Gov’t Prepared To Temporarily Privatize TB Airport

Melissa Edwards, Senior Journalist | 0 Comment
January 19, 2018 8:30 am AST
Photo Credit: Melissa Edwards/BVI Platinum News
In a surprise move, the government has backtracked on its previous assurance of ensuring that the BVI Airport Authority (BVIAA) and by extension the government will fully control the TB Lettsome International Airport, after its expansion.

Speaking with members of the media on Thursday, January 18, Premier and Minister of Finance Hon. Dr D. Orlando Smith disclosed that his government has scarped its previous proposed plan for the project, and are now in search of an investor who will fund the project and control the airport for several years.

This will be done through the concession model as against the previous plan for Government to design, finance and build.

Premier Smith said that the concession model will see a Private/Public Partnership (PPP) approach. He said that the new approach will not only lengthen the runway but also see major development at the Terminal.

The Premier disclosed that by adding the terminal enhancement, the project has increased from $153M to $250M.

It should be noted that The Expansion Outlined Business Case of May 2016, which was conducted by PricewaterhouseCoopers Advisory Services Limited (PwC), had listed $153 million for the expansion of the runway and terminal upgrade.

It is still unclear why the substantial difference in the new budgeted amount and the case study.

“Maybe someone would design, build and operate the airport for a certain time and then hand it back over to government after they have recoup the investment. So that is the model (PPP),” he told members of the media.

Premier Smith said that it is not uncommon for governments to pursue such a model, pointing out that the investor in such cases may control the airport for about 20 years, but this will be decided during negotiations.

The concession model is against the advised given in the business case study where it was advised that the project be undertaken by Government. It was under the design and build model that government had selected a preferred bidder in China Communications Construction Company (CCCC).

However, Premier Smith said that the final two bidders (CCCC and IDL Group, the Sir Robert McAlpine Holdings and local partner ADC) could not afford the concessional route at that time.

He explained that government had intentions to build it, but after further examinations, the final two bidders were not willing to offer a certain amount of money.

“We concluded discussions that were going on and having discussions with the two bidders, they didn’t provide the opportunity for public/private partnership at that time.”

Premier Smith added, “That does not mean that there are not persons or companies out there, who are not interested in doing that. So I think it is important to have that opportunity and that is the direction which we are intended.”

He said that he could not for certain say that CCCC will not bid during this second round.

“I am saying that the process that has gone on for the past several years have come to an end and so we are starting a new…it is possible they could come on board.”

The Expansion Outlined Business Case had stated that the BVIAA proposed to borrow 100% of the construction cost for the runway and subsequent terminal expansion under the design and build model.

Further, it was anticipated that $152.5 million will be the cost for the runway alone, and government will more than likely have to provide financial support between $18 million to $38.6 million in the initial stages of the project.

"After repeated analysis of various design and procurement options, and receipt of bids from qualified bidders, the minimum cost of the required expansion and terminal upgrade is approximately $152.5 million," the study noted.

It was noted that the level of Government’s financial support may be reduced if BVIAA implements additional optimization measures.
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