• 'Sea berm' to secure GB airport, Freeport from storms

• Gov't wants to stop it from adding to $11bn national debt

• Opposition wants guarantee clarity; why not PPP group

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Climate resilient projects to protect critical assets such as the redeveloped Grand Bahama International Airport could be included in the up to $400m financing that The Bahamas is negotiating with a UK government agency.

A principal in the Bahamian group that won the bid to redevelop and operate that airport, and a senior UK Export Finance official, revealed to Tribune Business that a "sea defense berm" - which would protect not only the aviation gateway but homes and businesses in Freeport - was among the initiatives being targeted in the financing negotiations.

Both Anthony Myers, Bahamas Hot Mix's (BHM) chairman, and a lead investor in Aerodrome Ltd, and Jesse McDougall, UK Export Finance's head for the North American and Caribbean region, confirmed that the size of the potential financing drawdown and its uses were still being worked out with the Davis administration. The Prime Minister indicated at the weekend that a portion of the funding may also be used for the overhaul of 14 Family Island airports.

However, revelations of the UK Export Finance negotiations, and Philip Davis KC's confirmation that he misspoke in relation to them, yesterday triggered Opposition calls for the Government to explain whether it - rather than Mr Myers, Aerodrome Ltd and the private sector group - was borrowing the funds or otherwise guaranteeing the financing given the fiscal implications and potential impact for the already-$11bn national debt.

Mr Davis, responding to questions at a Caribbean Council meeting in London last week, ahead of King Charles' coronation, gave the impression that the $400m would be devoted entirely to Grand Bahama International Airport's redevelopment. This seemed to imply that the price tag had doubled from the original $200m, with the investment set to match that of Lynden Pindling International Airport in Nassau, and raised questions over why the Government - and not the PPP consortium - was seemingly raising the financing for the project.

Mr Davis later clarified that Grand Bahama International Airport's price tag remains at $200m as previously announced, with the remaining $200m potentially targeted at 14 Family Island airports - such as North Eleuthera and Exuma - whose redevelopment has been estimated at $263m.

This was subsequently confirmed by Mr Myers, who was among the group accompanying the Prime Minister on his UK visit. "We're still in negotiations with that in terms of the final sum," he told Tribune Business of the talks with UK Export Finance. "The original sum was $270m, and it could be as high as $400m...... It could be higher than that, it could be lower than that. He [Mr Davis] was picking a number he was comfortable with. It will probably be that number.

"It relates to the different goals the Prime Minister wants to achieve in Grand Bahama, and that scope still needs to be defined. The highest priority is the airport." Mr Myers said the financing could also cover a sea defence berm "to stop wave and water intrusion from hurricanes", and thus protect a redeveloped Grand Bahama International Airport from the storm surge and flooding that devastated it during Hurricane Dorian as well as prior storms.

Ms McDougall said the climate resilient financing was "a separate cost envelope" from the airport, and added: "You have to ensure the airport is not battered by the next storm." Mr Myers, describing climate change resilience as a "huge priority", added: "There is no point making a huge investment in the international airport and not protecting that asset. That will not only protect the asset, but homes and businesses of people living in Freeport. It has a dual purpose."

However, Kwasi Thompson, the Opposition's finance spokesman, last night demanded that the Government provide greater clarity and details around the Grand Bahama International Airport financing. While stating that the Free National Movement (FNM) backs moving ahead with the project, he said little was known about "the arrangement, obligations and responsibilities of the Government" in relation to the potential UK Export Finance facility.

Pointing to the PPP unveiled in March with Mr Myers and his Aerodrome Ltd partners, the former state minster of finance questioned why the Government - and not the private consortium - appeared to be arranging and negotiating the funding. "What is the Government involvement in the financing for the Grand Bahama airport project?" Mr Thompson asked. "Is it borrowing the funds? Is it guaranteeing the borrowing in any way?

"It is astonishing that the public has not been advised of the financing terms for this Grand Bahama airport project, or what this 'new' $1bn in funding is for. What commitments or guarantees has the Davis administration given for these monies. Why has there been no specific communications around this $1bn facility, and why was there no mention of this facility in the annual Debt Management Strategy or the Fiscal Strategy Report."

Chester Cooper, deputy prime minister, in announcing the Aerodrome Ltd PPP deal for Grand Bahama International Airport in mid-March, gave the impression that work would begin almost immediately via the "demolition of the old international terminal and storage building.... at the end of this month, or by the first week of April". However, Tribune Business sources have repeatedly said they have subsequently seen no major works begin.

UK Export Finance was confirmed as the financier at the time by Mr Cooper, although nothing was mentioned about the terms, conditions or the Government's potential involvement in obtaining funding. Whispers were growing last week that the airport deal had run into difficulties because UK Export Finance wanted some kind of guarantee from the Bahamian government, which the latter was reluctant to give because the debt would appear on its balance sheet and add to the national debt.

Mr Myers told Tribune Business he was unaware of such concerns, saying: "I don't know anything about that. The Government is very much aligned in making this happen and moving forward very quickly." However, Mr Davis, in clarifying his statements on the $400m, confirmed that the Government was seeking to structure the potential $400m drawdown from UK Export Finance in such a way as to keep it from adding to the $11bn-plus national debt.

"We’re trying do it in a way that would not immediately increase our debt, and so we’re entering this partnership with the UK Development Bank," the Prime Minister added. "For all intents and purposes, the bank has indicated to us that they would have $1bn available to us for infrastructural development.

"We have to identify those projects to be able to decide what we would draw down. The fact that it’s available doesn’t mean we will use it all. It has to be a project that they could embrace, and that they feel has what they call an internal rate of return that will benefit the country and its people."

Ms McDougall explained that UK Export Finance has a Bahamas "country envelope" worth £750m, or $950m, which is the total available financing that can be allocated to infrastructure projects in this nation where there is "UK content" - meaning that British companies are involved.

In the case of Grand Bahama International Airport, Bahamas Hot Mix (BHM) is "the exporter of record" through its UK office. Ms McDougall, though, explained that the total $950m represents "a global allocation" that is not necessarily drawn down quickly, or all at once, by the borrower. This often occurs over a period of time, "years and years", before it is used up and, in the case of The Bahamas, it is presently seeking just $400m or less than 50 percent of the total available.

UK Export Finance, which serves as the British government's credit agency, is also selective in what it funds, choosing only "qualifying projects" once due diligence is satisfactorily completed.