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Pacific Islands Development Program, East-West Center

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Senator Defends Guam Port Authority Crane Purchase
Vice Speaker queries condition of cranes, anticipated upkeep costs

By Gaynor Dumat-ol Daleno

HAGTA, Guam (Pacific Daily News, Nov. 28, 2012) – The Port Authority of Guam decision to buy three second-hand cranes that the Port of Los Angeles no longer wanted was prudent because the local government doesn't have the cash to buy brand-new cranes, said Sen. Tom Ada, whose legislative committee has oversight over seaport issues.

The Guam port agency is paying $12 million for the three cranes, which are being sold jointly by Matson Navigation and Horizon Lines.

The two shipping companies bought the cranes from the Port of Los Angeles for $50,000 apiece, trade magazine Hoist reported. Ada, who's been keeping tabs on the Guam port agency's process to buy the used cranes, said Matson and Horizon had made representations they spent $18 million on the cranes before selling them to the local government.

Matson and Horizon's cost included refurbishing the cranes, shipping them from the West Coast to Guam and installing them at the island's seaport, Ada said.

"Given what we are able to afford, this, I would say, was a prudent purchase," Ada said. He said Matson is including a fourth crane that already is in place at the Guam seaport as part of the $12 million purchase.

Vice Speaker Benjamin Cruz isn't convinced this is the best deal the local government could get, even with a limited budget.

The Guam port agency is borrowing from a bank, with the loan secured by a low-interest guarantee by the U.S. Department of Agriculture. The loan will be repaid with a $105 or a $125 charge per cargo container at the seaport that is moved using the cranes.

The Public Utilities Commission recently approved the purchase of the cranes, as part of its role to scrutinize Port agency purchases of $1 million or more.

The purchase agreement will be signed in December between the sellers and the Port Authority of Guam board. Ada confirmed the signing of the purchase will be executed in Honolulu.

Cruz's opposition stems, in part, from his first-hand information that, before Matson and Horizon bought the three cranes, the Port of Los Angeles was offering the three cranes for a token fee of $1 just so the towering machinery could be moved.

Cruz also questioned whether Guam's port agency would have made a better purchase if it bought two brand-new cranes for about $14 million instead of paying $12 million for three used ones that would need several million dollars in further upkeep -- if they are to last 20 years instead of five years.

Cruz yesterday sent a Freedom of Information Act request to the Port Authority of Guam, particularly seeking records of a meeting on May 15, 2012, during which the Port Authority of Guam Board of Directors approved the purchase of the used gantry cranes.

The cranes are used to move containerized cargo on and off ships.

"I was promised information which would demonstrate that the board's actions were fiscally responsible and in the best interest of the people of Guam," Cruz said. "To date, approximately six months later, I remain without the information promised."

Ada and Port Authority board Chairman Dan Tydingco said separately that buying new cranes isn't easy, in part because it takes about a year for a crane to be manufactured once an order is placed.

Guam's port agency also has had years of failed attempts to purchase brand-new cranes because the bid process was challenged.

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