The Canadian
government-owned company’s proposal for Owen Roberts International
Airport involves a capital investment of US$200 million from private
sources in order to double the capacity of the Grand Cayman airport and
extend the runway, in exchange for a 30 to 40 year concession contract.
Last
week, representatives from Canada and the Cayman Islands-based
Paramount Group held three days of talks with officials from the Cayman
government and
business sector.
The proposal by the Canadian
Commercial Corporation – the Canadian government’s international
contracting and procurement agency – follows the same concession
structure it used in an ongoing US$700 million Quito International
Airport project in Ecuador, according to a copy of the presentation the
Canadians made to the Cayman Islands Airports Authority, provided to the
Caymanian Compass by Paramount.
Concession
According
to the presentation, “An airport concession is not a Privatization or
Ownership of the asset in a Concession is
retained by the CIAA”.
“A
concession is solely the limited transfer of some or all of CIAA owned
functions to the private sector for a prescribed period of time, putting
an obligation on the concessionaire to finance, build and operate that
asset over the period”.
“In return for this obligation to
operate the asset and the obligation of payment to government of
concession fees over the period of the concession, the concessionaire
receives a right to collect both aeronautical and non-aeronautical
revenues associated with the asset and an obligation to use these solely
for the project”, the
presentation continued.
Project details
The
Canadians propose to mobilise about US$200 million
in private
development capital for the project, with the majority of construction
work to be carried out by Caymanian-owned companies. The proposal
includes “a significant upfront payment to the Cayman Islands” of at
least US$30 million, plus annual shared revenue of US$7 million to US$13
million to the airports authority.
The Canadian government would guarantee the group follows through on contract terms, on both deadlines and budget.
The
project involves doubling the capacity of the passenger terminal
building, extending the runway onto land reclaimed from North Sound,
otherwise upgrading and improving existing runway and taxiway surfaces,
new staff parking, a new northeast perimeter road, and a new general
aviation apron (to be provided by a third party).
Participants
during last week’s discussions included the airports authority, tourism
association, Cayman Enterprise City, Chamber of Commerce, Civil Aviation
Authority, auditor general and government, according to a news release
from Paramount.
“The Canadian team is proposing a privately
financed, long-term airport concession that will not require any
government funding. The proposal includes a significant upfront payment
to the Cayman Islands, a healthy ongoing revenue share to the CIAA,
material fiscal savings to the Cayman Islands by transitioning civil
servants to the private sector and an overall proposed project
investment of approximately US$200M, in addition to the operation and
continuous improvement of the airport facilities for a period of 30 to
40 years,” according to the news release.
Background
In
August 2011, Cayman Islands Premier McKeeva Bush announced that Cayman
government had signed an agreement with the Canadian agency to explore
redeveloping the airports in Grand Cayman and the Sister Island of
Cayman Brac.
In September 2012, the airports authority signed a
contract with DSS Contractors to do preliminary work on expansion plans
for the Charles Kirkconnell International Airport in Cayman Brac.
Further work to accommodate nonstop outgoing international flights is
expected
to begin soon.
In late April, the airports authority
applied to the Development Control Board for permission to build two
additions to the Cayman Brac airport at an estimated cost
of CI$2.5
million.
http://www.compasscayman.com
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