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Ten facts about the Port Authority

Published:Wednesday | July 9, 2014 | 12:00 AM
Professor Gordon Shirley, president, CEO and chairman of the Port Authority of Jamaica. - File

A.C. Countz, Guest Columnist

The responsible officials for Port Authority of Jamaica (PAJ) are Minister Dr Omar Davies, Chairman and CEO Professor Gordon Shirley, and other directors Dr Janine Dawkins, Peter Melhado, Gary Peart, Horace Reid, Major Richard Reese, Ambassador A.B. Stewart Stephenson, and Maureen Stephenson Vernon.

The last available accounts are for the year ending March 2013.

1. PAJ made a loss of $2 billion, after exchange loss of $4.3 billion; has a net worth of $10 billion; owes long-term loans of almost J$40 billion, with almost all debt denominated in US dollars - all information from its last available accounts for financial year 2012/13.

2. Is way behind in making its accounts public - it is now 15 months since the last accounts were posted on its website. It does not publish quarterly accounts as it should, if it were to follow the example of stock exchange traded companies.

3. Has nine subsidiaries/associated companies: Montego Bay Free Zone Company Limited - owns 50 per cent with Government of Jamaica (GOJ); Kingston Free Zone Company Limited - 78 per cent; Ports Management and Security Ltd - 51 per cent; Jamaica International Free Zone Development Limited - 75 per cent, with Zim owning the rest; Port Authority Management Services; KCT Services Limited; Boundbrook Wharves Development Company - 51 per cent, with Banana Export Company owning the rest; Security Administrators Limited - 33 per cent; and Montego Bay Cold Storage - 33 per cent.

The Port Authority controls containerised cargo activities at the ports in Kingston and Montego Bay, and cruise shipping activities in Montego Bay, Falmouth, Ocho Rios and Port Antonio at the Ken Wright Pier and the Port Antonio Marina.

Results for these companies are not disclosed in PAJ's accounts.

4. Receivables are in a poor state with almost 50 per cent of unimpaired receivables over 90 days in arrears. New provisions for impaired receivables exceed $80 million. It is not clear what the reasons are for this delinquency.

5. Investment has gone bad in at least one subsidiary, which is unidentified. More than $106 million had to be provided. The reason for this large write down is not immediately clear from notes to the accounts.

6. The PAJ keeps some of its assets self-insured and has a fund of $37m to underwrite claims. It seems odd that the Port Authority did not increase this fund during the year, even with depreciation of the Jamaican dollar.

7. The compensation of the president was $23 million per annum, including bonus, in 2013. Although large for the Jamaican public sector, this compensation level is low by international standards.

8. The operations of the PAJ are up for divestment and there have been recent announcements suggesting this will happen in 2014. Let's hope this happens on time as the taxpayer would be better off not having to underwrite possible future losses.

Hopefully, the divestment might transfer responsibility for much of the debt servicing away from the GOJ and relieve it of being the eventual guarantor of $40 billion of debt.

9. The company appears to have a major underfunding of its defined benefit pension scheme. The shortfall seems to be over $71 million. There is also an unfunded liability to provide medical benefits to retirees which is estimated at $33 million.

10. The helpful website for the PAJ contains a wealth of valuable information about volumes of cargo, ship movements and number of visitors, which is most commendable. For example, Kingston Wharves has had 25 per cent fewer ships using its facility in the first four months of 2014 compared to last year, and Montego Bay has had a drop of 12 per cent in ship visitors in the same period. It is a pity that as at June 14, the data for May 2014 was still not entered.

It would be good if the PAJ would send this column a copy of its 2014 accounts with an explanation for the delay, accelerate the divestment of the container port, become more profitable, pay more attention to its receivables, start publishing quarterly accounts, and update its website faster.

The company is too large to be so tardy/casual with its financial reporting.

This column reviews the audited and in-house accounts and reports of companies and entities owned or influenced by Government.

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