The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The government’s aviation chief yesterday said he has received a Bahamian-generated offer to provide the “north of $120m” financing needed to kickstart overhauls of the major Family Island airports.

Algernon Cargill, director of aviation, told Tribune Business he will later this week start to schedule meetings with the Ministry of Finance to select, and gain approval for, the best private-public partnership (PPP) funding proposal while describing the Bahamian package as “more complete”.

Declining to name the source of this offer, he revealed that the government is seeking to finance the redevelopment of the Exuma, north Eleuthera, Long Island (Deadman’s Cay) and Great Harbour Cay (Berry Islands) airports in this financing round, as well as essential repairs to Abaco’s Leonard Thompson International Airport post-Dorian.

Pegging the north Eleuthera and Long Island costs at $65m and $15m, respectively, Mr Cargill said the PPP financing also needed to provide the $37m “balance” of the $55m price tag attached to Exuma’s new airport.

The remaining $18m will come from an aviation sector-related Inter-American Development Bank (IDB) loan, while Great Harbour Cay’s transformation will require a further $3m to $4m. And Dionisio D’Aguilar, minister of tourism and aviation, yesterday told the House of Assembly that the Leonard Thompson International Airport is in line for a $3m post-Dorian injection.

Asked whether the government was seeking around $120m to finance the first round of airport transformations, Mr Cargill revealed it will “probably be a little more than that”. He emphasised, though, that this will not add to the soaring national debt due to the planned off-balance sheet financing structure, with the monies set to be repaid from the income stream generated by passenger user charges.

“We have been talking to local capital providers, and we have a proposal from them to provide the funding required to support the IDB monies for the redevelopment of the airports,” Mr Cargill confirmed to this newspaper. “The next step will be for me to meet with the Ministry of Finance to approve the funding that will support what we already.

“We have a very good proposal from a local provider which I’m happy about. We have a local proposal that provides support for all of them [airports]. We have a lot of interest, but there is one from a local provider that is more complete. It’s a comprehensive proposal for all airports.”

The “provider” referred to by Mr Cargill is likely to be one of the major investment houses, such as RoyalFidelity Merchant Bank & Trust, CFAL, Providence Advisors, Leno Corporate Advisors or even a consortium of them working in tandem to raise the necessary financing.

The aviation director, though, said the government was open to receiving multiple offers as he revealed that international proposals and expressions of interest - some involving the provision of management services for Family Island airports - had also been received.

“We have received a lot of indicative international offers,” Mr Cargill disclosed, “but the main proposal we have is local. We are receiving offers internationally also to provide funding and management for the airports.

“We are looking at all these proposals, and will determine the best offer and decision to recommend on behalf of the Government of The Bahamas. We have funding proposals in place that we have to advance to the Ministry of Finance. The Ministry will want us to review more than one proposal. Once we can get their approval we can move ahead.

“We have a lot of interest. We don’t want to close the door to anyone else who comes forward to the Government.”

With the Government’s direct debt set to exceed more than $8.2bn by end-June 2020, and increase by a further $1bn over the next three years, Mr Cargill said a special purpose vehicle (SPV) will be created to borrow the PPP funding and keep it off the Ministry of Finance/Treasury balance sheet.

A similar structure is also being employed for the Bahamas Power & Light (BPL) $580m refinancing, but the aviation chief said the debt incurred to redevelop the Family Island airports will be paid-off via an income stream generated by the imposition of a passenger facility charge at these airports.

“It’s important to emphasise this will not be a debt borne by the Government,” Mr Cargill told Tribune Business. “This will be an SPV we’re going to recommend be created. The debt will not be on the Government’s balance sheet at all.

“The Government will not be borrowing; a separate entity will be borrowing and will recoup the debt from a passenger facility fee. It has nothing to do with any increase in the Government’s debt.”

The latest moves are an attempt to execute on the long-standing need to improve air access to the Family Islands if they are ever to fulfill their commercial and touristic potential. Aviation consultants, Stantec, estimated in 2013 that a $180m total investment was required to bring all 28 Family Island airports up to international standard, and this figure is now thought to easily exceed $200m.

Mr Cargill yesterday confirmed that the new Deadman’s Cay airport is in the design phase, but Exuma will be the first to see construction activity and the replacement of an existing facility that was yesterday described as an “embarrassment” by the island’s Chamber of Commerce president.

Pedro Rolle told Tribune Business that the island’s main aviation gateway should have been overhauled “at least five years ago”, adding that present conditions left a poor first and last impression in the minds of visitors.

“If we simply get this airport off the ground that would further boost the economy,” Mr Rolle said. “If they can get it started it would be wonderful. It’s overly important. We’re constantly embarrassed at weekends about the conditions our guests and visitors have to deal with.

“Sometimes they have to stand on the line and we don’t have enough seating. What we have in the departure lounge, it’s embarrassing on that end, and extremely embarrassing when they come in and have to go through the international section.”

Describing Exuma’s airport as “a few years past its sell-by date”, Mr Rolle said any investment in its upgrade would provide returns to the island, country and the Government. “I think this is something Exuma needed at least five years ago to put it mildly,” he added of a project that has been put out to bid. “It could well have been longer.

“If we give a good impression not only will visitors want to come back but they will tell others to return. Not only will they want to come back, but they will tell others about it. If the last impression is of a shoddy place, it’s not an incentive for them to return. We don’t want people to come despite the challenges. We want them to come and be enthusiastic about doing so.”