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Ecuador port privatization program in doubt
Journal of Commerce / May 9, 2005

By Larry Luxner

GUAYAQUIL, Ecuador — The future of Guayaquil's port privatizaton program is up in the air, following last month's removal of President Lucio Gutiérrez in the wake of widespread street protests.

Gutiérrez, pushed out of office after angry mobs surrounded the presidential palace in Quito, was immediately replaced by Alfredo Palacios. But it's unclear what direction Palacios will take the new government will take with regard to the Port of Guayaquil, which is the largest port in Ecuador.

Also not clear is how Ecuador will proceed with a proposed free-trade agreement with the United States, which was being negotiated at the time of the former president's ouster.

"I don't know what the strategy of the new government will be. It's too soon," said Juan Carlos Apunte, commercial director at the Embassy of Ecuador in Washington, which doesn't even have an ambassador at the moment. "[State privatizaton agency] Conam has analyzed various ports as possibilities for privatization, but the only one that has been granted to a private consortium up to now is Esmeraldas [primarily an oil port] in the province of "

The Port of Guayaquil is located on an estuary near the Pacific Ocean, only two degrees south of the Equator. It handles 62% of Ecuador's total import-export cargo and 93% of container traffic in and out of the country, representing 5.6 million tons and 453,000 TEUs respectively.

Considering that Ecuador is the world's No. 1 banana exporter, it's no surprise that banana exports by Noboa (Bonita Banana), Dole and smaller banana growers account for well over half the port's total cargo volume. Other leading commodities include shrimp, coffee and cacao.

In 2003, the latest year for which statistics are available, the Port of Guayaquil handled just over 3.1 million tons of containerized cargo and 2.2 million tons of general cargo. In addition, the port handled 275,000 tons of bulk and liquid cargo.

The port's main channel depth is 9.6 meters and an average 122 meters wide, with dredging completed in December 2003. Guayaquil's main channel is 51 nautical miles long, divided between a 10.8-mile outer channel with a marine environment, and a 40-mile-long inner estuary channel.

At present, the port has three berths of 185 meters each, and more than 290,000 square meters of paved areas for containers. There's also a multipurpose terminal with five piers of 185 meters each, as well as 85,000 square meters of warehousing space (including 4,000 square meters for refrigerated cargo and 5,400 square meters for hazardous cargo).

In addition, the port has a bulk terminal with one 155-meter pier, three silos totaling 8,900 cubic meters; two warehouses of 900 metric tons each; one grain warehouse of 30,000 metric tons and other various bulk facilities.

Last October, the Guayaquil Port Authority, known by its Spanish acronym APG, announced that it would award a 20-year concession for a new operator to offer services such as pilotage, tug and towing, firefighting, maintenance of sea bottom and navigational aids, water, electricity and fuel supplies, as well as stevedoring and other cargo services.

"They're talking about this because they foresee a definite expansion at the Port of Guayaquil. The more the port expands because of increasing import and export volume as well as cruise-ship traffic, the more there will be a need to concession certain areas," said Patricio Tamariz Dueñas, executive director of Ecuador's Mixed Fund for Tourism Promotion and former director of a coastal management program for the Ecuadorean government.

Tamariz told The Journal of Commerce that "a couple of things need to be done, including deepening the entrance channel for larger ships to come in. It's a very nice port, but concessioning will make it more efficient. If these operations go to professional companies, it'll be better than it is now."

The APG had already staged several prominent roadshows in the United States, Europe and Panama, meeting with prominent port operators in search of the ideal company. It also released bidding rules, and this month, the bidders were to submit proposals.

According to APG officials, "the winning company will likely invest around $117 million in developing and modernizing the port's facilities, undertaking such tasks as constructing a quay when cargo reaches a certain level, acquiring better cranes and reinforcing cargo areas for containerized traffic."

APG was hoping to award the concession and enter into a contract by June, with operations beginning by October. But now, it seems the process is no longer on track.

"There was a lot of interest by the previous government in privatization, though we don't know to what degree they've accomplished that," said Apunte.

In 2003, Guayaquil handled 5.63 million tons of cargo traffic (61.8% of Ecuador's total), followed by Puerto Bolívar, with 1.57 million tons (19%); Manta, with 1.14 million tons (13.8%) and Esmeraldas, with 434,000 tons (5.3%).

Tamariz said maritime officials have also spoken of building a large deep-water transshipment port on the Gulf of Guayaquil, the largest estuary on the west coast of South America. The port, located at Posorja, would receive huge containerships and transfer their cargo to smaller ships for regional distribution.

A similar project is envisioned for the Port of Manta, a leading exporter of fish products only 11 miles from main maritime shipping lanes, though no information is available about where these projects currently stand.

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