The Tribune

• Govt to ‘reimburse’ Hutchison 50% of staff payout

• Tender for private sector partner out ‘in 30 days’

• Rebuilding price tag pegged at around $50m

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A senior government official yesterday confirmed the Grand Bahama International Airport’s two outgoing owners have retained the Hurricane Dorian insurance proceeds rather than financing restoration.

Algernon Cargill, director of aviation, responded by saying “that’s what I understand” when asked whether Hutchison Whampoa and the Grand Bahama Port Authority (GBPA) were keeping the payout as part of the deal that will see the government acquire the airport for just $1.

He also disclosed that the government (Bahamian taxpayer) will “reimburse” Hutchison Whampoa for half the costs it incurs in paying due severance and other benefits to the airport’s 60-70 staff, who will leave its employment and be transferred to the state-owned Airport Authority.

Speaking as the House of Assembly debated legal reforms to facilitate Grand Bahama International Airport’s purchase, Mr Cargill told this newspaper: “The deal is just about complete. The Heads of Terms have been signed. The next step is to transfer the employees. The intent is to ensure that no one loses their jobs.

“The intent is to bring them all over. Hutchison is paying all the employees and the government is reimbursing 50 percent of the costs.” Dionisio D’Aguilar, minister of tourism and aviation, told Parliament that the cost of this reimbursement will be less than $1m.

While many have hailed the purchase as vital to Freeport and Grand Bahama’s “economic survival”, others are distinctly less impressed. While much of the focus will be placed on the $1 purchase prices, one well-placed source argued that Hutchison and the GBPA had effectively been allowed to abandon their developmental obligations to Freeport under the Hawksbill Creek Agreement.

Suggesting that the Dorian insurance claim payout may have been as high as $25m, although that figure could not be verified by this newspaper, they added that Grand Bahama International Airport’s owners could walk away and saddle the Government and Bahamian people with a rebuilding that Mr D’Aguilar yesterday confirmed will come with a $50m price tag.

“It’s a $50m bill,” the source said, although the Government is aiming to place the financing burden on a private sector airport operator rather than the Bahamian taxpayer. “It’s a damn disgrace, and Bahamians are so proud of getting this airport for $1. They’ve given Hutchison and the Port Authority everything they wanted.”

Arguing that the Government should have held the GBPA and Hutchison Whampoa to their responsibilities, they continued: “They should have made the Port Authority and Hutchison rebuild. It’s in the Hawksbill Creek Agreement that if they hand it over to any third party responsibility moves to them.... It’s a total disgrace and abdication by the Government.”

The source said “our whole future hinges on Hutchison” in Freeport after Mr D’Aguilar reaffirmed that the ITM/Royal Caribbean deal to acquire the Grand Lucayan is now “contingent” on the duo securing an agreement with the Hong Kong-based conglomerate to redevelop the cruise port in Freeport Harbour together with their water-based adventure park.

“Hopefully, all of these stars will stay aligned so that we can complete what has been a long and arduous set of negotiations, made the more difficult by the onset of the coronavirus,” the minister added. 

“The conclusion of all of these transactions will, we believe, signal a new beginning for Grand Bahama which, as we all know, has been the brunt of so many external shocks and extreme weather events that, for many, the situation has become desperate. Hopefully, with the conclusion of all of these much talked about transactions, the rebuilding of Grand Bahama can continue in earnest.”

Mr Cargill, meanwhile, also revealed that the Request for Proposal (RFP) seeking a public-private partnership (PPP) for Grand Bahama International Airport should be issued “in 30 days or so”.

He said the Government is seeking a turnkey solution similar to the Nassau Airport Development Company (NAD) model at Lynden Pindling International Airport (LPIA), where a private group or company will take over Freeport’s aviation gateway and be responsible for all aspects - planning, development, financing and operations.

“We’re looking at one company for all of that,” Mr Cargill added. “It’s all in together.” Mr D’Aguilar yesterday branded Hurricane Dorian as “the straw that broke the camel’s back” in terms of Hutchison and the GBPA, via the Freeport Harbour Company, remaining willing to reinvest in the airport’s rebuilding.

Noting that most major airports worldwide are owned by the Government, Mr D’Aguilar said: “The ability of the Government to direct and control such a crucial piece of infrastructure, Mr Speaker, is critical to the development of any economy......

“Mr Speaker, the people of Grand Bahama, through their government, must own that airport and thereby regain control of how it is developed, how it is operated and how it can best be used to improve economic outcomes for the tens of thousands of Bahamians who live on that island.”

Mr D’Aguilar, referring to Hutchison’s operational and management control, said: “The jury is out on whether that airport has, over the past two decades, been operated in the best interests of Grand Bahamians. 

“Some have complained that it was an expensive airport to use, some have complained about its facilities or lack thereof, especially after the passage of hurricanes, and everyone has complained at the lack of interest by Hutchison in rebuilding that airport after the passage of Category Five Hurricane Dorian.

“With the sale of the Grand Lucayan to the Government in 2018, it seems as if Hutchison was no longer interested in being in the airport business since, some might argue, it was no longer in the hotel business and wanted now to stay focused on its core. and more profitable business which, as we all know, is the Freeport Container Port.”

With Grand Bahama International Airport sustaining “tens of millions of dollars” in damages after being struck by major hurricanes three times’ in seven years, Mr D’Aguilar said: “Hurricane Dorian was, to use the old adage, the straw that broke the camel’s back.

“After the passage of Hurricane Dorian, on 1 September 2019, Hutchison expressed that they had had enough of operating that airport and simply wanted to sell it and be done with it.” He added that the Government is now purchasing “2,500 acres of land, an 11,000 foot-long runway that was recently resurfaced - taxiways, ramps, etc - all for under $1m.

“Once the purchase of the Grand Bahama International Airport has been completed - the lawyers are currently doing the title searches, the relationship between a Bahamas government-owned asset and the Port Authority being finalised - the asset will be transferred to the Airport Authority, who will create a special purpose vehicle (SPV) to operate and redevelop the airport very similar to what was set up at the Lynden Pindling International Airport.”

The Opposition yesterday demanded greater transparency over the Grand Bahama International Airport deal, including disclosure of the Heads of Terms signed with Hutchison and the GBPA.