By NEIL HARTNELL
Tribune Business Editor
The government “sees no difficulty” in securing private financing to kickstart the bulk of its “over $150m” Family Island airport redevelopment ambitions, a senior official told Tribune Business yesterday.
Algernon Cargill, director of aviation, confirmed that the Minnis administration will this year continue pursuing a private-public partnership (PPP) to fund and manage overhauls to multiple key Out Island airports despite the fiscal constraints caused by the COVID-19 pandemic.
Pointing out that the required capital is not reliant on the government, Mr Cargill said his office was working with the Ministry of Finance to “take a deep dive” into one Bahamas-based financing source whom he declined to identify.
He added that the three bids submitted for the $40m-$50m upgrade of Exuma’s airport, complete with terminal and runway expansion, are now being evaluated with the winning bidder on 18 months’ of construction work expected to be selected before 2020 year-end.
The aviation chief said the necessary investment will have “a huge multiplier effect for the economy”, creating jobs and stimulating commerce across many islands in The Bahamas that have been hit hard by COVID-19’s economic fall-out.
“That’s still actively on our agenda to proceed with through PPPs for several ones,” Mr Cargill said of the airport upgrades. “We’re not reliant on government financing for the airports. They will be funded or financed through PPPs, and the cash flow from the airport projects themselves.
“From that perspective, there’s no burden on the public purse. The airport projects will create employment in The Bahamas and expansion of the macroeconomic fabric. If we’re expending well over $150m on capita projects, that’s a huge multiplier factor for the economy. The fact there’s no reliance on government support is a good solution for the challenges we have.”
Mr Cargill confirmed that the Government is eyeing something “pretty close to the Nassau Airport Development Company (NAD) model, or a hybrid between that and what we have now”. Under the NAD model, Lynden Pindling International Airport (LPIA) was leased to NAD and its operating partner, Vantage, who then raised around $410m in private financing to fund the facility’s redevelopment.
The aviation director added that while much of Exuma airport’s financing will come from the proceeds of an Inter-American Development Bank (IDB) loan, the majority of the more than $150m required will be raised from private capital sources.
“There’s so much widespread interest in the airport project that I don’t see a difficulty in securing a PPP partner in terms of financing,” Mr Cargill told Tribune Business. “We have offers now for the capital. The capital is not the issue; it’s getting the right partner to manage the airports...
“We’ve had two offers, and we’re taking a deep dive into one right now in conjunction with the Ministry of Finance. That’s a local offer, but we’ve had lots of interest internationally.” He added that the Government had yet to decide on whether one or multiple managers were best for the targeted Family Island airports. While “economies of scale” favoured a single manager, it was unclear whether all facilities would be a good fit for that operator.
“The Exuma airport project is out to tender now, and we’re in the bid evaluation phase,” Mr Cargill said. “We have three bids we’re analysing. Certainly, the contractor will have been selected for the Exuma airport before year-end, and then we will have to work on a PPP for the operating company over an 18-month project.
“We have the North Eleuthera airport in the final stages with the land acquisition, the Deadman’s Cay airport in Long Island is in the final design stages, and the Great Harbour Cay airport they’re building now. The Marsh Harbour airport, the Disaster Reconstruction Authority and Ministry of Tourism are repairing that, and are providing a solution for the Treasure Cay airport.”
Mr Cargill said Hurricane Dorian’s devastating impact on Grand Bahama and Abaco had left Exuma and North Eleuthera as the next busiest airports in The Bahamas after LPIA, while Great Harbour Cay acts as a “hub” for private planes and Deadman’s Cay remains critical to Long Island’s tourism expansion.
These 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 - something that has become increasingly urgent due to COVID-19. 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.
The planned $150m PPP financing will likely be kept off the Government’s balance sheet via the use of special purpose vehicles (SPVs), and thereby not contribute to a national debt projected to pass the $10bn threshold within the next two years.
Mr Cargill, meanwhile, confirmed that the Airport Authority plans to invest “close to $13m” in upgrading LPIA’s security features, chiefly baggage screening equipment and full body scanners. “That’s going to be state-of-the-art and mirror what you see at other international airports,” he said.