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Port Authority of Guam halts H-Wharf project in favor of crane purchase

Updated: Apr 27



 

By Mar-Vic Cagurangan

 

The Port Authority of Guam’s board of directors has put the brakes on the Hotel Wharf construction, redirecting the project’s funding along with other resources to purchase three new gantry cranes.


“This will be the first new cranes in the Port Authority of Guam’s history,” Rory J. Respicio, the port’s general manager, said following the board’s unanimous approval of a resolution authorizing the procurement.

“Our current cranes are more than 40 years old and based on consultant reports,

they will reach the end of their expected service life and will need to be replaced

 by 2029,” he added.

Rory Respicio

Based on a 2016 estimate, it would cost a total of $35 million to replace the three aging cranes.

 

To meet the financial requirement, the board moved to reprogram the port's priorities and reallocate its resources, giving up the H-Wharf project in favor of new gantry cranes.


“Given the unforeseen requirement to update seismic codes for H-Wharf, which substantially increases the project’s cost, the decision to pause construction on H-Wharf becomes even more pressing,” states the board’s resolution adopted on April 25.


The H-Wharf project, which has been contracted to Sumitomo Mitsui Construction Co., involves the expansion of vessel berth capacity for cargo and cruise ships to accommodate larger vessels. 


It was envisioned to serve as a home port for cruise liners while facilitating the deployment of military assets.


The project’s initial price tag of $46 million has since spiraled to $92 million.

The port authority sought to fill the funding gap through a grant from the Maritime Administration but its application was turned down.



 This situation underscores the complexity of large-scale infrastructure projects, particularly those in environmentally sensitive zones,” the resolution reads.

 

“It also highlights the importance of flexibility in project management and financial planning, ensuring that the Port can adapt to changing circumstances and requirements without compromising its strategic objectives or operational capacity.”

 

Plans to replace the old gantry cranes have been in place for years. However, the port has been unsuccessful in its attempts to secure funds from MARAD.

 

In 2019, MARAD rejected the port authority’s grant application due to noncompliance with the Buy America, Build America Act, which mandates domestic purchasing for federally funded projects.


In 2023, the port authority resubmitted its grant application along with a request to be exempted from the Buy America policy, but it received another thumbs down.

 

Through the newly passed resolution, the board instructed the general manager to “pursue all available funding avenues” to expedite the acquisition of new gantry cranes.

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“However, if port funds or any funds whereby no geographical restrictions exist, i.e., Buy American or Do Not Engage with the Enemy Clause, then the general manager is statutorily bound to proceed accordingly,” the resolution states.

 

Respicio said the port has available funds to cover the cost of just one gantry crane. He said his office has been engaging with federal offices, congressional leaders and military commands to assist in funding the purchase of new equipment.

 

“With the Biden administration’s heightened concerns,” Respicio said, “it is crucial to secure funding aligned with U.S. security policies to prevent reliance on China-manufactured equipment.”


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But during a meeting with a congressional delegation in Adelup on Friday, Gov. Lou Leon Guerrero noted the potential impact of the purchasing restrictions on port operations.

 

She warned that should one crane go out of service, the port’s capacity to meet commercial demand and support Department of Defense missions would be compromised, potentially delaying the military buildup by up to four years.


Last year, the U.S. Department of Housing and Urban Development issued a temporary waiver that exempts Guam, the Northern Marianas and American Samoa from the “Buy America” policy.


The waiver, which went into effect on Nov. 15, is in force for 15 months, according to the department’s official notice posted on the Federal Register.


The U.S. Department of Transportation earlier proposed a similar waiver for Pacific territories. Respicio said the proposed rule does not cover MARAD.





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