International Container Terminal Service, Inc. (ICTSI) said Wednesday it has pulled out of a terminal it operates in Tartous, Syria, due to the ongoing war in the Middle East nation.
Tartous (also spelled Tartus), is Syria’s second biggest port. ICTSI has been operating the terminal through its Tartous International Container Terminal (TICT) subsidiary since 2007.
The operator said its decision to pull out of Syria is based not only on the spiraling violence in the country (which ICTSI said has severely hampered container activity through the port), but also by the local government’s “refusal to acknowledge the existence of unforeseeable change of circumstances and provide relief under the investment agreement.”
The current crisis, which has seen Syria plunged into civil war, has knocked back the Syrian container market to 2006-2007 levels, with container volume dropping 4 percent in 2010 and 14 percent by 2011, ICTSI said in a statement.
“At the time ICTSI submitted its bid in 2005, Syria’s container market was growing and on track as projected,” the company said.
The operator also said the Tartous Port General Co., the local entity with which it signed an agreement to operate TICT, has not kept its promises as part of the agreement.
Manila-based ICTSI said it withdrew all its Filipino employees prior to the pullout announcement, adding the war and resulting civil disorder constitutes force majeure.
“The Syrian civil war is escalating, exposing everyone, both combatants and civilians, to increasing threats of death and destruction every day,” ICTSI said. “The agreement allows a party to seek relief if there is an unforeseeable change in circumstances which materially upsets the economic balance of the parties from when they started. The situation in Syria has since then deteriorated into an open civil war. To continue operations in Syria under those circumstances was clearly unsustainable and dangerous to TICT personnel.”
ICTSI said writing off the TICT contract and remaining net assets in the 2012 consolidated accounts of the overall company would amount to $1.2 million, while it would save $4 million annually in terms of port fees and cash operating expenses from the agreement's termination.
The operator said Tartous Port General Co. had received $13 million since the agreement was signed and the “annual investment fee and variable fee were paid on time.”
The Tartous terminal represents a small part of ICTSI’s global network of container facilities. TICT’s contribution for the first nine months of 2012 was 0.6 percent and 0.4 percent of ICTSI’s consolidated volume and revenues, respectively. - Eric Johnson