Port of Baltimore officials are asking the state Board of Public Works to approve a one-year contract extension with the American company that just bought P&O Ports from the Dubai government, making Maryland the first government to seek such a deal with the marine terminal operator's new owners.
The current six-year contract in Baltimore is set to expire in November. Though officials at the Helen Delich Bentley Port of Baltimore could have extended the deal for another six years, they decided to craft a one-year contract worth close to $50 million. The deal is designed to give port officials more time to decide who should operate the Seagirt Marine Terminal in the long term.
FOR THE RECORD - A photo caption in yesterday's Business section about the port of Baltimore incorrectly identified the location where the photo was taken. It was Seagirt Marine Terminal.
The Sun regrets the error.
AIG Global Investment Group, the U.S. insurer's asset manager, bought P&O March 17 and renamed it Ports America. Washington lawmakers had objected to foreign government ownership of U.S. port assets on security grounds last year and forced the sale to a U.S. company.
If approved today, it will be the first contract extended since AIG took over at the U.S. ports, a company official said.
The sale included contracts to manage terminals in Baltimore as well as New York-New Jersey, Philadelphia, New Orleans, Miami and Tampa, Fla. It also has cargo-handling duties in 16 other locations along the East and Gulf coasts and management of a passenger terminal in New York.
Other ports will face similar decisions about extensions in their contracts with Ports America. Some negotiated other changes at the time of the P&O sale. For example, in negotiations that stalled the sale, the New York and New Jersey port authority secured commitments of funding for infrastructure at its facilities.
"It was a business decision we made that gives us some time to decide what we're going to do," said F. Brooks Royster III, executive director of the Maryland Port Administration, which oversees the public terminals. "We're in the midst of the process."
He declined to elaborate on what would be considered in choosing whether Ports America continues on after the extension, if it's approved by the state board as expected. Royster did say the company had done a good job.
AIG says current management will stay in place, so the company will continue operations as normal. The company employs about 65 in Baltimore and provides thousands of hours of work for longshoremen.
The one-year extension would be worth an estimated $48.8 million, although the payments are based on cargo handled, according to the MPA. The current six-year contract, signed in 2001, was estimated to be worth about $174.9 million. But the contract's value with nine and a half months to go is now estimated at $206.3 million because more containers came through than expected.
The port said the number of containers passing through the port has gone up nearly 33 percent since 2001.
The new value of the contract, with the one-year extension, is estimated at $255 million.
John Stokes, chairman of Ports America, said the company was pleased to win an extension.
"They wanted to add some time, and we were happy to give it to them," he said from his office in Houston. "The company has been in limbo for some time and no one was sure of its future. We're pleased to have gotten past that stage."