The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Ministry of Finance’s top official yesterday assured there will be “a very minimal” cost impact to Bahamian imports from a $25m deal to overhaul “a disgrace” of an air freight terminal.

Simon Wilson, the financial secretary, defended the planned agreement with JDL, which he described as a Bahamian company, as a solution to decade-old security and revenue leakage woes stemming from the “compromised” facility at Lynden Pindling International Airport (LPIA) (see other article on Page 1B).

Speaking after former prime minister, Dr Hubert Minnis, challenged in the House of Assembly whether the public-private partnership (PPP) arrangement had been put out to competitive bidding, he told Tribune Business that the air freight terminal and its problems had “not just sprung up”.

Mr Wilson also pointed out that the Government had been totally transparent about its intentions, having disclosed the proposed JDL agreement on page 280 of its 2023-2024 Budget back in May. And he branded suggestions that JDL, and its proposed ‘40 cent per pound of cargo’ fee, would significantly raise import costs as “disingenuous”, arguing that it paled against charges levied by the courier companies.

“Let me be clear: If you look in the Budget you will see it,” the financial secretary told this newspaper. “Our air freight building is in poor, poor shape. That’s the key element here. We have to upgrade our air freight building. It is not fit. We have Customs officers working in a building which, in the modern Bahamas, is a disgrace. A disgrace.

“Going to our air freight building, you’d be astounded at how we have our employees working there. We were seeking a solution for the last ten years. The roof is compromised, half the building is not fit for operations. All the activities are squeezed on the eastern side of the building; the western side is not fit for occupation.”

Tribune Business revealed on June 6 this year how the Government was seeking to solve the air freight terminal’s issues via a potential PPP outsourcing arrangement with JDL. Documents accompanying the 2023-2024 Budget, in an annex detailing private-public partnerships, set out the “justification to design, finance, build and operate a new air freight terminal”.

“The purpose of this proposal is for the Government to transfer the property consisting of the air freight terminal to a special purpose vehicle (SPV) owned by the Government, and then to lease that property to JDL in order to design, finance, build and operate a new air freight terminal,” the Budget documents stated.

Mr Wilson affirmed yesterday: “We were looking for a solution and a Bahamian company came in and was willing to take on the risk for redeveloping the building for Customs purposes. We made no secret of it in the Budget. This is nothing new......

“It will make a massive investment, and the company is willing to do it. A review of the file will show that we have attempted to do this for at least the last seven years. We went far and wide, approached many persons to say: ‘Are you interested?’ There was no interest.

“This started seven to eight years ago when we thought we could use part of that building as an office for Nassau Flight Services (NFS). This is not just something that sprung up. We found one person willing to take the risk upfront. They’re taking the complete risk. If the volume of traffic is not there, they lose their money. Hopefully, this goes well for us. If it does, it will be a precursor for other things where the private sector takes on the risk.”

Mr Wilson said the need to overhaul the air freight terminal is beyond urgent, while adding that JDL’s fees have yet to be finalised. “The facility in its current state cannot assist us in securing revenue,” he told Tribune Business. “Because it is so limited we cannot do proper cargo inspections. Cargo just leaves, and that creates a security and revenue risk.

“The facility cannot be used for the export of cargo. There’s no technology for scanning; that’s a major issue for us. Because the space is so limited, businesses that want to be in the facility, there’s no way to accommodate them. The barrier to entry in the Customs broker and air freight market is very high.”

Describing the Government’s negotiations with JDL as “long and arduous”, Mr Wilson added: “We are still fine tuning the agreement. The negotiations are still going on with the company. We have not reached a final fee cost. We hope it will be less than 40 cents a pound.

“We still have to settle some things. We want it to start early in the New Year. If it’s not New Year’s Day it will probably be the first week in January. They’ve started the renovation of the bathrooms, which were unusable. They’ve started some early activity. They’re trying to fix the rear door to make it operable after an attempted robbery several years ago, and improve efficiency. They’re trying to make the place more habitable.”

Mr Wilson argued that JDL’s fees, even if they turned out to be 40 cents per pound, paled when compared to what he said was the $25 minimum charge levied by courier companies for air freight imported into The Bahamas. He added that JDLs charge was “less than 2 percent” of the latter sum, and “no one can say that’s unreasonable”.

“Those couriers are being disingenuous,” the financial secretary charged. “They charge their customers $2-$3 per pound. That’s outside the air transportation or air freight fees. Ours is a very minimal cost.

“The second thing is if you look at the amount of contraband interdicted at the air freight terminal - drugs, guns, bullets. If you look at what the Commissioner of Police put out, a gun can be purchased in Florida on Monday and used in a murder in Nassau on Wednesday. We have a security concern, and this is us trying to make sure we have a facility fit for purpose.”