Complete BS Alden.

  21. Anonymous says:

    Big plans, big wishes, big fees, big ships, UK would be fool to approve any project of this nature.

    Put development in hands of private sector and see what their response would be – bet money invested would not be worth it to them unless it had retail space!!!! Sorry Kirk Freeport, not sure you would stay in business under this scenario

  22. Anonymous says:

    Good job Mr. Premier. Let’s get on with it!

    • Anonymous says:

      Once the government can spend hundreds of millions that it doesn’t have, then this is a good idea. Unna better be watching just how friendly the US is becoming with Cuba. And unna better pray that a Republican gets in next time – as you can see how friendly the current administration is to the Cayman Islands

    • Anonymous says:

      The fact that you got to persuade the FCO should tell you something. And the Minister for Tourism needs to abstain from any Cabinet votes – conflict of interest????

      • Anonymous says:

        It won’t be CIG doing the convincing (lobbying?) at the FCO but Carnival who have huge financial interests in the UK including global headquarters in Southampton along with ownership of both Cunard and P&O – two companies whose links to the UK government go back a very long way. If Carnival say they are willing to put the money up for the dock the FCO aren’t going to get in the way.

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