By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas used just 32 percent of an Inter-American Development Bank (IDB) loan provided to overhaul its aviation industry because it failed to implement safety reforms essential to unlocking the $32.5m balance.

The multilateral lender’s report on the Air Transport Reform Programme, which was launched in 2011, revealed this nation accessed just $15m of the total $47.5m facility after it did not fully implement three policy conditions critical “to safe operation of infrastructure” and achieving the project’s goals within the necessary time period.

Besides the absence of “adequate safety management systems” at the seven targeted airports, the IDB report noted that The Bahamas also failed to address the handling and transportation of hazardous air cargo. The third downfall, the lack of an independent body to investigate accidents and near-misses in the Bahamian aviation sector, was ultimately resolved - albeit out of time - through legal reforms that created such a unit that now complies with global standards.

The report suggested that The Bahamas could have met the IDB’s terms and conditions “with a small amount of resources”, and a $10m investment, but the lack of capacity within the Government-owned Airports Authority and other agencies meant another extension would have been required to fulfill this.

“The completion of the actions required to improve the compliance of the seven airports with the established standards was the critical path activities for the fulfillment of the policy conditions and required concerted effort, planning and resources (time and finance) to complete,” the IDB assessment said.

“The institutional items such as plans, procedures systems and training were numerous, and while these could have been achieved with a small amount of resources, the absorptive capacity of the Airport Authority and other stakeholders would have resulted in another extension being required.

“Even though policy-based loans concentrate on policy and procedural aspects of aviation, it was difficult to separate the infrastructure and equipment requirements as they are fundamental for the safe and secure operation of the airports, and hence compliance with the policy conditions,” the report added.

“The identified need for infrastructure and equipment was estimated to cost around $10m and would have needed around two years to complete. Consequently, the second tranche policy conditions were not completed within the 36-month extended disbursement period (over the initial 60 months), and the corresponding financing - 68 percent of the policy-based loan amount - was cancelled upon expiry of the disbursement period.”

The Bahamas thus lost access to some $32.5m in financing that could have helped push aviation reform further, and faster, than the present position. However, sources familiar with this particular IDB financing facility, and speaking on condition of anonymity because they were not authorised to talk publicly, gave a different interpretation to that of the report.

They argued that the IDB frequently imposed terms and conditions which result in The Bahamas and other small countries, with limited human, technical and other resources, “never ever meeting the bar” to qualify for policy-based loan financing. With The Bahamas unable to meet the standards required, and the air transport loan dragging across the last Ingraham, Christie and Minnis administrations, the latter decided to let the IDB “keep the money”.

“What happened was we could never ever meet the bar to qualify for the loan,” the source said. “There were conditions for that loan, and the complement of staff we had was just inadequate, both technically and individually, at the time to meet the conditions to qualify for this loan.

“The IDB is pretty onerous. They give you a loan, but set the conditions, and when you’re in a small environment and the technical leadership is not there - you don’t have the technical people in-country to qualify for the loan - they say you can’t get it. We said you shouldn’t give it in the first place. You make it so onerous on small countries that don’t have the depth of people to put in the necessary infrastructure to meet the conditions of the loan.

“You can never technically get to the promised land. They just kept moving the bar on the loan, so we ended up saying ‘screw it, keep the money’. It became very evident that we were not going to qualify for it. We told the IDB: ‘Just keep it; forget it’. It had been dragging on for years, trying to figure it out, and we were not going to qualify for it so just withdraw it. It’s not going to happen.”

The source pointed out that aviation was a large sector that requires an extensive variety of technical skills and capacity, and while The Bahamas has “very professional people” in these areas there were simply not enough to both meet the IDB’s requirements and fulfill their regular day-to-day duties.

“We had an operational budget of $3m and 30 airports. It’s a very complex aviation sector,” they added. “It made it impossible for us to complete the requirements and therefore qualify for the loan. Every time we did something it would expose something else. They said we had to do this, the bar kept getting higher. It was not realistic given the complexity of an aviation sector with many moving parts, deficient capacity, and it was very difficult to get this done.”

Of the policy conditions that The Bahamas failed to meet, the IDB report said: “The safe operation of the country’s airports is critical for the tourism industry, which is the largest earner and employer in The Bahamas. The seven airports named in the programme for verification of their operations all have scheduled international flights and are also the busiest airports.

“The main findings of the independent verifications were that the airports were lacking adequate safety management systems in that the procedures to handle safety issues and emergencies were not well documented and staff were not sufficiently trained.

“In addition, equipment and infrastructure were not adequate for safe operation of the airports, which included fire-fighting gear and equipment, fire truck water capacity, equipped fire stations, removal of runway obstacles and provision of markings for visual operation.”

The Bahamas had also failed to address the shipping of hazardous air cargo. “The management, handling and storage of dangerous goods is vital for the safety of air travel and airport operation. The July 2019 independent assessment identified the following actions to improve compliance....

“The Bahamas Civil Aviation Authority has to establish a stronger surveillance process in terms of air transport of dangerous goods; train airport staff, Customs, carriers and other stakeholders on dangerous goods management; prepare and post signage with appropriate terminology for dangerous goods; and designate areas in the airports for storage, inter-modal transfer, and temporary transit storage for dangerous goods.”