Mobilise investment and settle liabilities.
Aware of the strenuous effort of the Government in mobilising matching funds, and having revenue contribute in settling liabilities, and in accordance with the instructions of the correspondence of the Secretary General at the Presidency of the Republic of 18 March 2014, the Project Owner gave preference to a business plan in line with the following principles: alleviate the financial burden on the Government during the construction phase and ensure debt servicing through revenue generated by the project.
In this vein and as per the tender documents, the BOLLORE/CMA-CGM/CHEC Group (KCT), the successful bidder for the operation of the 700-meter quay to be built during the second phase of the project was required to contribute in financing 15% of the project which represents the matching funds required.
Therefore, despite being scheduled in terms of funding and construction, both phase 2 & 1 are connected as concerns operations and the revenue generated. The concessions granted to the various private partners consequently cover both phases.
Concerned with settling the liabilities mainly with operating revenues, The Project Owner used the financial offer as a discriminating factor when selecting tenders and the successful bidders. Hence, after each tender met up with technical requirements set by the Project Owner, the bidder was shortlisted based on the highest financial offer. Furthermore, the bidding procedure imposed the assurance of a minimum traffic which each bidder committed to in their respective tender. The aim was to ensure as much revenue as possible so that the Port can protect itself from unrealistic forecast that would only present an attractive yet unsustainable tender.
KCT, the future operator of the Container Terminal, intends to process the national import and export traffic which currently goes to solely Douala, and also to make the Port of Kribi a major transshipment hub that will process the transshipment traffic bound neighbouring ports.
This strategy banks on the capabilities of CMA-CGM, the third global ship owner, which is looking for a hub in the West African coast and the Gulf of Guinea. With these traffics, the Port Authority of Kribi (PAK) which will be in charge of settling the liabilities, will be able to generate operating revenue broken as per the following classification: concession fees paid by private operators (entry fees, royalties on the actual turnover, State fees based on the space used for activities …), a fee paid by the vessel entering the port of Kribi (residence fee, steering, etc.), and a fee for goods incurred by shippers (loading/unloading of goods).
The peculiarities of the concessional bank funding of phase 2 (674m USD loan) granted by Eximbank China are similar to those of the funding of phase 1 (423m USD loan), namely a 2% interest rate, a 20-year maturity, loan repayment during 13 years and a grace period of 7 years. The maturity of the loan granted for phase 1 started in 2011, while that of phase 2 was set to start in 2016.
In a nutshell, the business plan of phase 2 is in line with a maximum relief of the financial burden on the Government, whether during the construction phase or the operating phase/debt settlement. Private partners were selected in this regard, by requiring that they provide the matching funds on behalf of the Government and that they ensure minimum traffic and revenue that could cover debt servicing. With a positive average gap of 33m USD and an average debt servicing ratio of 1.47 (taking into consideration the operation of both phases and the repayment of the loans), the PAK should have a cash surplus that can help face difficult years, if managed appropriately.