Yilport clarifies the situation at Puerto Bolivar

Puerto Bolivar on Juy 2017. Source: Carlos Barros.

Following our recent publication on the troubles that the Turkish port operator Yilport Holding has lately encountered with its project in Ecuador while developing the terminal at Puerto Bolivar, we have received an official statement on the dispute, which was issued by Robert Yuksel YILDIRIM, the Chairman of YILPORT Holding and President & CEO of YILDIRIM Group of Companies. We appreciate the wide interest our article has caused among the industry professionals and the keen attention on the part of Yildirim and would like to provide the opportunity for the Group to explain their view on the situation.

First of all, Yildirim Group confirms that its subsidiary Yilport Holding secured the rights to Puerto Bolivar in Machala City, Ecuador in August 2016. The 50-year concession deal marks the largest ever Turkish investment in Ecuador. The project is created on a public-private partnership (PPP) model and implies certain concession fee that Yilport will be paying, as well as sharing profits with the Ecuadorian government. Within 50 years the government will receive a few billion dollars from this business, says the company and adds: “Keep in mind that Puerto Bolivar was losing money every year, and was not serving Ecuador’s future growth plans in its underdeveloped condition.”

Yilport commits to invest USD 750 mln in the expansion and modernization of the port in 5 phases. Phase 1 will take 3 years and will bring the investment of USD 230 mln. The company aims at creating a container terminal as well as keeping the existing bulk banana services. However, the new container terminal will be designed to provide more options to shippers and banana exporters and create an advantage for shipments from Southern Ecuador.

But Yilport informs that the project has not been started yet. Its launch has been delayed due to a number of problems. First and foremost is the expropriation of the land, which the Ecuadorian government should complete before the construction can start, according to the PPP agreement.

The second issue is obtaining the required licenses. “As of December 2017, all of the permits to develop the container terminal have not yet been collected,” says the company’s statement. It does not mention which licenses are still pending but highlights the company’s commitment to “fulfil all the license obligations by global high standards such as the environmental impact assessment (EIA) taking into account the extra conditions stated in the concession”.

In response to the local protesters who claim that 300 jobs have been lost since Yilport gained the concession, the company argues: “We have employed over 100 new people in both our port in Puerto Bolivar and head office in Guayaquil. We also kept operators of the port, who were providing services before the takeover. During the takeover period, we conducted more than 300 interviews (white- and blue-collar positions) and gave the priority to the citizens of Machala as well as El Oro region. Once our investment starts, many local workers (around 300-500) will be hired in the first construction phase. After phase 1 is completed, and all cranes and equipment are installed, we will again be hiring operations personnel… When the operational activity starts at the terminal, Puerto Bolivar will also create business around the neighboring district. New job and business opportunities in neighboring hotels, restaurants, accommodation, transportation, logistics, custom brokers and agents will boost El Oro’s urban economy.”

Yilport confirms the necessity to deepen the port’s draft from the existing 6-10m to 14m and 17m in two phases of dredging in order to handle the world’s largest container ships. The Group states that the dredging was part of the concession agreement between the government and Yilport and further highlights: “In the EIA permits, it is clearly stated that dredging project will not affect shrimp farms and there would be no damage to the ​​40,000 hectares of shrimping area. Permission for the project was granted under current conditions.”

Yilport has obviously been working on resolving this issue recently, as according to the local media, an agreement between Yilport and CORPODET EP, a public company from the El Oro province, to do the dredging was signed in early December. The start of the 9-months project, although still being subject to Yilport’s obtaining some permissions, is planned for February 2018. The works will be financed by the provincial government.

Responding to the public concerns on the increases of port tariffs, Yildirim Group stresses: “The tariffs are already in our PPP contract with the government and port authority. We did not increase tariffs unlawfully. However, there was a dispute on the new tariffs, so we revised the tariff for the first year of our operations. We lowered the tariff even though it was much higher in the official deal.”

The company confesses that it “cannot understand unfair protests and complaints” and further states that it fully supports banana exporters and aims at developing Puerto Bolivar the best banana exporting port in Ecuador. However, Yilport admits some sort of a dispute with these customers: “The banana exporters already owe Puerto Bolivar a lot of money, and they are yet to clear their debts. We are not obliged to tolerate this, and if they do not pay, we are not obliged to serve them without payment. They should be honest and pay their invoices to receive service from our terminal.”

Aiming to do business honestly and transparently in every country it enters, Yilport plans to introduce the know your customer (KYC) compliancy check for its customers in Puerto Bolivar: “Banana, seafood and mineral industry in Ecuador will have to pass our KYC process. If they are not clean, if they deal in contraband or illegal drug trafficking, they will be stopped, banned from the port, and turned over to authorities. Our aim is to uphold Ecuador’s global image and prestige.”

Concluding the statement, Yildirim Group says: “We came to Ecuador all the way from Turkey to serve this country, invest and build infrastructure. This dark image of Yilport, painted by some parties is absolutely incorrect and not acceptable. We proved ourselves in many cities of Norway, Sweden, Malta, Spain, Portugal, Turkey, Peru, Colombia, and France. We have strong references from many countries. We will not yield and we are committed to Puerto Bolivar’s development.”

Port.Today will continue monitoring the situation and will keep our readers well informed of the developments.

Julia Louppova:
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