Debate No 8 of 2004
MAURITIUS PORTS AUTHORITY/CARGO HANDLING CORPORATION - QUARY CRANES
The Leader of the Opposition (Dr. N. Ramgoolam) (By Private Notice) asked the Minister of Training, Skills Development, Productivity and External Communications whether, regarding the acquisition of two new quary cranes for the Mauritius Ports Authority/Cargo Handling Corporation, he will state -
(a) the project value;
(b) when were tender documents with specifications prepared and by whom;
(c) whether the tender documents were approved by the Central Tender Board and, if so, when;
(d) whether a public tender exercise was effected and, if so, when;
(e) whether any official delegation has proceeded overseas to carry out negotiations with any preferred supplier and, if so, when, and
(f) the time limit given for tenderers to submit their tenders.
Mr Fowdar: Mr Speaker, Sir, at the very onset, I would like to inform the House that the two new cranes are being leased. The rationale behind the lease option is that the finances of the Cargo Handling Corporation Ltd. (CHCL) are an impediment for the company to raise loans to proceed with an outright purchase of the equipment.
Mr Speaker, Sir, the need to procure additional cargo handling equipment has been necessitated by the fact that the transhipment container traffic, which is destined for other ports, but transiting through Port Louis Harbour, has registered a phenomenal growth as from the year 2001, from 3,874 TEU's to 36,093 TEU's in 2002, an increase of over 800%. At the end of December 2003, the volume of the transhipment traffic stood at 102,282 TEU's.
There is no doubt that transhipment traffic is increasing by leaps and bounds. It is forecast that transhipment will increase by more than 10% annually between 2004 and 2007.
The development of transhipment at Port Louis Harbour is attributed to the following factors -
(a) good infrastructure and superstructure in the Port;
(b) strategic location of Port Louis;
(c) good quality service, i.e, high productivity;
(d) 24-hour service;
(e) good industrial relations, and
(f) competitive tariffs.
Above all, it is the direct result of an aggressive marketing campaign carried out by the Cargo Handling Corporation Ltd (CHCL), Mauritius Ports Authority (MPA) and the Mauritius Freeport Authority (MFA) with a view to promoting Port Louis as an undisputed logistic platform in this part of the world.
Dr. Ramgoolam: On a point of Order, Mr Speaker, Sir. Will the hon. Minister answer the question, or is he going to spend 15 minutes going on bla-bla-bla on questions that I didn't ask?
Answer the question! Answer the question!
Mr Speaker: Order! Order! Order, please! I have ruled on this point, that?.
Dr. Ramgoolam: Yes, but what time will I have to ask supplementary questions if the hon. Minister will go on and on?
Mr Speaker: Please resume your seat, hon. Leader of the Opposition. I cannot?.
Dr. Ramgoolam: Yes, Mr Speaker, Sir, I know you cannot control the answer of the Minister, but he has to be relevant.
Mr Speaker: Order, please! Hon. Leader of the Opposition, why don't you come with a proposal for the amendment of the Standing Orders?
Order! I am calling the House to order. Order, please!
I am making a formal request to the hon. Leader of the Opposition. Since he has been raising this point several times in this House, asking the Chair to control the replies of the Ministers, I am asking him formally to come with a proposal for the amendment of the Standing Orders so that, in future, the Chair can control the answers of Ministers. Now, I am giving my ruling. I have no control over the answer of the Minister, although I have control over questions. These are Standing Orders. Would the hon. Leader of the Opposition like me, on my own, to depart from the Standing Orders? I can make a request to the hon. Minister that, as far as possible, he should give the reply asked.
Mr Fowdar: Mr Speaker, Sir, the question concerns the acquisition of the new cranes and we are leasing the new cranes, that is why I am giving an explanation as to why we are leasing them. The reply goes to the question of the hon. Leader of the Opposition.
Mr Speaker: Order, please!
Mr Fowdar: Listen to the answer!
Mr Speaker Sir, the economic and financial benefits to be derived from transhipment traffic, in terms of -
(i) increase in container handling activities;
(ii) jobs secured;
(iii) increased revenue for both the CHCL and MPA; and
(iv) reduction in freight rates
are critical for the sustained development of both the CHCL and MPA.
For the CHCL, transhipment has contributed to the tune of Rs70 m. to its annual revenue during the financial year 2002/2003, while the MPA has registered an increase of Rs75 m. during the same financial year.
Furthermore, transhipment enhances the connectivity of the economy to world markets, thus giving Mauritius an edge over the other countries in the region.
The upsurge in transhipment container business has had a serious impact on port infrastructure and overall port operations. The present level fleet of equipment has been stretched to the extreme limit. This is illustrated by -
(i) the waiting time of vessels which is on average 24 hours; the acceptable waiting time is between 8 and 10 hrs;
(ii) the level of productivity which has gone down from an average of 19 moves per hour to 16 moves per hour; and
(iii) the average delivery time of containers which was 15 minutes has now reached 25 minutes.
This is relevant! Please, listen!
Mr Speaker: Order, please!
Mr Fowdar: For the procurement of the following cargo handling equipment -
Mr Speaker: Order, please! It is not because the Chair cannot control the reply of a Minister that the hon. Minister can permit himself to say anything in the House. I am not going to judge what is the relevancy of what he is saying; I understand it's all about the Mauritius Ports Authority/Cargo Handling Corporation, but still I am making a request to the hon. Minister that, as far as possible, please give the reply which has been asked.
Mr Duval: Mr Speaker, Sir, on a point of order, if the attention of the hon. Minister's attention could be drawn to Standing Order 47, insofar as irrelevance and repetition is concerned?
Mr Speaker: Yes, I am aware of this provision, but unfortunately it refers to debates not questions.
Mr Fowdar: Mr Speaker, Sir, with a view to creating the necessary additional capacity to cope with the present and anticipated level of transhipment traffic, the CHCL has already embarked on a massive investment programme of the tune of Rs330 m. for the procurement of the following cargo handling equipment -
(a) 10 tractors and 13 trailers, to be commissioned by September 2004;
(b) one mobile crane, to be commissioned by September 2004, and
(c) 4 rubber tyred gantries, to be commissioned by June 2005.
Mr Speaker, Sir, the procurement of the two proposed quay cranes on a lease basis must therefore be seen in the context of the vision of the CHCL to further consolidate its existing capacity in order to meet the future transhipment development needs. Furthermore, in November 2003, the CHCL contacted the three major shipping lines, namely, Maersk, P&O Nedlloyd/Mitsui and Mediterranean Shipping Co., involved in transhipment. The rationale behind inviting the three major shipping companies was to entice them to continue using Port Louis as their transhipment operational base. As of the closing date (December 2003), only one company responded favourably. Subsequently, the CHCL and the MPA started negotiations with the company on the terms and conditions pertaining to the lease of the equipment. After three months of discussions, the proposal of that company was deemed to be unacceptable, in view of the high financial implications involved.
In the meantime, however, the CHCL and the MPA had received an expression of interest from an Abu Dhabi-based company, International Management and Construction Corporation (IMCC). The company had proposed to manufacture and commission two gantry cranes at the total costs of USD 11,200,000 with a delivery time of 14 months, which could be either -
(i) sold on a cash basis; or
(ii) leased over a period of 7 years or 8 years at the per unit cost of USD 86,000 a month and USD 84,250 a month respectively.
The views of Mr Marc Juhel, Ports and Logistics Adviser of the World Bank, who was on mission in Mauritius in February 2004, were accordingly sought thereon. He suggested that the CHCL and the MPA should, inter alia, check the reliability of the leasing option, in particular the compliance of the proposed cranes with cyclonic conditions, and if positive, to move ahead with the proposal so as to secure equipment delivery by mid-2005. Mr Speaker, Sir, I am tabling a copy of the aide mémoire from the World Bank).
Mr Speaker Sir, my information is that the lead-time for the manufacture of a ship-to-shore crane is approximately 30 months. However, in a spirit of transparency and good governance, the CHCL decided not to negotiate directly with IMCC but to invite other manufacturers to submit a bid for leasing. Hence, the need was felt to seek quotations from reputable crane manufacturers.
Mr Speaker, Sir, I am accordingly advised that -
(a) the leasing arrangements being proposed would entail a total disbursement of approximately USD 14.4 m over a 7-year lease period;
(b) based on the specifications of the existing cranes which had already been approved by the Central Tender Board in December 1996, Mr Dharmalingum, Port Engineering Adviser of the Mauritius Ports Authority, prepared another set of specifications highlighting the requirements of the proposed equipment in consultation with the Principal Marine Engineer;
(c) the advice of the Central Tender Board (CTB) was sought on 05 March 2004, by the Cargo Handling Corporation Ltd. regarding the procedures to follow for the leasing of the equipment. In a letter dated 10 March 2004, the CTB advised that the lease of equipment was a service activity and as such the matter did not fall under the purview of the CTB. I am tabling a copy of the correspondence from the CTB, Mr Speaker, Sir.
(d) on the basis of the tender specifications prepared by the Port Engineering Adviser, a list of seven leading crane manufacturers representing a wide spectrum of manufacturers covering Europe, South Korea and Gulf countries was drawn and quotations were accordingly sought on 05 March 2004 from the following suppliers -
(i) Kone Cranes (Finland)
(ii) Fantuzzi Reggiane (Italy)
(iii) Mitsui Engineering and Ship Building (Japan)
(iv) Liebherr - Werk Meazing GMBK (Germany)
(v) Kalmar Crane Manufacturers (France)
(vi) IMCC (Abu Dhabi)
(vii) Hyundai Heavy Industries (South Korea);
(e) a delegation comprising the Permanent Secretary of the External Communications Division of my Ministry, as Head of Delegation, the Chairman of the Cargo Handling Corporation Ltd. Board, the Principal Marine Engineer and the Port Engineering Adviser of the MPA proceeded to Abu Dhabi on 11 April 2004 for technical discussions with IMCC. The delegation also took the opportunity to visit Mumbai and Chennai Ports, India, to assess de visu the suitability and reliability of such cranes supplied by IMCC to these two ports, and
(f) given the urgency of the situation in the port with regard to container transhipment business, and the fact that specifications of the equipment are practically standard, a time limit of 10 days was deemed to be appropriate and reasonable.
Mr Speaker, Sir, I would like to inform the House that transhipment is an extremely volatile business and all measures have to be implemented to ensure that transhipment traffic continues to remain a major activity at Port Louis Harbour. But, at the same time, it would be unwise to invest heavily in volatile business. Therefore, the lease option represents the least risk.
It should also be recalled that due to inadequate level of equipment in the Port, one shipping line has already reduced its number of calls at Port Louis. On the other hand, some of the port stakeholders have already pointed out that the lack of equipment is a major impediment to the further development of the transhipment business. Port Louis may, therefore, lose its credibility as a transhipment hub in the region if its capacity is not enhanced immediately.
Dr. Ramgoolam: Mr Speaker, Sir, I am left with twelve minutes. I hope you will be indulgent with me. I know you are restricted, but, sometimes, you use your discretion.
Mr Speaker: We will see when the time comes.
Dr. Ramgoolam: First of all, the hon. Minister has been saying that it is a lease and, therefore, he has bypassed the Central Tender Board. He is an accountant. He knows there are two types of lease. Can I ask him what type of lease is it? Is it an operating lease that he is purchasing or is it a lease that he is renting?
Mr Fowdar: We have not yet discussed the modalities of the lease. We will look for an option to purchase the equipment at the end of the lease.
Mr Duval: The hon. Minister knows full well that it is a finance lease. It is a purchase of an equipment financed by leasing arrangement. Do we agree on this?
Mr Fowdar: Yes, this is a finance lease.
Dr. Ramgoolam: Then if the Minister agrees on this why is it that he has bypassed the CTB? After all, he is purchasing it.
Mr Fowdar: Mr Speaker, Sir, I have just tabled a copy of the correspondence from CTB; and CTB argues that it does not fall under its purview.
Dr. Ramgoolam: It depends on what the hon. Minister says. He has just admitted that he is purchasing it for a finance. Can we have a copy of the letter given by the CTB, because I fear that this is a roundabout way, a colourable device to bypass the CTB?
The Ministry is purchasing it, he is not renting it. It should have been through the CTB. I would draw the attention of the CTB. The Minister should draw the attention of the CTB that it should have gone through the CTB.
Mr Fowdar: Mr Speaker, Sir, in all transparency the Cargo Handling Corporation has written to the CTB for advice and the CTB has replied. A copy of the correspondence has been tabled.
Dr. Ramgoolam: Can I know which letter has been laid on the Table? Both letters have to be tabled because the CTB is wrong to think that the purchase....
I am going to say....
No, no, I have the right to say.
The Prime Minister: On a point of order, Mr Speaker, I don't think that it is in order for the Leader of the Opposition to claim that the CTB is wrong.
Dr. Ramgoolam: It is quite in order for me to say if that is what the CTB has said, it is wrong because it is a purchase and it is not a rental that we are doing here. It is a way of bypassing the CTB so that money can be stolen. That is what it is. Bribes have been taken. I know. Colourable device has been used. That is what it is.
Mr Speaker: Order!
Mr Fowdar: Mr Speaker, I insist, it is a lease, it is not a purchase.
Dr. Ramgoolam: The Minister has just said it is a purchase through a lease. Does the Minister not hear what he has said?
Mr Duval: Mr Speaker, is the Minister honestly saying to the House that he is going to return the equipment, that he has paid USD 14.4 m to Abu Dhabi, after seven years? Therefore it is only a rental. Mr Speaker, the Minister should not take us for fools. This is a purchase through a finance lease. The Minister should agree with it and not take us for fools.
Mr Speaker: Order!
Mr Duval: Is he going to return it after seven years?
Mr Abdoola: Mr Speaker, Sir....
Dr. Ramgoolam: Is the hon. Member going to ask questions? This is my PNQ, the hon. Member should shut up and sit down.
Mr Speaker: Order, please! There is a question put to the hon. Minister.
Hon. David, please, no comments!
Mr Fowdar: Mr Speaker, Sir, the hon. Member, who is an Accountant, knows very well how finance leases are being operated. He knows very well that at the end of the lease period, we have an option to purchase the equipment.
Mr Duval: Would the hon. Minister tell us, out of the USD 12 m that is being paid, what is the nominal amount that will be paid at the end of lease so that the equipment becomes fully the propriety of the Government of Mauritius?
Mr Fowdar: Mr Speaker, Sir, the conditions have not yet been decided upon.
Dr. Ramgoolam: Mr Speaker, Sir, I have a lot of questions. I think hon. Abdoola is being told to ask questions to save the Minister's skin. I don't want this. I have a lot of questions and I want to ask these questions.
Mr Speaker: Hon. Leader of the Opposition, this is not proper. You are commenting on the conduct of the Member. The Member has the same right as you to ask questions. This is not proper. I did not hear anybody telling him to put questions. It is his right to put questions.
Dr. Ramgoolam: Can the hon. Minister tell us what is the rate of interest that is being paid?
Mr Fowdar: Mr Speaker, Sir, the average rate of interest would be 6.2% .
Dr. Ramgoolam: Can I ask the Minister what is the recent Libor rate?
Mr Fowdar: I do not know, Mr Speaker.
Dr. Ramgoolam: The hon. Minister is an Accountant and he does not know what is the Libor rate. Can the hon. Minister deny that he has been offered a loan from a bank for less than 3%?
Mr Fowdar: I do not have the information, Sir, but I am sure that the Cargo Handling Corporation Ltd. has got serious financial constraints and they have to go for a lease option.
Dr. Ramgoolam: If he does not know any answer, so why is he asking the question? I ask myself. I am telling him that he was offered a loan by bank for less than 3%.
The Prime Minister: Mr Speaker, Sir, on a point of order again, the Leader of the Opposition cannot inform the Minister. He cannot make a statement. He can ask whether any bank has offered a loan; he cannot make a statement.
Dr. Ramgoolam: I am asking the hon. Minister if he knows that a bank has offered loan less than 3%, if he does not know, he says he does not know. I know. I am not the Minister, but I know.
He does not know. There is a bank. I ask him to be very careful in answering that question. Does he know yes or no?
Mr Fowdar: Mr Speaker, Sir, Cargo Handling Corporation has just commissioned the purchase of several equipment and it is costing more than Rs330 m.
Mr Speaker: Order, please!
Mr Fowdar: Cargo Handling Corporation has got a highly geared ratio, over 400%, and it is evident that they cannot borrow money further. This is why they are going for a lease option.
Mr Duval: Mr Speaker, we have just asked the Minister to verify that this has been offered to the Cargo Handling Corporation. It is not a question of whether they cannot borrow yes or no. They have been offered this by banks in Mauritius. Therefore it is a fact and he should verify it.
Mr Fowdar: This what I have just said. I do not have the information. I will check. There is nothing to hide.
Mr Speaker: Yes, hon. Abdoola.
Dr. Ramgoolam: If you remember, Mr Speaker, Sir?.
Mr Speaker: The hon. Member is asking me the floor. Hon. Leader of the Opposition, I have given you the floor all the time.
Dr. Ramgoolam: I have got lots of questions, I told you. Am I going to shut up, sit down and ask no more questions?
Mr Speaker: Order!
I decide whom to call for questions. I have been giving you the floor all the time!
You can walk out if you so wish! Order! You can say whatever you want!
Order! You are not going to direct me whom to call!
Dr. Ramgoolam: You are biased!
Mr Speaker: Hon. Armance, your question.
At this stage Opposition Members left the Chamber.