Razon-led ICTSI pulls out port business in Syria
MANILA, Philippines - The ongoing civil war in Syria has prompted the group of Fiipino businessman Enrique Razon to pull out its employees and entire port business there.
In a statement on Friday, December 28, International Container Terminal Services, Inc. (ICTSI) said the "untenable, hostile and dangerous business environment" has triggered the "force majeure" provision of its 10-year contract with its Syrian counterpart.
"Under the Investment Agreement between (its subsidiary Tartous International Container Terminal) TICT and Tartous Port General Company (TPGC), wars and civil disorders constitute force majeure. The Syrian civil war is escalating, exposing everyone, both combatants and civilians, to increasing threats of death and destruction every day," it wrote.
"To continue operations in Syria under those circumstances was clearly unsustainable and dangerous to TICT personnel," it added.
The termination of contract and the write off of the remaining assets of the Syrian business will cost ICTSI US$1.2 million in 2012, the port operator said.
ICTSI's unit and Tartous signed a public-partnership-project (PPP) contract in March 2007 to operate and develop the Tartous container terminal.
ICTSI said that even before the civil war that started in 2011, volume growth and forecasts of Syria’s container market were already drastically affected. "Volumes started to plummet by 4% in 2010, and 14% by end 2011. The drop has set the Syrian container market back 5 to 6 years at 2006-2007 levels," it reported.
"Economic and business conditions in Syria have been volatile as a result of trade sanctions by the European Union and the United States, and the closing for trade of the Syrian-Iraqi border. The Port of Tartous, where TICT operates, should have been the transit point for transshipment trade to and from Iraq," it said, citing the eruption of political unrest and spiralling violence.
It also reported that the Razon-led firm encountered "policy setbacks" from the Syrian government, which failed to deliver some promises under the contract. ICTSI said its unit has "remitted over US$13 million to TPGC in port fees and rentals. The annual investment fee and variable fee were paid on time."
The Syrian port business contributed 0.6% to ICTSI's consolidated volume in the January-to-September period, and 0.4% to consolidated revenues. It also accounted for 0.4% of total group's assets.
The Philippine government has been evacuating its nationals who are working in Syria, which has been gripped by fighting since early 2011 and has already flown more than 3,200 out of the country.
ICTSI operates numerous ports in the Philippines and around the world including the United States, Japan, India, Brazil, Indonesia, Argentina, Mexico and Poland.
On Friday, December 28, it also announced that it is buying the 15.72% stake of a foreign company in Pakistan International Container Terminal, boosting ICTSI's stake to 63.59%. - Rappler.com