THE Port Authority of Guam will soon be getting POLA and gantry cranes, but they’re not new cranes.
The PAG board of directors yesterday unanimously voted to begin the process of purchasing three used POLA cranes and one gantry crane from Matson Navigation and Horizon Lines Inc.
The purchase price was listed at $12 million, but PAG board chairman Dan Tydingco said PAG will seek a loan with the United States Department of Agriculture for $14 million.
During the board meeting, Vice Speaker Benjamin Cruz raised a number of issues surrounding the purchase of the cranes, which was authorized by Public Law 31-145.
Cruz highlighted numerous deficiencies with the cranes based on a report conducted by Port consultant Casper Phillips & Associates. Cruz questioned the final purchase price of the cranes from Matson/Horizon. Calling the purchase a “bad deal," he said while the purchase price is set at $12 million, it may take millions more to restore the used cranes to make them last several years.
He suggested PAG take advantage of the remaining two years left in the arrangement with Matson/Horizon and use that period to assess whether it’s more fiscally responsible to purchase new cranes.
He also questioned why the Port wants to purchase the cranes from Matson/Horizon before the company has completed the critical repairs needed.
Tydingco responded to Cruz’s concerns by saying Guam simply cannot afford to purchase new cranes outright.
In fact, Tydingco said it may not be feasible to purchase new cranes, even if the Port had the funding to do so. Most port authorities utilize 100-gauge cranes, while Guam’s operational capacity may be impacted by a crane more than 50-gauges. The gauge description is the number in feet between the legs of the cranes. Tydingco doubted that manufacturers still produce 50-gauge cranes as they may be obsolete.
That coupled with the $9 million-per-crane price tag plus another $2 million it may take to ship and tie down the cranes on Guam, Tydingco said it would cost too much to purchase new cranes for the island’s port.
“Do I wish we could buy brand new cranes? In an ideal world, of course I do – we all do. But we just don’t have the debt ceiling availability to do that nor do we have the money,” Tydingco said.
Asked how the Port plans to repay the $14 million, Tydingco said the Port may be able to generate additional revenues through the acquisition of the POLA and gantry cranes.
Matson and Horizon currently tack on a $125 fee on its customers for every full container its cranes move. Tydingco said PAG plans to adopt that fee, pending Public Utilities Commission approval, over the next two years left on the agreement between PAG and Matson/Horizon.
By vesting that surcharge authority to the Port, Tydingco said the Port could generate more than $8 million that would be used in the procurement and maintenance of the cranes as well as develop a sinking fund to get monies in reserve for procurement of new cranes in the future.
During the board meeting, PAG board member Shelly Gibson said after consulting with legal counsel, she recused herself from voting on the matter because of a personal relationship with Sen. Mana Silva Taijeron.
Another board member, Christine Baleto, also consulted with legal counsel because she is a relative of Speaker Judi Won Pat, but was advised that her relationship with Won Pat is beyond consanguinity of the third degree.
Board member Mike Benito, who is the brother-in-law of Gov. Eddie Calvo, made the motion yesterday to approve the terms of the purchase agreement and also voted in favor of the motion.
Pursuant to Public Law 31-145, any person or spouse of a person related to elected government officials within the consanguinity of the third degree, who held office at the time of negotiations on the cranes, are prohibited from participating in negotiations for acquisition of the cranes.
