August 1, 2021

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Awarded the APP for maritime transport | government

After almost two years of bidding, the Authority for Public-Private Partnerships (AAPP) concluded the concession contract for the operation and maintenance of maritime transport between Vieques, Culebra and Ceiba, as well as that of San Juan and Cataño, to the North American company HMS Ferries.

The company selected less than a year ago will manage the assets of the Maritime Transportation Authority (ATM) for the next 23 years. HMS Ferries carries over 30 million passengers a year and is also the operator of the ferry services for the Statue of Liberty in New York; the Alcatraz prison in San Francisco; Niagara Falls, in Canada, among others.

Fermín Fontanés, executive director of the AAPP, pointed out to THE SPOKESMAN that the concession of the assets will allow the government to put an end to the obstacles that for decades the operation of the boats to Vieques and Culebra has presented. In his opinion, the situation has prevented the economic development of the municipality islands.

“This is an essential service for Vieques and Culebra. It is the daily transportation system of both islands. For years it has not been efficient, much less consistent. We are looking to give stability to the service and that complications are a part of the past. This will improve the quality of life for these citizens and will enhance the economic development of the two islands ”, emphasized Fontanés.

The executive affirmed that given the fiscal crisis that the government is going through, they do not have the economic capacity to invest in critical infrastructure in Puerto Rico, so the PPP model allows them to ensure the necessary investments for the proper functioning of the assets.

They will receive over $ 31.1 million

With the transaction, the AAPP and the ATM transfer the risks and responsibility of the operation to the private operator and become a supervisory entity. Among many things, HMS Ferries will need to optimize the quality and reliability of services, innovate the ticketing system and customer service, maintain facilities and vessels, recruit and train personnel, and increase profits from operations.

“The ATM will basically be in charge of supervising the private operator and guaranteeing access to federal funds from the Federal Transit Administration (FTA). One of the consequences of not having had managerial stability during the past 15 years is that we have lost access to these funds because we are not in constant compliance with their requirements ”, Fontanés declared.

According to the contract structure, HMS will receive a fixed annual payment for its services that will amount to $ 25.7 million in the first year of transition and then, upon completion of the concession, the payment will be between $ 31.1 million and $ 37 million. “In the transition phase, ATM will continue to operate the service. Once they take control in the fourth year of the contract, they assume all the risks ”, emphasized the executive.

Savings of $ 17 million

The contract envisions the division of profits between the government and the company as long as the revenues exceed $ 10 million, as well as savings of $ 17 million annually. Currently, the operations of the boats do not reach the figure shown and only cover 6% of the ATM expenses; does not reach the stipulated figure.

“This operation is highly subsidized in a government that is going through a severe crisis. Currently, it does not reach $ 10 million, but it is a fair figure because with the contract they have the responsibility of increasing passengers, adding concessionaires to facilities and boats, among other nearby activities, ”Fontanés explained.

They can request a raise

Fontanés made it clear that the operations of the boats do not generate profits for the government, and explained that since they are an essential service they cannot increase costs, so that they are compatible with expenses. At the moment, the price of the trip to Vieques and Culebra is $ 2.00 and $ 2.25 respectively, but it costs the government between $ 33 and $ 39 per passenger.

Under the conditions of the contract, as of 2023 the private operator has the power to request from the ATM and the FTA a rate increase every three years. However, after 23 years of validity, the increase may not exceed 50 cents for the trip to Culebra and 55 cents for Vieques.

$ 100 million in improvements

Both the ATM and HMS Ferries agreed to an extensive capital improvement plan during the negotiations. The agency will invest over $ 100 million in FTA funds in the projected improvements and must be completed before the company takes full control of operations.

Mara Pérez, executive director of the ATM, indicated to THE SPOKESMAN that the improvements include the repair of the Isla Bonita, Santa María and Cayo Largo boats; the design of two new cargo and passenger vessels and one passenger only; new facilities for Ceiba and Cataño, and a new maintenance base.

“Capital improvements are going to be paid for with federal FTA funds. They are already available and we have been working to maximize what we receive. None of these improvements will require any investment from the government. We hope to complete everything in 1 to 3 years, ”Pérez pointed out.

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