Virginia’s Governor, on an official visit to Cuba, indicated today that Virginia’s port authority will become the first US port operator to sign a cooperation agreement with its Cuban counterpart.
“We are going to sign an agreement tomorrow between the Port of Mariel and our Port of Virginia which will be a strategic alliance,” Virginia Governor Terry McAuliffe said during a three-day trip to the island nation.
Mariel Port has been a centerpiece of Cuba’s effort to expand private sector economic activity. A major revitalization effort at Mariel Port started in 2010 by Brazilian firm Odebrecht Infrastructure.
The work included the construction of a new international container terminal with the capacity to move 1 million containers per year – along with dredging of the entrance channel and turning basin. The project included the construction of 700 meters of docks for the container terminal, a freight center, yards, water supply and waste treatment networks and all of the infrastructure required to supply electricity.
The installation of the new terminal required some improvements to the logistics structure designed for the port: the construction of 11 km of roads and connecting railroad lines.
The investments for the modernization of the Mariel Port totaled US$957 million, with US$682 million financed by Brazil and the remainder by Cuba. For the credit approval process, BNDES (Brazil’s development bank) concluded an agreement with the Cuban government for at least US$802 million in spending to purchase Brazilian goods and services.
Despite economic incentives including tax incentives and a free trade zone, the massive port project has not met expectations in terms of attracting foreign investors. Several reasons cited by international investors include issues with property ownership, labor policy and the Cuban legal environment.