The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday "adamant" that Nassau Flight Services (NFS) will be privatised by selling it to a 100 per cent Bahamian group not previously involved "in the big deals".

Dionisio D'Aguilar, minister of tourism, told Tribune Business there was "no way" a privatised NFS could be acquired by a buyer with foreign equity interests, given that the company's size placed it well within the reach of prospective Bahamian purchasers.

And, indicating the Government's intentions to 'spread the wealth' among a new entrepreneurial class, the Minister said the preferred purchaser will be "an up and coming" Bahamian group with previous business experience but which has not participated in major acquisitions before.

Nassau Flight Services, which provides ground handling services at Lynden Pindling International Airport (LPIA), generates annual revenues of between $8-$10 million. With taxpayers providing a $2 million per annum subsidy, Mr D'Aguilar suggested it represented 'low hanging fruit' for the Minnis administration's drive to 'get the Government out of business'.

Having announced his intention to ready the company for privatisation during the 2017-2018 Budget debate, the Minister said he and the Board were now awaiting a valuation report on Nassau Flight Services (NFS) before determining their next move.

"The valuation is being done, and a Request for Proposal (RFP) is being prepared, I believe," Mr D'Aguilar told Tribune Business.

"I know a valuation of the company is being done, but the Board has come back to me yet with their recommendation. They've hired an accounting firm to do a valuation of the company, and what could be its value."

Such an exercise is a normal 'first step' in privatisation processes, as governments typically seek to determine the 'true worth' of public assets earmarked for sale so they can better evaluate bids. Nassau Flight Services (NFS) Board is headed by North Eleuthera MP, Howard 'Rickey' Mackey.

Mr D'Aguilar said the nationality of an eventual purchaser was "not even up for discussion", signalling the Minnis administration's determination to ensure Nassau Flight Services remained fully Bahamian-owned - albeit by the private sector.

"The eventual purchaser would have to be a Bahamian company, and the Government's expectation would be that the purchaser of the company would be some up and coming group of Bahamians, not the usual, traditional groups that own things in this country," the Minister of Tourism told Tribune Business.

"It would be an attempt to empower, and give individuals or companies that have not traditionally participated in the big deals an opportunity to participate in a deal like this. The Government is adamant that it will end up in the hands of aspiring Bahamian entrepreneurs who have some business experience but are not the traditional mainstream.

"That's a given; that's not even up for discussion. They will have to be 100 per cent Bahamian-owned. There's absolutely no way this can end up in the hands of non-Bahamians. When we put out a Request for Proposal (RFP), we are looking for a group that is aspiring, up and coming, has some business experience already and is looking to take on another challenge."

Mr D'Aguilar suggested Nassau Flight Services' privatisation could be the first step in reducing the burden imposed on long-suffering Bahamian taxpayers and the Public Treasury by loss-making state-owned enterprises (SOEs).

"It's a relatively small company," he added of Nassau Flight Services, "and would probably be best run by a private sector organisation.... It needs good management and no government meddling. It just needs to be run right.

"The Government provides an annual subvention of $2 million, and the reason it provides that subvention is the politicians have meddled and probably saddled it with a whole bunch of costs; greater expenses than it needs to have.

"I have got to get this [valuation] report back, and need to find out the timeframe on that, but have been told it will be forthcoming."

State-owned enterprises received $430 million in subsidies in the 2017-2018 Budget, and K P Turnquest, Deputy Prime Minister, subsequently said the Government had set a target for all such entities to become self-sufficient or "cost recovery centres" within three-five years - meaning they no longer represent a drain on the Treasury through annual subsidies.

Mr D'Aguilar, though, suggested the Government needed to go further through public-private partnerships (PPPs) or exiting ownership entirely via privatisation, thereby removing the state from business and - in some instances - competing with the private sector.

"This model we have been using for many, many years, where the Government owns and runs corporations, has not clearly been a successful model," he told Tribune Business. "All of these entities owned and operated by the Government continue to cost the Treasury.

"If we want to reduce the subsequent burden of these entities on the public purse we've got to start somewhere, and Nassau Flight Services is probably the easiest place to start."

Mr D'Aguilar, though, warned that getting the Government 'out of business' will not be easy, given the decades-long dependence on an economic model where many have relied on the public sector as a form of patronage and to provide jobs.

"There is a cadre of Bahamians that like entities to be owned and operated by the state," he argued. "Just look at BAIC, BAMSI, Bahamas Power & Light, Bank of the Bahamas. We're trying to change that. We cannot afford to continue with this model."

The Minister of Tourism pointed to the likes of Cable Bahamas, Aliv and Arawak Port Development Company (APD) as examples of entities that were either PPPs or had significant government shareholdings, but did not cost taxpayers a cent because they were run as private sector businesses.

"I think the Bahamian people are sick of spending vast amounts of money and getting lousy service," he told Tribune Business. "If you look at the PPPs out there, while the service may not be fantastic it's certainly a lot better than that provided by the state.

"Look at Cable Bahamas, Aliv and APD. Those companies don't cost the state a dime and, by and large, provide a better service. These PPPs are the way to go. We need to infuse a sense of 'let's run this right', let's run this as a business and not as pieces in a political chess game."

Nassau Flight Services was founded in 1957, and provides ground and cargo-handling services at LPIA. Its website says it has "operated for over 10 years as if it were a normal business", and has ambitions to expand into the wider Caribbean.

Among its past and existing clients are Jet Blue, Air Canada, British Airways, Delta, Spirit, Southwest Airlines and Copa.