Wednesday, February 12, 2020
By NEIL HARTNELL
Tribune Business Editor
Freeport’s two largest owners have sent “a strange message” to other investors by their reluctance to rebuild Grand Bahama’s airport post-Dorian, a leading hotelier argued last night.
Magnus Alnebeck, Pelican Bay’s general manager, told Tribune Business that the Grand Bahama Port Authority (GBPA) and Hutchison Port Holdings were potentially deterring fresh job-creating investment by failing to live up to their developmental obligations under the Hawksbill Creek Agreement.
Describing Freeport as “a company town” largely controlled by those two conglomerates, he added that it would send a negative signal about Freeport’s future economic prospects if they simply handed the task of rebuilding Grand Bahama International Airport to the Government without leaving any insurance proceeds to finance this.
Speaking out after the prime minister confirmed that the Grand Lucayan’s sale is due to close on March 2, Mr Alnebeck expressed hope that the airport will “follow suit shortly thereafter”.
“I have heard it’s very close to being done. That will be very positive,” he told this newspaper. “But it would be nice if they [the GBPA and Hutchison] would have followed what is in the Hawksbill Creek Agreement and put the money back into where it should be.
“It’s a bit of a strange message because, regardless of how you look at it, Freeport is a company town that is owned by Hutchison and the Port Authority in different ways, and through different companies and percentages of companies.
“It’s a bit of a strange message when the two owners of the city, and two owners of the airport, choose to take the insurance proceeds and seemingly not reinvest them,” Mr Alnebeck continued.
“It does send a strange message to other investors. If they don’t have the confidence to reinvest it will be a challenge to convince new investors to come here. One would have thought it would have been the socially responsible, and corporate responsible, thing to do. If they don’t want the headache of rebuilding the airport, leave the insurance proceeds or at least a portion of it.”
The Pelican Bay chief pointed out that Hutchison Whampoa, parent of Port Holdings, had form for receiving hurricane-related insurance proceeds and failing to reinvest them in essential repairs as had been demonstrated by its actions over the Grand Lucayan.
He is not the first to criticise the GBPA and its owners, the Hayward and St George families, in particular. Philip Davis, the Opposition’s leader, has also accused them of failing to fulfill their development obligations as Freeport’s quasi-governmental authority by not taking the lead over the airport’s rebuilding.
Tribune Business previously revealed that the Government was negotiating an arrangement with the GBPA and Hutchison where it would pay both $1 apiece to take over Grand Bahama International Airport’s ownership, while also assuming responsibility for its $20-$40m rebuilding and possible relocation.
It is unclear what will happen to the proceeds of any Dorian-related insurance claim on the airport, and this is likely to be one of the issues central to the negotiations. These monies would provide a useful financing source for the Government, but they could equally be retained by the two existing owners in exchange for such a token purchase price.
Grand Bahama International Airport is arguably Freeport’s key economic infrastructure asset, serving not just the island’s tourism sector but its industrial firms and the wider economy. It is the main domestic and international gateway for air transportation connectivity, and many observers fear the city’s business model will cease to function unless it is rapidly restored to full health.
Mr Alnebeck last night urged the Government to bring Nassau Airport Development Company (NAD), and its Vantage Airport Group operating partner, in to run Grand Bahama International Airport once the ownership transition was completed.
“Let’s hope they give it to NAD to operate so that there are people in there who know what they’re doing,” he told Tribune Business, “and that they don’t go down the avenue of people trying to operate it who don’t know what they’re doing. I think we’re all in agreement that NAD has done a good job with the airport in Nassau.”
While hailing the Prime Minister’s announcement of a March 2 signing for the Grand Lucayan Heads of Agreement as “fantastic news”, Mr Alnebeck said the 24-month construction period required by the ITM/Royal Caribbean joint venture meant Freeport’s tourism fortunes “will not change overnight”.
He added, though, that this in no way diminished the development phase’s impact as this will translate into “money being spent on the ground” by hundreds of construction workers - something Freeport has not experienced for a long time.
“If the plans that we’ve seen are what they’re going to do then it’s a significant investment in the Grand Bahama economy,” Mr Alnebeck told Tribune Business. “Any investment in the Grand Bahama economy is good.
“It will take time to get the work done and get it ready, but in the meantime there will be money spent and that’s positive. There’s not going to be a change in the tourism industry overnight, but at least we’re moving in the right direction.
“I think the big problem with Grand Bahama post-Dorian, which is very different from Abaco, is the majority of the houses damaged were uninsured. In Abaco, many of the homes were owned by second home owners who had insurance,” he added.
“The problem in Abaco is finding the manpower to rebuild but the money is there. The problem in Grand Bahama is getting the funds but the manpower is there. I think a construction project is the best way to put money on the ground. Let’s hope it happens. What do they say? It isn’t a deal until the ink is dry.”