By NEIL HARTNELL
Tribune Business Editor
A company part-owned by Brent Symonette's family offered to raise up to $750m in cheap British government loans to fund critical infrastructure works in The Bahamas.
Documents obtained by Tribune Business suggest that if Bahamas Hot Mix's proposal, made to both the Christie and Minnis administrations, had been accepted it would have given the company a lock over development projects it specialises in - roads, airport runways, and water and sewerage systems.
The first offer to raise massive "concessionary loans" through the UK government's export credit guarantee scheme was made in February 2017 just months before the general election. No progress appears to have been made with the Christie administration, and it was left for its successor to assess the offer.
Bahamas Hot Mix then rolled out the same financing model just eight months later as part of a joint venture proposal to take over the redevelopment of the Exuma and North Eleuthera airports via a "25-year concession" in partnership with fixed-based (FBO) operator, Odyssey Aviation.
Both K P Turnquest, deputy prime minister, and Dionisio D'Aguilar, minister of tourism and aviation, told Tribune Business that while the two Hot Mix proposals were received and discussed they were never acted upon by the Minnis administration.
While there is nothing wrong with either Bahamas Hot Mix (BHM) proposal, had the $750m financing offer, in particular, been accepted it would inevitably have sparked huge concern that one firm was going to establish a dominant position over much of The Bahamas' infrastructure development.
A BHM funding proposal to the Ministry of Finance, dated February 2017, details how the Bahamian company could use its UK subsidiary to obtain low-interest rate loans from UK Export Finance, the British government department that oversees the export credit guarantee financing.
It added that The Bahamas was "on cover for up to $750m", meaning that this nation could access funding up to this amount, with the document even suggesting that $1bn could be available.
"In the current economic climate, the British government through its Export Credit Guarantees Department (UK Export Finance) is actively financing projects undertaken by British contractors on extremely competitive terms," the proposal says.
"BHM, using its UK subsidiary BHM Construction International (UK) Ltd, can therefore offer concessional loans for projects using the UK Export Finance direct lending facility.
"This could be applied to various infrastructure projects such as Water & Sewerage, roads, airport runways, etc. The focus would typically be on Government’s urgent/priority projects." The areas identified are all those that Hot Mix specialises in.
Detailing the advantages of its offer, the Hot Mix proposal said lending costs would be further reduced by the absence of bank "middle men", while no repayments would be demanded of the Government until any projects were completed. It added that financing would cover up to 85 percent of a project's value, with the 15 percent balance "potentially" coming from the likes of the National Insurance Board (NIB).
While the document seen by Tribune Business does not explicitly say so, it is clear that Bahamas Hot Mix expected to be selected as the main contractor on any infrastructure projects financed by its proposal if it proved successful with both the Bahamian and UK governments.
Promising "certainty of price with no cost escalation and robust risk management", the proposal states: "BHM would expect to conclude a..... fixed price contract including the cost of consulting engineers and all variations. There would therefore be a complete transfer of risk to the contractor, which drives innovation and value engineering."
Suggesting that its scheme offered "substantially reduced cost" through loan interest rates as low as 0.93 percent, Bahamas Hot Mix set out how it would partner with the Bahamian government via a public-partnership (PPP) type arrangement and the steps required to access the British government financing.
Besides not having to draw on an already-strained Public Treasury to finance critical infrastructure projects, the company said its proposal would benefit the Government when it came to financing both airport and water infrastructure upgrades.
Mr Turnquest said he recalled both seeing the Bahamas Hot Mix proposal and meeting with the company over it, but told Tribune Business that the Government "hasn't acted upon it".
"I do seem to remember seeing something of that nature; a PPP-kind of arrangement," he replied, when questioned by this newspaper. "We haven't acted on it as far as I'm aware.
"I think we had a meeting, if I remember correctly, but nothing came of it. They were exploring the push for PPPs as we'd talked publicly about being interested in PPPs. That was the intent of it but I don't think we got anywhere with it."
Both the Christie and Minnis administrations identified PPPs as a potential solution to a Bahamian infrastructure deficit that Desmond Bannister, minister of works, previously told Tribune Business was "unquantifiable" and another obstacle to improved economic growth. This is especially since the cash-strapped Public Treasury lacks the means to finance such works.
PPPs involve the mobilisation of private capital and investors to fund projects intended to serve public needs, and Bahamas Hot Mix was far from the only company to respond to the Government's signals. The Christie administration approved PPPs with companies controlled by Sebas Bastian, the Island Luck chief, and Chester Cooper, the PLP deputy leader (new Road Traffic head office).
These, though, were halted by the Minnis administration as it sought to develop PPP policies and a regulatory framework to guide their development. One priority area identified by both governments is the $200m worth of upgrades required by Family Island airports, hence Bahamas Hot Mix's interest in the Exuma and North Eleuthera airports.
Its proposal, dated October 2017, says: "BHM Company Ltd, in partnership with Odyssey Aviation, offers to finance, design, build, maintain and operate, under a 25-year concession, the airports at George Town and North Eleuthera.
"BHM, using its UK subsidiary BHM Construction International (UK) Ltd, can offer concessional loans for projects using the UK Export Finance's direct lending facility in order to achieve this."
While Odyssey would take cover of airport management and operations, Bahamas Hot Mix was to deal with all necessary construction and physical upgrades to the runways and buildings.
"As a partnership, BHM and Odyssey have the experience to deliver a sustainable solution to upgrade the terminal building, apron and runway to achieve international standards of service and security," the proposal said. Odyssey already operates FBOs at LPIA, Exuma, San Salvador, Governor's Harbour and Rock Sound, as well as at two foreign airports.
Mr D'Aguilar told Tribune Business that the Bahamas Hot Mix/Odyssey proposal was one of multiple airport management/financing offers received by the Government, adding that he did not "want anyone to create mischief" and that there was "no underhandedness" involved.
"That offer was proffered and I rejected it out of hand because the ownership was not diverse enough," Mr D'Aguilar said of the two companies' joint venture. "They asked if they could submit one with a more diversified ownership structure, and did that in July/August 2018.
"I decided that it was just too complicated to do. There were a number of proposals on Exuma, a number of proposals on Eleuthera, and as we were building ideas and how it would be structured and how the financing works, I decided going with a small group was not the best way."
Mr D'Aguilar said the Bahamas Hot Mix/Odyssey proposal had been "put on the shelf" along with all offers, adding that the Government was "still trying to figure out" how to fund up to $200m worth of Family Island airport upgrades.
While "the Nassau Airport Development Company (NAD) model", involving the appointment of a management company and use of debt financing to fund necessary infrastructure upgrades. was being given serious consideration, Mr D'Aguilar said no final decision had been taken.
He added that air passenger volumes in the Family Islands would likely be insufficient to repay all such debt via a passenger facility charge (PFC), such as the one levied on LPIA users, and the Government may have to cover a certain amount through its own resources.
In the meantime, Mr D'Aguilar said the Government had decided to use available Inter-American Development Bank (IDB) financing to begin required improvements to Exuma's airport that could run into the $40-$45m "ball park".
Mr Symonette has repeatedly distanced himself from Hot Mix by saying that his children's trust, not himself, owns a minority stake in the business that he has suggested could be as little as 10 percent. Other Board directors include his brother, Craig Symonette, and Peter Andrews, the Bahamas Waste chairman, according to the company's website.
This has not stopped the former Cabinet minister and Hot Mix being placed at the centre of recent "conflict of interest" allegations relating to the award of several government-linked contracts to the company - claims that Mr Symonette has vehemently refuted.
These allegations, driven by the Government's political opponents, have centred on the award of a $20m contract for runway repairs at Lynden Pindling International Airport (LPIA) and two multi-million dollar Water & Sewerage infrastructure upgrades in the Family Islands.
Mr Symonette and his defenders have argued that the entire affair is nothing more than a politically-motivated witch-hunt, pointing out that Bahamas Hot Mix was evaluated as the best bidder for both the LPIA and Water & Sewerage contracts by foreign consultants.
The Water & Sewerage deals also had to be approved by the Caribbean Development Bank (CDB), which is financing the projects, adding a further level of protection against any improper influences in the bidding process.
Mr Symonette has such a vast array of business interests, many of which rely on government contracts or permits/approvals, that many believe it is virtually impossible for him to avoid "conflict of interest" finger-pointing by political opponents.
Companies such as Bahamas Hot Mix are often specialists in their field, and have few local rivals to match, thus enabling them to deliver quality projects that offer value for money for Bahamian taxpayers - something that is all-important given the Public Treasury's strained position.
However, perception is often just as important as reality, and social media postings indicate many Bahamians see the recent contract awards to Bahamas Hot Mix as part of a pattern where government deals are going to a select few and inhibiting the spread of wealth across society.