Port again delays renewing contract

Published 12:00 am Tuesday, May 19, 2009

Though without a formal vote, port commissioners appear to have turned down yet another counteroffer from Kinder Morgan to renew a lease to operate the Port of Vicksburg.

A pair of options — the third set of concessions presented to the five-member panel in less than a year — would have the company pay Warren County a base rent of $200,000 annually and 8 percent if annual revenue topped $2.255 million or a base rent of $235,000 and delay the 8 percent payments to $2.8 million in revenue.

Under the existing agreement signed in 2005, base rent is $135,000 and performance-based payments to the commission total 8 percent if the gross tops $1 million and 15 percent if it tops $1.4 million. The agreement is set to expire in December. Offers on a renewal have gone back and forth for nearly two years due to Kinder Morgan’s attempts to attach the deal to a long-term pact to ship steelmaking components to the SeverCorr plant in Columbus.

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The county owns the loading, unloading and storage facilities at the E.W. Haining Industrial Center and hires an operator. Port Commission members, appointed by supervisors, manage the port and all industrial sites for the county.

“I’m concerned this just isn’t the final deal,” commissioner Mike Cappaert said, reacting to the offer.

Most of the panel’s issues were with the cut in guaranteed revenue up front before benchmarks are reached. Tom Murphree, regional sales director for the company, said revenue would have been between $450,000 and $500,000 since the current agreement took effect if not for the replacement of the T-dock support platform and later issues.

“We just can’t sustain ourselves with just $450,000 in revenue,” Murphree said.

Port revenue totaled $1.75 million in 2008, or about $146,000 monthly. The annual total is about $500,000 more than in 2007. Tonnage unloaded at the port doubled in April compared to March, to a total of 3,156 tons. A combination of structural issues with the T-dock associated with shipments of heavy pig iron and fewer shipments of gas pipeline segments have lowered average tonnage since early February.

Chairman Johnny Moss indicated losses would likely exceed the difference in base rent between the two pending sets of terms and indicated the port’s current deal might represent its peak performance.

“That may be the best we think we can do,” Moss said, adding the newest counteroffer could cost the port up to $46,000 a year, including revenue-based dollars.

Murphree took credit for keeping talks alive to keep Vicksburg a major player in the steelmaker’s plans following its majority purchase in late 2007 by Russian principals of Severstal. He alluded to changes in the makeup of what was unloaded at the port in recent years, particularly the phaseout of paper products in the early part of the decade and its reflection in the current base rent — $90,000 less than the prior arrangement.

“But, former tenants hustled business without us subsidizing it,” Cappaert said.

Increases recently in the amount of grains and corn used by Bunge North American at the ethanol plant at the port, jointly run with Ergon Refining, may provide for another bump in tonnage for next month, said Keith Cochran, Kinder Morgan’s local supervisor.


Contact Danny Barrett Jr. at dbarrett@vicksburgpost.com