How it works

New port terminal assures Jamaica of tourism revenue

The Danish contracting company E. Pihl & Son was in a close race with a competitor for a large contract for a new terminal for cruise liners in Falmouth, Jamaica. Pihl secured the contract following EKF's incisive action to arrange the financing.

Case facts

What: E. Pihl & Son builds cruise terminal in Falmouth, Jamaica.
How much: Quay, terminal and buildings totalling USD 160 million.
EKF's role: Guarantee of USD 160 million for the loan made to the Port Authority of Jamaica and Royal Caribbean Cruises.

EKF product: Buyer credit guarantee
When: 2009-2020

Download case as PDF

The challenge

Fortunately, EKF's approach and assessments of the Falmouth project, including the environmental and social aspects, was very efficient.
Ghassan Farah, Head of Acquisitions, E. Pihl & Son

Tourism is a key source of revenue for Jamaica, and tourists from the cruise liners especially are big spenders on this Caribbean island.

With that in mind, in 2009, the Port Authority of Jamaica and the cruise line company Royal Caribbean Cruises planned to build a new port terminal and a tourist reception centre for cruise liners in the town of Falmouth.
Since 1994, the Danish contracting company E. Pihl & Son has completed a number of projects to build ports, bridges and roads in Jamaica, which means it enjoys good relations on the island.

"Pihl submitted the lowest bid in the international tendering procedure, but when the client was unable to raise funds for the project, the race was on for which contracting company would be fastest at raising financing for the project," says Head of Acquisitions Ghassan Farah, E. Pihl & Son.

Jamaica's constrained economic situation was a significant challenge in that it limited the prospects of finding banks to finance the port terminal project in Falmouth.

In addition, the project was up against an environmental challenge, as the town is situated on a bay with heritage waterfront and a sensitive marine environment with both coral reefs and a fishing industry that are vital for the local inhabitants.
The process

EKF came aboard the project and investigated both the options for financing and the project's environmental and social impacts.

Given that the cruise terminal was a large-scale project with a budget of USD 160 million, during the process it became clear that EKF risked hitting the ceiling for the size of guarantee EKF is able to provide to projects in a single country.

It was also necessary to conduct a large number of environmental impact assessments. This meant that EKF itself was on site in Jamaica to assess the project's environmental and social impacts.

EKF was also aware that the new port terminal would generate increased tourism and economic growth, and would therefore benefit inhabitants in an area with limited income opportunities.
The solution

The final outcome of EKF's various investigations was a positive assessment of the project's environmental and social sustainability.

EKF then went on to present a model whereby the Port Authority of Jamaica and Royal Caribbean Cruises would assume joint ownership of the new cruise terminal.
EKF offered a buyer credit guarantee of USD 160 million, which represented a substantial share of the loan for the project.

Thanks to the financial preconditions and EKF's backing, E. Pihl & Son successfully landed the project so construction of the new port could get underway in July 2009. The quayside facilities themselves were ready to receive the first cruise ships in early January 2011.

"The Falmouth contract is an excellent reference project for Pihl and we expect to be involved in further contracts in the region, potentially with the same clients," says Ghassan Farah.

He is committed to the use of local labour and for the Falmouth project to bring new jobs in the tourism industry to this island state.