Three vie for port privatization

Published 10:04 pm Wednesday, August 15, 2012

Virginia has received two alternative proposals to APM’s unsolicited bid to take over the state’s port operations, Transportation Secretary Sean Connaughton has stated.

In an email, Connaughton also said that the state does not plan to publicly name the alternative bidders, or detail their proposals, until an Aug. 22 briefing to the Virginia Port Authority Board.

Meanwhile, the Virginia Maritime Association, representing over 400 companies connected to the shipping industry, has expressed concern that privatizing the port could result in a damaging monopoly.

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Privatization “could have a significant negative impact on the Port of Virginia if it creates the fact or appearance of one steamship line having been given a competitive advantage over its competitors …,” an Aug. 8 resolution of the association Board of Directors reads in part.

According to the resolution, the association is also concerned that a private company could divert trade from Virginia to other ports “for its own financial benefit, regardless of the impact it would have on the Port of Virginia and the economy of the Commonwealth.”

On the other hand, the resolution also states that “if the proposals are evaluated purely on the basis of principles designed to enhance the competitiveness of the Port of Virginia …,” privatization could enhance trade through the port.

The resolution lists seven principles the association says any contract should adhere to, including that the agreement must stipulate a lease and the sale of terminals, proceeds to the state are reinvested in port infrastructure, and that terms and conditions “protect the competitiveness of the Port of Virginia.”

Under its proposal, APM, a subsidiary of Danish shipping giant Maersk, would pay state and local taxes and fund capital improvements at the terminals, including a major expansion of APM Terminals Virginia, ownership of which the company would also turn over to the state.

The deal is worth up to an estimated $3.9 billion to the state over 48 years.

As APM’s proposal was lodged under the state Public-Private Partnerships Act, rival bidders were given a period of time to lodge initial counter proposals, which ended on Aug. 13 after an extension was granted to allow groups more time to respond.

A similar process in 2009 involved three groups – CenterPoint Properties, the then-initial bidder, which has said it is opting out this time; a partnership between Carrix Inc. and Goldman Sachs; and the Carlyle Group, which is reported to have submitted a bid in the current round.

The current port operator, Virginia International Terminals, is also required to argue its case for being allowed to continue to operate APMT, Norfolk International Terminals, Newport News Marine Terminal and the Virginia Inland Port.

Container units through the Port of Virginia in 2011 were down 6 percent from 2006 pre-recession levels, according to figures provided by the Virginia Department of Transportation, although monthly figures for the second quarter of 2012 have improved on those of six years ago.

July figures were up 8 percent against July 2011, and year-to-date figures are up 5.8 percent on the same period in 2011, the Virginia Port Authority reported Wednesday.

However, of 13 East Coast ports, Hampton Roads is among five that have failed to reach 2006 levels, according to the department figures.