Puerto Rico cruise ship docks face $425M public-private deal

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Tue, August 16, 2022 

SAN JUAN, Puerto Rico (AP) — Puerto Rico’s governor on Tuesday announced a public-private partnership to overhaul the island’s cruise ship docks as part of a $425 million project to boost the U.S. territory’s tourism sector.

Gov. Pedro Pierluisi said the project aims to transform Puerto Rico into the Caribbean’s main cruise ship destination by modernizing, repairing and expanding nine docks located in the capital of San Juan to receive larger vessels and 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 — a subsidiary of London-based Global Ports Holding, the world’s largest cruise port operator — will be responsible for operating and overseeing the project as part of a 30-year deal with Puerto Rico’s Ports Authority that was five years in the making. The contract states the island’s government will receive annual payments representing at least 5% of the operator’s gross income.

As part of the deal, the number of docks currently capable of serving as base port for four cruise ships at a time will double to eight. Crews also will modernize docks battered by hurricanes Irma and Maria in 2017 and that have been worn down throughout the decades, with the first one being built in the 1970.

“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 docks are currently not designed to receive larger ships or 5,000 passengers or more at a time. He also noted that the agency is $350 million in debt, which makes it hard to issue bonds to repair and improve docks despite federal officials identifying serious structural deficiencies that would require more than $200 million 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.

The announcement is the latest public-private partnership that the U.S. territory has launched as the central government and certain public agencies emerge from a deep bankruptcy amid an ongoing economic crisis. Previous partnerships have led private companies to take over management and operation of the island’s main international airport, certain highways and the transmission and distribution of power, among others.

Some have criticized the newest partnership, demanding that federal officials scrutinize the privatization of some $5 billion of infrastructure for an upfront initial investment of $75 million. Puerto Rico Rep. Ángel Matos García, spokesman for the majority of the island’s House of Representatives, said he and other politicians will be meeting with federal officials in Washington, D.C. to talk about the deal.

Tourism represents less than 7% of Puerto Rico’s economy, but officials hope to change that with the newest partnership, with work slated to start next year.

Puerto Rico saw a record number of cruise ship passengers prior to the pandemic, only for the docks to shut down for 16 months. But business has since rebounded. The government reported more than 420,000 passengers in fiscal year 2021-2022, a 23% recovery compared with the 2018-2019 fiscal year

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