|The Bahamas Investor Magazine
June 22, 2010
June 22, 2010
The Grand Bahama economy is built on two main pillars of revenue: tourism and industry. Although Freeport, along with most of the world, is facing many challenges in these times, there have been moderate gains in these sectors and with passion, determination and a clear vision, the nation’s second largest city could finally realize its long-purported promise.
“Everyone is tired of the word ‘potential’ in reference to Grand Bahama,” says Vernice Walkine, director general of the Ministry of Tourism. “But I am convinced that Grand Bahama has a great future and that future starts now.”
Speaking at the Grand Bahama Business Outlook conference earlier this year, Walkine explained the reason for her confidence: double digit growth in the number of cruise passengers visiting the island each month during 2009. Despite a slight downtrend in the total number of visitors over recent years (down in 2008 to 558,177 compared to 2007’s 588,571), early indications for 2009 suggest that “there is a resurgence in the cruise industry.” Overall cruise visitors to The Bahamas rose 19 per cent in 2009 to 4,967,798, according to the Ministry of Tourism.
“Celebration Cruise Line, since March this year, now exclusively sails to Grand Bahama from West Palm Beach. There is a strong timeshare client base, which is linked to their Orlando client base, delivering a new market to Grand Bahama in addition to the Broward and Miami-Dade counties’ sources of business.”
The cruise operator estimates that the 680 ft Bahamas Celebration will bring around 4,000 passengers a week to Grand Bahama.
The relatively robust performance by cruise lines is part of the government’s thinking in predicting moderate gains in the Grand Bahama economy this year compared to 2009, which, in line with the rest of the country, saw a significant drop in economic activity. “This year there should be improvement in the tourism, industrial and construction sectors of the economy, which will lead to some job creation and broader financial gains,” says Zhivargo Laing, Minister of State for Finance in the Ministry of Finance.
Although stressing that gains will only be modest, Laing sites various government-led initiatives as being significant in underpinning growth, particularly in the construction sector. “A contract for the construction of a new government office complex in Freeport has been awarded to FES Construction Co Ltd. This will create 250 new jobs in that sector and spin-off economic effects for the wider economy.”
Costing around $19 million to build, the new office complex will house various government departments and cover 65,000 sq ft. Construction is expected to be completed by August 2011.
“The government’s housing programme is also expected to continue, providing additional construction jobs,” continues Laing. “Add to this the refurbishment to occur at the newly acquired South Riding Point Terminal, additional works taking place at BORCO [Bahamas Oil Refining Company International Ltd], as well as some Grand Bahama Port Authority projects and you can see why I say that we expect construction in Grand Bahama to receive a boost [this year].” The year’s bottom line will also be bolstered by the completion of the five-storey, $7.1-million Canal House conference centre at Pelican Bay resort by local company Freeport Construction (FRECON) Ltd.
Vopak expansion plans
However, many of Grand Bahama’s hopes are pinned on the continued expansion of the BORCO facility currently operated by energy industry investment company First Reserve Corp and Dutch-based oil storage operator Royal Vopak (Vopak), which acquired the company in 2008 in an 80/20 per cent split, respectively.
The massive oil storage plant has around 80 tanks, with capacity of 21 million barrels. The Freeport facility is key to the company’s global strategy, being ideally located to serve both the US and Latin American markets, as well as being close to major shipping routes through the Panama Canal. Last year alone, the facility handled the shipment of 174 million barrels of various grade oil and petroleum products and has seen a $200 million investment post acquisition.
To further capitalize on the facility’s logistic advantages, Vopak has plans to increase the plant’s storage capacity by six million barrels, some 30 more tanks, at a cost of $350 million. Completion date is expected to be in the next 24 months, with the new tanks receiving shipments by the end of December 2011.
It would be fanciful to suggest that these initiatives alone will restore Grand Bahama to its former glory, but the challenges Freeport now face present opportunities that must be seized with both hands to achieve its true potential.
“It takes a right mindset,” says Laing in a final rallying call. “It is the realm of the rainmaker, the go-getter, the self-reliant, the victor, the innovator, the champion to realize that failure is not an option and there is too much to be enjoyed by winning. With greater focus, grit and determination, I am certain we can benefit greatly from such opportunities.”