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by pltm
(PLTM) - The financial standing of the British Virgin Islands Ports Authority (BVIPA) was brought into question on Thursday, September 13, when approval was sought and granted by the House of Assembly to Premier and Minister of Finance, the Honourable Dr. D. Orlando Smith to secure a $5.8 million loan for that entity. However, the Government side is seeking to assure the public that the Ports Authority is not ‘broke’.
According to the request, the loan from FirstCaribbean International Bank will be utilised to purchase equipment, as well as fund interest and net swap payments, and guarantee a Line of Credit.
The breakdown indicates that $2.1 million of that amount is to be used for funding interest and net swap payments, while another $2 million is for guaranteeing a Line of Credit. The remaining $1.7 million has been listed for the purchasing of port equipment.
In debating the motion put forward by Dr. Smith, Opposition Member and Third District Representative, the Honourable Julian Fraser called into question the state of the BVIPA, probing whether the entity is “broke”, given the sum of money being sought from the lending institution.
“This is an embarrassment; look at the sum of money we are talking about…$5,800,000. Why would the Ports Authority be borrowing $5,800,000? And when you look at the breakdown, it’s even more embarrassing. $2,100,000 funding the interest and net swap payment….funding interest. Since when you borrow money which is a loan to pay off a loan? You’re not even paying off the loan, you’re basically servicing the loan. It suggests to me that the Port is broke,” he told the House.
According to the Opposition Member, the request paints a poor picture of the Ports Authority’s state, saying, “When the pubic sees something like this, it sends a message. Is this a message that you want to send? That the Ports Authority has to borrow $5.8 million. And part of it is operational funds and part of it is to pay off a loan…not pay off a loan, pay the interest on the loan?”
Recovery Plan
Hon. Fraser pressed the Government side on recovery plans for the Ports Authority, as he sought information on plans to revive the entity.
“What are we presiding over here? Are we presiding over a corpse? If it’s sick and has to be mended, I need to hear that,” he affirmed.
The Opposition Member also scrutinised a statement by Governor of the BVI, Augustus Jaspert earlier in the day during his Speech from the Throne. The Governor had stated that “Government will seek to amend the Ports Authority Act, 1990 and its enabling regulations,” adding that, “the amendment is to facilitate overall improvements to the day-to-day operations as well as during times of emergencies and crisis. It will also strengthen our compliance with the International Ship and Port Facility Security (ISPS) Code and pave the way towards BVI becoming a premier transshipment point in the Caribbean region.”
Hon. Fraser lambasted the Governor’s pronouncement, saying that, “These are words that are thrown out there to appease those who don’t know better.”
“Transshipment, it’s nonsense. The Ports Authority has to come up with a better plan. If it doesn’t have one, it needs to get one. If it has a plan, you need to bring it forward to us as to where the Ports are going forward,” he affirmed.
According to the Third District Representative, he needs to see a recovery strategy for the BVIPA.
“What I need to see is how you’re going to get out of the situation you’re in. Are you going to need another $5.8 million in another eight months to do the same thing or do you have a revenue stream that’s going to cover this stuff and get you out of where you are?”
Recuperation
In defending the request, Minister of Communications and Works, the Honourable Mark Vanterpool assured that while the BVIPA suffered great losses due to the 2017 hurricanes, it is not “broke.”
“The Port is not broke. The Port through its insurance did receive in the last two months or so $9.9 million in insurance recovery for some of the damages they had throughout the Territory. About $4 million was spent out of this and the rest of the funds have been received and is there,” he made known.
However, he pointed out that the Ports Authority suffered major revenue losses “as a result of the cruise ship business being almost discontinued.”
Addressing the loan, Minster Vanterpool revealed that negotiations have been in progress for almost six months and began after their bankers recognised the need to keep loan funding current. “So that when we get back on track, we would be current with the bank.”
In regards to the breakdown of $1.7 million for the purchase of equipment, Hon. Vanterpool divulged that “one of the main importer’s equipment is what was being used to move around the containers and operate the Port so that the Port itself did not have full command of managing the logistics on the Port.”
“Therefore at that time, we approached the bank to look at how they could help us to finance the equipment we are trying to get. The main equipment was two 35 tone reach stackers and these were the main cost of the $1.7 million. They’re very expensive,” he stated.
He further disclosed that within that equipment budget, provisions are made for the procurement of two heavy jockey trucks and several forklifts. He told the HoA that “the Port will recoup some of this by charging for the use of these equipment.”
As it relates to the Line of Credit, he affirmed that these funds are for “temporary allocation purposes when the Port may be short of cash and that’s what it is for, it doesn’t necessarily have to be used. We requested it at a time when we felt that it was needed and we feel that we should have that line there available in the event that we need to use it.”
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