The Tribune

By KHRISNA RUSSELL

Deputy Chief Reporter

krussell@tribunemedia.net

THE government’s acquisition of the Grand Lucayan was likened to Oban Energies’ proposed $5.5bn oil refinery for Grand Bahama as the Official Opposition continued its assault on the hotel purchase.

“This is not Oban, though it is equally a bad deal,” Official Opposition Leader Philip “Brave” Davis told Parliament yesterday as he called on the government to provide a business plan to support its decision.

In his communication to the government’s resolution seeking $35m to complete the Grand Lucayan sale, Mr Davis rejected Prime Minister Dr Hubert Minnis’ assertion the former Christie administration did not have a plan for the Grand Bahama property.

But although he sought to prove the government’s plan for the resort is insane, Mr Davis did not say whether he supported the resolution – as is customary during House debates of this kind.

“I also ask the government to provide a business plan to support this massive financial undertaking,” Mr Davis said.

“Parliament needs to know and the Bahamian people need to know the likely impact of the purchase and operation of these hotels on the national debt and ratings of international agencies.”

Regarding the PLP’s plan for Grand Bahama, Mr Davis said the outgoing Christie administration left a comprehensive report outlining measures needed to ensure both the short and long term sustainability of the Grand Bahama economy, particularly Freeport.

“We also left in place a memorandum of understanding between the government, the Grand Bahama Port Authority Ltd, and certain Hutchinson Whampoa owned companies with vital interests in hotels, properties, harbour, shipping and airport, etc,” Mr Davis said.

“Sadly, after some sixteen months in office, we see very little, if anything which the FNM administration is doing to implement these comprehensive measures, which are essential to Grand Bahama’s economic revival, survival and to offer relief from the hardships being endured by far too many Grand Bahamians.

Among those measures, was a $200m Carnival Cruise Port Development for East Grand Bahama, and strategies for the reorganisation and recapitalisation of The Grand Bahama Port Authority (GBPA) to effect an extension of duty-free concessions for start-up and existing businesses throughout the island.

For his part, Exuma & Ragged Island MP Chester Cooper attacked the Minnis administration’s transparency about the costs associated with acquiring and operating the resort. In his calculation, it will cost the government about $100m to do so.

He also expressed concern the government will attempt to sneak in supplementary appropriation bills in the future to cover other expenses that arise from the deal. However, during his speech last night, East Grand Bahama MP Peter Turnquest acknowledged that the government may have to return to the House of Assembly for permission to borrow money to facilitate the operation of the hotels.

“They didn’t provide the details so I did back of the envelope calculations,” he said. “There’s the $65m that we know about, the $10m and the $20m that have been paid and the $35m for the mortgage, that’s $65m, let’s start there.

“Is there stamp tax on this sale? I would suggest that there wasn’t and that’s $6.5m overall. Then there’s the interest on the bond, that’s perhaps another $2.5m, $2.8m and I’m being very conservative here in my round numbers.

Mr Cooper said: “The Bahamian people want to know, is this a $65m deal or is this a $100m deal as I contend? Employee obligations of the government, as it magnanimously agreed to shoulder the responsibility of, I calculate and estimate that that’s perhaps in the region of $8m.

“For backpay and union obligations and severance and pensions, perhaps it’s a little more than $8m. The government would pay another $2m being conservative to subsidise Hutchinson’s loss until the sale closes.

“This deal is closed for all intents and purposes. Let’s not forget this resort is losing millions of dollars every month. I will tell you I believe the closing will take longer than six months as they project and since we’ve established the losses at $1.5m per month let’s multiply that by the 6 months the government actually believes it will take to find a buyer for the property, that’s another $12m.

“That’s all assuming the government doesn’t feel gracious with the new buyers the way they felt with Hutchinson and cover all the taxes and all the costs all over again. And then there are legal fees.

Mr Cooper pointed to additional fees for lawyers facilitating the transaction, and exchange fees.

“Hutchinson also told the government they can’t have the napkins or the plates or the Joy or the cleaning supplies or the toilet paper in the resort,” Mr Cooper said.

“They wanted those because those are part of the inventory according to the SPA so you’re going to give them $65m and they will take all the inventory in the hotel so you’ll need to replenish that and let’s be conservative again and say that’s another half-a-million dollars,” he said.

During her contribution to the debate, Englerston MP Glenys Hanna Martin eviscerated the administration, saying the debate is about the administration’s failure to “negotiate a palatable arrangement for the reopening of this hotel”.

“You have been in negotiations for more than one year and have been unable to secure an agreement,” she said.

“But relief could have come to Grand Bahama during this period in other ways. When you took office in May 2017 you met a deal on the table for a new Carnival Cruise Port in East Grand Bahama with guaranteed entrepreneurial opportunities for Bahamians, including water sports, shops, art and craft with extensive linkages into the economy of Grand Bahama, including the possibility of home porting which would have had implications for overnight tourist arrivals by air.

“We have yet to obtain, however, an explanation from this government for the apparent abandonment of this project.”

During closing remarks, Deputy Prime Minister Peter Turnquest said the cruise port deal had not abandoned, but it had been put on hold at the request of Carnival.