The Virginia Port Authority's decision not to pursue a public-private partnership could have a negative impact on other potential port privatization deals, according to a new report from Fitch Ratings.
Two groups, APM Terminals, Inc. and Virginia Port Partners, had submitted bids to operate the port of Virginia as a P3. Last month, the VPA board announced it had decided to reject both proposals. Virginia Gov. Bob McDonnell, who had directed the authority to evaluate the bids, said Tuesday that he accepted the board's decision provided it institute considerable auditing and restructuring of the port's current operational structure.
Fitch said that the deal, which would have been the first privatization of a major U.S. port facility, might give pause to other potential private sector partners looking to do port deals.
"We believe that those contemplating similar large port privatizations will consider this decision and the events surrounding The Dubai Ports World bid for six major U.S. ports in 1996," the report states. "Both were politically complicated and suggest that future privatizations will be similarly challenging. We would expect the privatization of smaller, individual terminals to continue, as they present smaller political challenges."
The lease payments under either proposal were expected to be in the $3 billion to $4 billion over 20 years. Fitch said the VPA decision would not likely affect the port's rating.
