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Guyana port development proposals

Call for action to fix Georgetown harbour

In Guyana’s maritime history, February 2013 may be remembered as the month in which talk turned to action. After years of discussion, deliberation, debate and dialogue, specific proposals for the development of Port Georgetown were formally presented to the national government by way of the Minister of Public Works and Communications.

The proposals, contained in the document ‘Concept paper for the improvement of the Georgetown Harbour through public/private sector partnership’, set out a path to dealing with the mounting problems that have been distressing port users and, at the same time, hindering Guyana’s national economic development.

Perhaps the most urgent of the problems is the water depth in Georgetown Harbour and, specifically, in the access channel. As Clinton Williams, former chairman of the Shipping Association of Guyana (SAG) noted, this channel is always under threat from heavy silting during outflows from the Amazon River. This has hampered commercial shipping for some time.

The current SAG chairman, Desmond Sears, said the Association had been voicing its concerns about the shallow draught of the Demerara River Channel for a number of years. In his first major address as chairman, at the 2013 SAG Awards ceremony, Mr. Sears made a link between depth in the access channel and Guyana’s national economy.

Producers

“The draught places restrictions on the size and weight of vessels and cargo going in or leaving the port,” he said. “It has had a negative impact on shippers, the commercial sector, the public sector including GuySuCo [the Guyana Sugar Corporation], and the private productive sector. Business across the spectrum has slowed down.”

The SAG chairman said local producers had lost markets in the Caribbean and elsewhere because cargo vessels could take out only limited volumes of cargo. The same situation applied to imports, he said.

In addition to the draught there are, of course, other problems, including incidents of piracy, theft and loss from international and local vessels; the lack of a fire-fighting vessel; poor pilotage services because of equipment and human resource constraints; and a lack of adequate navigational aids. The state of the access channel is the biggest concern, however.

Challenges

“Maintenance by capital dredging is the only solution,” Clinton Williams told guests at an SAG function last year. “From chart datum of 6.0 metres over many years, the period 2008 to 2011 has seen the level dropped drastically to approximately 4.5 metres,” 

At the very least, Mr. Williams sees this as a major problem and links it to the growth of the country’s shipping industry. Indeed, he believes the most immediate challenges or threats to the growth of Guyana’s maritime sector are: 

• Delay in dredging the Demerara navigational channel to an acceptable depth

• Replacement of navigational aids and accompanying infrastructure and services

• Effective port security measures.

Guyana’s main port is in urgent need of care and attention and the SAG sees this as a significant part of its mandate for development. Any national initiative of the nature contemplated would require an organisation that was properly structured and the SAG completed work to build up its capability following a 2006 Canadian International Development Agency (CIDA) project. The Association also developed alliances in the public and private sectors and established itself as the main protagonist in stimulating the modern development of the Port of Georgetown. 

The SAG, together with the Maritime Administration Department (MARAD), was tasked, through the National Competitiveness Strategy Unit and the Ministry of Transport and Hydraulics, to develop appropriate strategies to deal with the situation at the Georgetown port.

Draught

This led ultimately to the formation of a working group by the government comprising 10 people – five from the government and five from the SAG. The government’s representatives included three people from MARAD, one from the Ministry of Trade and one from the Ministry of Finance. The group completed its proposals and drafted its concept paper at the end of January. It identified the problems as:

• Severe limitations on the draught of vessels that can now transit the Demerara Channel have had a negative impact on maritime commerce in Guyana, to the extent that the volume of cargo being moved per vessel call has been declining significantly;

• These limitations have resulted in the inefficient movement of cargo which, when coupled with other uncontrollable factors, have caused increases in freight costs;

• Financial and organisational constraints of MARAD and the Transport and Harbours Department that inhibit the ability of those organisations to effectively perform their shared responsibilities in the management, operation and maintenance of the Georgetown harbour.

Ready solution

The working group suggested that, given the constraints on the government’s ability to raise capital, the establishment under the Companies Act of a properly constituted Public Private Organisation (PPO) would provide a ready solution. Certain delegable functions of MARAD, it suggested, could be transferred to the company by way of an operating licence. MARAD would then provide government oversight and regulation. The ultimate composition of the company would be determined by equity participation, the paper proposed. The formalisation of the company, it suggested, could be completed by January 2014.

The PPO would be responsible for contracting and servicing debt, possibly from international funding agencies, as well as for implementing other activities considered necessary for the improvement of the harbour.

First priority

The working group was clear about the first priority – dredging of the Demerara Channel as soon as possible but not later than 30th June 2013.

“The dire state of the Demerara Channel necessitates immediate action,” said the group. “While the formalities of setting up the PPO are being finalised, government should consider a loan to MARAD to execute the works. This loan could be obtained via bilateral or multilateral technical assistance, which it is understood is on offer. This debt could be passed on to the PPO as a condition of the operating licence.”

The group estimated this exercise would cost about US$7 million. However, sources at the SAG have adjusted that figure to nearly US$10 million since the lower figure was based on an estimate well over a year old.

Phase 1

Phase 1 of the development includes dredging the channel to a minimum of 6.5 metres; acquisition of a dredger, a multipurpose vessel (for buoy tendering, hydrographic surveys and fire-fighting) and a pilot launch; and the purchase and installation of adequate navigational aids. The cost of Phase 1 has been put at US$22.25 million.

The pilot launch has since been acquired. “The fact that it is equipped to function both day and night enables the launch to contribute to ongoing efforts to enhance port security,” said SAG chairman Desmond Sears. “However, there is still the need for recruitment and training of an adequate number of river pilots.”

Phase 2

Phase 2 would have the PPO, with a mandate for the improvement of Guyana’s ports and harbours in the medium to long term, take on full responsibility to bring to fruition the vision and mission statements adopted by the group.

The vision: “To optimise Guyana’s maritime transportation potential via the provision of effective and efficient ports and harbours services.”

The mission: “To contribute to the improvement of Guyana’s international trade competitiveness by ensuring maximum utilisation of the country’s ports and harbours via the establishment and operation of a public/private sector body drawn from selected stakeholders, and endowed with the requisite vision, entrepreneurship, skill and resourcefulness that will sustain value, growth, learning and excellence in the delivery of all related services.”

Modern terminal

According to the working group, the obvious challenge would be the need for the immediate identification and subsequent establishment of a modern container terminal, preferably on the west bank/west coast of the Demerara Channel. This would be separate and distinct from the proposed establishment of a deepwater harbour in the Berbice River, the group’s concept paper noted.

Given the expansion of the Panama Canal and the effects this will have on maritime services in the region – demands and opportunities – the development of the Georgetown harbour and the establishment of a modern container terminal are as timely as necessary. Timely, relative to changes in shipping economics and technology; necessary, because ports generate economic growth.

CSA President Grantley Stephenson made this point when he visited Guyana recently to address the SAG’s annual awards ceremony on 22nd March.

“Investment in infrastructure and particularly marine ports which allow efficient movement and docking of merchant ships will yield rich dividends and bolster national economies,” said Mr. Stephenson. “By the same token, countries which do not provide facilities for their producers to exploit world markets will achieve relatively little growth. An efficient and modern port system, capable of effectively servicing world commerce is, as they say, money in the bank. National economic growth, based on world trade, cannot be sustained without an efficient port supported by a ground transportation system of roads or waterways.”

Neighbour

Suriname, Guyana’s neighbour, has long seen the need for a modern marine port and has been investing in the development of its main port facility at Paramaribo. These investments have been showing results. Indeed, Suriname’s N.V. Havenbeheer for the last two years was named the CSA’s Multi-Purpose Terminal of the Year.

A year ago, Clinton Williams voiced his concerns to the Association’s members and guests gathered for the 2012 awards ceremony.

Opportunities

“It would be tragic indeed if Guyana’s unpreparedness results in Suriname stepping up to reap the benefits in this southern hemisphere, given their recent upgrading and modernisation of their maritime infrastructure to cater for such new opportunities,” he said. “It is also useful to note that shippers around the world, in order to increase vessel efficiency, have been using gearless vessels and shore cranes which Suriname has already installed. They have begun to attract Middle Eastern partners in joint venture partnerships.”

Some of Mr. William’s fears may have been allayed, overtaken by the completion and delivery of the working group’s concept paper earlier this year. However, his sentence following still rings true. 

“The feasibility of Guyana establishing a central terminal at west bank Demerara to meet the anticipated demand for container storage space must be examined and acted upon at the earliest opportunity.” 

Berbice Deep Water Harbour project may attract private investment

The Berbice Deep Water Harbour is still in at concept stage. So are the container terminals at Linden and Lethem. However, an 81-acre plot of land has been allocated at Lethem by the Guyana government for this development.

There have been unconfirmed reports about the possibility of the Guyana government receiving some ‘assistance’ from a private firm with the development of this project but up to press time this could not be confirmed.

In this year’s budget presentation, the Guyana government reportedly indicated that arrangements are being made to build a bridge across the Corentyne River. However the logistics have not yet been completed and discussions between the Guyana and Suriname governments and the InterAmerican Development Bank (IDB) are continuing. Meanwhile, there has reportedly been some discussion about construction of a fixed bridge across the Demerara River but details about this potential are unclear.

State of Georgetown port creating problems for commercial sector

Chairman of the Shipping Association of Guyana (SAG), Desmond Sears, addressed the concerns of his Association about the state of the country’s port when he spoke at the annual SAG awards ceremony on March 22 in Georgetown.

He spoke in the presence of CSA President, Grantley Stephenson, who was guest speaker at the event.

Mr. Sears said the SAG had been particularly concerned about the limitations on shipping the shallow draught of the harbour had imposed. He said the situation was affecting the size and weight of vessels that could go into Guyana’s main port. This he said was creating problems for the national economy.

Mr. Sears said:

“For a number of years, the SAG has been voicing its concerns about the severe limitations that the shallow draught of the Demerara River Channel imposes on maritime commerce on the whole. The draught places restrictions on the size and weight of vessels and cargo going in or leaving the port. It has had a negative impact on shippers, the commercial sector, the public sector including GUYSUCO, and the private productive sector. Business across the spectrum has slowed down. Some Caribbean and international markets have been lost or reduced because cargo vessels could only take out limited volumes of cargo. The same inefficiency applies to the movement of cargo inward. 

“Naturally, the situation has precipitated increases in freight costs. Nevertheless, statistics from 2012 show that approximately 66,000 teu moved through the
port marking an increase of 21% over the last four years. It is possible that this figure could rise to 80,000 teu by 2017 considering the current rate of increase. 

“We are optimistic that if the proposal for overland trans-shipment of cargo from Brazil comes to fruition, container traffic into and out of Port Georgetown would multiply once the plans for a modern Demerara harbour are put into effect. The entire maritime world is moving ahead in leaps and bounds. Countries all around us have either begun or completed the modernisation of their sea ports. Guyana must now be made ready to meet the stringent demands of shippers all around the world for more modern port facilities and more efficient operations.”