Ecuador’s Ambitious Port Project – Moving Forward

DPWorld Posorja S.A (DPWP) was awarded a 50-year concession for the development, construction, operation and maintenance of a “general purpose” deep-water port located in Ecuador at Posorja, which is situated approximately 85 km southwest of Guayaquil.This is an ambitious project, with potentially important ramifications. In total, the Posorja Port project requires a total investment of over US$1 billion. DPWP has declared, with IADB, that will be developed in two phases. The first phase, has a footprint of approximately 40 hectares. It’s designed for an annual handling capacity of 800,000 TEUs, and will be completed by mid-2020. The project’s first phase includes land acquisition; dredging of a new access channel; the construction of a 400-meter berth; and the construction of a 20-kilometer access road. The Posorja Port will offer a 15-meter draft, as compared with the 9.75-meter draft currently available to ships at today’s Guayaquil Port.This project has had made twists and turns, with the Port Authority of Guayaquil (APG) actively involved through most of the stages. Firstly, Alianza Internacional Portuaria (ALINPORT S.A.), was the company in charge of the construction of both the Container Terminal and of the access channel of Posorja.Then, in August 2007, ALINPORT was acquired mostly by APM TERMINALS. They eventually gave up on the project, and finally DP presented APG with a proposal to construct, operate, maintain and service the Port. When APG signed the agreement with DP, they stipulated that transfer of ownership of all facilities happened only at the end a specified period of time, during which time DP would complete the dredging and construction of a new maritime access channel (from the marine buoy to Posorja), as well as constructing a new highway that links the City of Playas with Posorja Port (a link which is known as “via Morro”).This first phase at the Posorja Port was made possible by the construction of the project’s main access road — which began in May of 2017. The first phase of the Posorja Port project requires a total investment of approximately US$503.8 million. The financial package includes several elements: equity; Senior Loans comprised by an IIC and IDB A-loans; an IIC B-Loan and Co-Loans from other international development institutions.The second phase of the Posorja Port’s development will expand the project’s footprint to a total of 63 hectares. This is mainly due to the construction of additional facilities, all of which are outside the scope of the IDB’s financing. The local government is planning to construct a 2500-hectare industrial park, immediately adjacent to the Port.IDB Invest, the private sector institution of the Inter-American Development Bank in Washington D.C., is providing a financing package worth US$377 million for the construction, operation and maintenance of the first phase of the multipurpose terminal at the Posorja Port. The project is developed by DP World Posorja, a subsidiary created by the company DP World, the third largest container operator in the world in terms of capacity and productivity.The new terminal, which in its first phase will have an estimated capacity of 800,000 TEU (twenty-foot equivalent units), will compensate for the expansion and load constraints of Guayaquil, which is currently Ecuador’s main port. The location of Posorja, closer to the area of ​​free access to the sea, will decrease the average transit time and offer a deeper draft (16.5 meters). Once the new port is completed, vessels of up to 15,000 TEU can operate. The activity of this new infrastructure will generate, in addition, more than 480 permanent jobs.IDB Invest’s own financial package is divided into several parts: a loan of $147 million; the mobilization of resources from other investors of $230 million, of which $50 million comes from the China Co-financing Fund for the Americas. IDB Invest is providing a package with a 15-year long-term financing. This is not available in Ecuador and is deemed by all parties to be necessary in this instance, in order to ensure the financial sustainability of the Port project.Guayaquil is the country’s main port, with 70% of foreign trade pass through it each year. It’s one of the busier South American commercial ports, due in part to its geography – a location which allows it to capture traffic for routes to the Far East, and the rest of the Americas. It’s highly convenient for the concentration of Latin American cargo destined to cross the Panama Canal — and then onwards to the east coast of the Americas, or onwards to Europe and Africa.But, as a transfer port, the current Port of Guayaquil cannot capture large draft ships such as the post-Panamax vessels. As a result, leaders in the national government and in the private sector jointly decided that there is a need to build a deepwater port. Specifically, they’ve determined that it must have the capacity to receive such bigger vessels, and that the best option would be to host this project in the area of Ecuador’s Posorja, due to the advantageous characteristics offered by the area – in transport linkages, in geographic situation, and in geology.____________________________________________________________IDB Invest is the private sector institution of the Inter-American Development Bank. IADB is a multilateral development bank focused on supporting Latin America and Caribbean businesses. It finances sustainable enterprises and projects to achieve financial results that maximize economic, social and environmental development for the region. With a current portfolio of $11.2 billion under management and 330 clients in 23 countries, IDB Invest works across sectors to provide innovative financial solutions and advisory services that meet the evolving demands of its clients.DP World Posorja is a company committed to the community and the environment, offering customers, partners, shareholders and collaborators ways to create long-term sustainable value, extending its values ​​not only to those who form the DP World family, but also to the entire Ecuadorian community. The work of the Deepwater Port PD World Posorja is part of the 50-year concession to build and operate the first deepwater port in Ecuador and its first phase includes the following: building and equipping the facilities of the Port Terminal of the Port of Deep Water in Posorja (TPPP) and operate said facilities during the delegation period; the construction, operation and maintenance of a 20 km access road to the TPPP that joins the cities of General Villamil Playas and Posorja; the logistics park, which will be developed under the ZEDE modality, expanding a new pole of industrial development and opening up great opportunities for national and international companies, promoting new investments; and the dredging of an access channel of 16.5 meters, which will benefit all users avoiding greater risks and will allow maximizing the cargo capacity of the Post-Panamax Ships.

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