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Grantley Adams International Airport Going PPP

With Christmas approaching how many Barbadians have registered the news that Grantley Adams Airport (GAIA) is going the route of a Public Private Partnership (PPP) to fund the running of the airport? This is an interesting move by the government; a new transaction for Barbados concerning one of our main ports of entry.

As civic minded Barbadians we must insist on transparency. Government has teamed up with the International Finance Corporation (World Bank) to help oversee the bidding process.

Reports indicate the government has received several offers from investors to invest $300 million in the PPP. This week we also learned that government granted a 5 year contract to a US-based firm to ramp up marketing of the island’s products and services at the Grantley Adams International Airport (GAIA).

The upside is that a good PPP will be a win win for Barbados by providing access to the investment to maintain a world class airport therefore relieving government of the ‘responsibility of allocating scare resources and/or attract more debt in times of austerity. The downside is that there must be transparency and Barbados has struggled in this area of governance.

 

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139 responses to “Grantley Adams International Airport Going PPP”

  1. Vincent Codrington Avatar
    Vincent Codrington

    @ David BU

    Would you explain to BU Household exactly what forms the basis of this PPP? It is necessary to keep the interventions relevant and avoid waffle. What asset is being partially privatised ?

  2. Piece the Legend Avatar
    Piece the Legend

    @ Mr Vincent Codrington

    To paraphrase the words of the Honourable Blogmaster

    When you said “avoid waffle” to who are you referring?

    Are you referring to the GoB and their practice of WAFFLING, insofar as the details of this PPP and what precisely are the ToRs for the award winner?

    Or the WAFFLE which forms the usual backdrop for one or two of the writers of the article.

    You can tell when articles are written or responded to by King merely by measuring the amount of WAFFLE…

  3. David Avatar
    David

    @Vincent

    The blogmaster has provided the links in the public domain, feel free to add or elucidate in the matter.

  4. John A Avatar
    John A

    When you done with that do the same for the BWA, TB and garbage collection.

  5. Vincent Codrington Avatar
    Vincent Codrington

    @ Piece ,the Legend at 9 :10 AM

    I am going to take your advice and wait for the waffle.

  6. David Avatar
    David

    @Vincent

    Any comment about the IMF team taking over the second floor of the central bank building?

  7. John A Avatar
    John A

    One other thing if you want the PPP to actually work make sure government own no more than 49%, that way you free of political interference and yardfowls being sent for jobs. Also make sure the board represents the ownership structure. So a 7 member board with the Chairman and 3 directors appointed by the private ownership.

    If this is not done you could as well stick with what wunna now got.

  8. David Avatar
    David

    @John A

    From the literature posted the successful applicant will invest and manage the GAIA plant, at expiry GAIA will revert to sole control of the government.

  9. Mariposa Avatar
    Mariposa

    As the smoke goes up the mirror images of this country get larger
    A question which should now resonate in the minds of all barbadians
    What mirror image do you want of yourself

  10. Miller Avatar
    Miller

    @ David December 4, 2019 9:52 AM

    The IMF watchdogs will be here for the long term. They could as well find a permanent residence.

    The watered-down divestment of GAIA in the form of a “PPP” is just an easy target to go after in order to meet the ‘mandated’ requirements of the ‘Privatization’ programme the IMF has set for the GoB.

    Full privatization to foreign interests will come later in order to meet the forex needs of the country.

    Which SOE will be next on the “P” list?

    The BWA or the Port?

    Are there any local buyers for CBC or should it be merged with the “GIS”?

    Have you, dear Blogmaster, managed to get hold of a copy of the report on the ‘Restructuring’ of the SOEs prepared under the chairmanship of Dr. JR?

    This month will mark 6 years since the MoF in the previous administration mandated such a report and told the country of his grandiose plans of restructuring the SOEs either by hook or by ‘crook’.

  11. David Avatar
    David

    @Miller

    Robinson indicated his committee had submitted the report to Sinckler as mandated.

  12. Miller Avatar
    Miller

    @ David December 4, 2019 11:08 AM

    So where is it? Mr. Stuart the land turtle of a decision-maker is no longer sitting in the chair of inertia.

    What has become of the electorally-catchy phrase of: Honesty &Transparency?

    Is this the same administration which is calling on every citizen to their part in helping in the restructure of the economy in order to ensure the survival of country as a going concern?

    How about greater productivity and the top layer of the management hierarchy?
    Six years for a sick economy is much too long to come up with a course of fiscal medication in order to save the patient from pending disability.

  13. Sargeant Avatar
    Sargeant

    @Miller

    What has become of the electorally-catchy phrase of: Honesty &Transparency?
    ++++++++++
    Tell me when you find them, I still looking or the Integrity in Public Life legislation…..

    We Gathering

  14. John A Avatar
    John A

    @ David

    That is even better just send government a cheque every month and keep them far from anything called MANAGEMENT. Look at any SOE and it is clear why I say this.

  15. David Avatar
    David

    @Miller and Sargeant

    Minister Straughn will probably get around to it after the IMF business settles.

    He is under pressure with substantive Minister committed to international travel.

  16. John A Avatar
    John A

    Let’s hope the BWA and TB will be next in early 2020. Even of its a PPP with government i am good with that. As long as they keep no more than 49% and on a 7 member board have no more than 3 seats which should not include the Chairman.

    By now even to a blind man it has to be clear the SOE approach has been a dismal failure, with the taxpayer burdened yearly with propping up their inefficiencies. Yet the boards and management stay, even those some have not produced audited financials in 6 years.

    I was at an AGM A few years back and the shareholders crucified the board for being 5 weeks late!

  17. Sargeant Avatar
    Sargeant

    @David

    He is under pressure with substantive Minister committed to international travel
    +++++++++++++++
    Looka here I know it is your blog but you treading on my territory as I’m the only one allowed to make those kinda jokes.

    “Committed to International travel” Wuhloss

  18. Miller Avatar
    Miller

    @ December 4, 2019 11:59 AM
    “Minister Straughn will probably get around to it after the IMF business settles.”
    ++++++++++++++++++++++++++++++++++++++++++++++++++++

    So why have the IMF taken up Permanent Residence (so it appears) in the halls of the country’s financial HQ?

    Mr. Blogmaster, the IMF is here until it gets back its loans and the overseas creditors are paid the full value of the renegotiated bonds plus interest.

    Given the forex earning performance of the country with its one-cylinder economy and insatiably gargantuan appetite for imported conspicuous consumer goods and services how long do you think that is going to be?

    An IMF-imposed fiscal and financial management programme was an inevitable outcome given what passed for economic management and ‘good’ governance over the previous 10 years.

    But you must give the current administration its own jacket of bravery for ‘negotiating a life jacket for the country in a shaky economic boat while the DLP-coloured sharks of Devaluation circled off the financial shores of forex-starving Barbados.

  19. Mariposa Avatar
    Mariposa

    Well a blind man on a trotting shore can see where this all is heading the rich getting richer and the poor shove out to sea without a life jacket
    These fields
    These hills are barbadian no more.

  20. David Avatar
    David

    @Miller

    Barbados can be the model country to show the world how to effeciently navigate an IMF program. How does this resonate with you?

  21. fortyacresandamule Avatar
    fortyacresandamule

    Was the GAIA inc losing money? was the airport a drag on the budget? Did the operator, GAIA inc, published timely financial reports? $150 million for 30 years, equates to $5 million per year. Couldn’t the Airport self-fiinance itself for this small sum of investment.

  22. fortyacresandamule Avatar
    fortyacresandamule

    Assuming the Airport was profitable and properly managed, why leased it out to foreigners?

  23. David Avatar
    David

    @fortyacres

    Is GAIA managed as a 100% profit centre? Are all expenditures captured on GAIA’s P&L?

  24. fortyacresandamule Avatar
    fortyacresandamule

    Governments the world over have a tendency to give away prized assets and keep the loss-making ones.

  25. Miller Avatar
    Miller

    @ David December 4, 2019 3:32 PM

    It’s achievable but only with a committed and competent management team along with trustworthy and honest leadership which keeps promises based on integrity and honesty and not electoral chicanery.

    Not silly academics pretending to be consultants talking about importing 720,000 people to achieve that 1 million magic population number.

    What the government should be doing is incentivizing those university-trained young people mainly females to take the education and then reproduce (breed).

  26. Vincent Codrington Avatar
    Vincent Codrington

    I hear the words;but the actions are deafening. Wuh Loss!!

  27. fortyacresandamule Avatar
    fortyacresandamule

    @David. We just borrowed US$40 million from the CDB to upgrade the airport runaway and taxiways. Therefore what major investment the concessionaire will be embarking on? Adding another terminal? I am trying to be reasonable to see the logic in this deal, and so far it doesn’t make sense.

  28. peterlawrencethompson Avatar
    peterlawrencethompson

    The essence of the PPP arrangement for GAIA will be as follows I predict:
    (1) The US based Private partner will invest US$300 million in infrastructure upgrades. This will be managed so that they show an expenditure of US$300 million but much of it is channeled through related US based entities who are not entirely arms length so that the real cost to the Private partner is significantly less than US$300 million. The investment will be spread out over the term of the PPP contract so the cost to the partner in 2020 dollars will be significantly lower.
    (2) The Private partner will get contractual terms which guarantee them a positive return on their investment over the term of the contract. This means that they will control the fee structures for both airline and passenger use of the facility even if the Government has significant board representation. This means that airline fees and passenger fees will increase significantly so that the US$300 million is paid off with interest within the term of the PPP contract.
    (3) So expect special departure fees to increase sharply.
    (4) Expect parking fees to increase sharply.
    (5) Expect them to charge taxis high fees for clearance to pick up passengers at the airport.
    (6) Expect them to increase the rent for food service and Duty Free operations at the airport and expect those fees to be reflected in higher prices.
    (7) Expect regional travel to remain prohibitively expensive as airlines try to recover high landing fees.
    (8) Expect staff cuts and labour disruptions as the Private partner slashes employment levels to control costs and increase profits.
    (9) As traveller volumes decrease when the global economy goes into recession within the next 3 years expect even steeper increases in fees because there is little latitude to reduce costs.
    (10) Above all, expect Barbadians to be complaining bitterly about the unfairness of it all in five years…

  29. David Avatar
    David

    @fortyacres

    Have you read this article?

    https://barbadostoday.bb/2019/02/14/govt-exploring-partnership-to-run-airport/

  30. Hal Austin Avatar
    Hal Austin

    @ PLT

    You got them in one, but do not forget the management fees: for changing a light blub, it will be hundreds of Bds$, for sweeping the floor, more dosh, for cleaning the latrines, a mega ton of dosh. PPIs are a licence to print money.
    Even Tony Blair, the architect of PPIs, is now not very keen on them. Can someone plse remind me of the Dodds PPI?

  31. peterlawrencethompson Avatar
    peterlawrencethompson

    @David
    According to the article Minister “Symmonds said the $80.8 million loan would be used to resurface the 2.8 mile long runway…”

    2.8 miles is 4.5 km.

    He also said “The pavement work is not only going to resurface the runway, but also the taxiways and the parking aprons and lend us capacity in the context of making us able now to play host to the Airbus A380 which is the largest piece of equipment being used in commercial travel.”

    However Google tells me that the runway length requirement for the Airbus A380-800 is 2.9 km. For a Boeing 747-8 the figure is 3.05 km.

    So either the Minister has made an error or Barbados Today has misquoted him.

  32. john2 Avatar
    john2

    And one want to see the PPP extended to BWA, TB and SSA. and already complaining about the taxes and increase in bus fares. SMH

  33. peterlawrencethompson Avatar
    peterlawrencethompson

    According to the ‘measure distance’ tool on Googlemaps satelite image the length of the runway at GAIA is 3.28 km, so I am not sure who has made what error here… It it perfectly possible that there are multiple errors, some of them mine.

  34. john2 Avatar
    john2

    3.28
    2.8
    hmmmm

  35. john2 Avatar
    john2

    BT has a problem with misquoting (ministers)
    Agriculture on the amount of honey produced by a hive of bees
    Sanitation on the part time workers – exprisoners and out patients.
    maybe the same here

  36. John A Avatar
    John A

    Forming a PPP would not necessarily mean an increase in taxes, especially if the entity being privatised is grossly inefficient like the TB and BWA. Actually the opposite may happen and efficiency could well reduce taxation to all of us. We a have a TB that had 200 buses at one time what was its payroll then? It now on a good day has 50 buses what is it’s payroll now? A PPP would have to do piss poor to match the current performance of our SOEs and that is a blatant fact!

    Then again hold on, we don’t know how poorly they have done cause many haven’t filed financials for 5 years!

  37. John A Avatar
    John A

    Before we condemn a PPP go and read up on a company called BAA Limited then come back and talk.

  38. fortyacresandamule Avatar
    fortyacresandamule

    @David. Yes I did read the article . I am not anti-ppp. However, it would make more sense to offload those loss-making, budget support entities first. For a measly $5million investment per year without runaway CAPEX included, is a giveaway in my opinion.

  39. peterlawrencethompson Avatar
    peterlawrencethompson

    @John A
    Your faith in capitalism is endearing 😉

    In 2008 BAA Limited made £2,567 million in revenue and earned a whopping £434.7 million in operating profit. That’s a very attractive 17% of revenue. At that time they operated Aberdeen Airport, Edinburgh Airport, Gatwick Airport, Glasgow Airport, Heathrow Airport, Naples Airport, Southampton Airport, & Stansted Airport.

    In 2009 the UK Competition Commission forced it to sell some of its holdings because of its monopoly control in both London and Scotland. Over the next few years BAA sold off all its holdings except the largest, Heathrow Airport, and renamed itself Heathrow Airport Holdings.

    In 2015 Heathrow Airport Holdings made £2,765 million in revenue and earned a more reasonable £223 million in operating profit. That’s a more reasonable 8% of revenue.

    So what do we learn from this? Airport holding companies will gouge the public and the airline industry if they hold a geographic monopoly.

    Unless Moontown will finance the St. Lucy DKIA (Denis Kellman International Airport) we are stuck with a geographic monopoly.

  40. David Avatar
    David

    @fortyacresandamule

    Is it reasonable to assume the government would have to eat the losses of any SOE it wants to dump?

    Cannot be as straight forward as you are suggesting.

  41. Mariposa Avatar
    Mariposa

    Barbados is being put on the auction block
    But dont worry folks yuh can still own a couple trees
    Just plant them

  42. john2 Avatar
    john2

    I don’t even want to hear about PPP in airports and hotels. BWA, TB, and SSA are social services in Barbados .

    The three entities need improved management and productivity – Yes. But to run them as a profit making business, will bring more suffering to poor bajans.

  43. John A Avatar
    John A

    @ PLT

    Yes The sword has 2 sides but we need to ensure from day one regulation exist governing their ROI. Had the UK put that in place from day 1 then BAA would never have enjoyed the 17% return to begin with.

    But where do we draw the line in terms of a monopoly achieving a fair return on investment? What I mean is are we being charged a fair rate for water based on an inefficient operation, or are we being asked to subsidise inefficiencies there?

    What about the TB, were they efficient would the increase in bus fares to $3 have been necessary?

    You see if a PPP can post a decent return based on increased efficiency, as opposed to gouging their clients then power to them. In the case of our AP I would bet on current charges a PPP with improved efficiency, could in fact post a decent return even at current rates.

  44. john2 Avatar
    john2

    Transport is already PPP the private has the short haul/profitable routes and the long haul/ hilly routs like Bathsheba, Bellplaine and Martins Bay left to suffer especially during off peak hours

  45. john2 Avatar
    john2

    What about the QEH, PPP also?

  46. Miller Avatar
    Miller

    Barbados should consider itself fortunate to attract that kind of foreign investment to upgrade its only gateway to the world which props up its main forex earning industry; that is, the sunset industry of beach-based tourism.

    Long-haul air travel for recreational (and sun tanning) purposes –the one on which the Bajan tourism bread is buttered- will soon be a major target in the sights of the climate change activists.

    Are the Bajan policymakers aware of the growing opposition to recreational air travel which, as it is alleged, contributes significantly to the ‘reckless’ increase in global carbon footprints through the burning of fossil fuels?

    Avoidable footprints which are being seen as a major contributor to man-induced climate change.

    In the coming climate change battle (based on the science) what would be at stake if Barbados’s major tourism source market has to make a trade off between cutting back long-haul flights to exotic destinations like Barbados in the winter and closing down some power station(s) providing heating and lighting in the same winter to thousands in the UK?

  47. peterlawrencethompson Avatar
    peterlawrencethompson

    Why is Minister Symmonds so keen to pour money into GAIA? What benefit will there be for Bajans or tourists. It seems to me that this is a huge mistake that will do nothing to improve convenience or efficiency for the travelling public.

    I flew into GAIA from Boston last Saturday. I was on JetBlue but there was an American Airlines flight disembarking simultaneously. After getting off of the aircraft I was sitting in my vehicle in the parking lot in under ten minutes— through the Automated Passport Control machines, checked by the Immigration Officer, no checked baggage, nothing to declare at customs so I wished him good afternoon and went to pay for my parking. That is GREAT service. It was the BEST arrival experience that I have had at ANY airport worldwide in the dozens of international flights I have taken over the last 48 years. BRAVO GAIA!

    The less time is wasted in airports the better they are for travellers.

    What will this proposed PPP achieve that will improve that experience??

  48. Miller Avatar
    Miller

    @ john2 December 4, 2019 8:40 PM

    You are right there!

    Where then is the proposal to invest in electric buses going to fit into the existing PPP model?

    Where are these expensive and silent electric buses going to run? To Bush Hall and Silver Sands or to Bathsheba and Matins Bay via Checker Hall and Pie Corner?

  49. Vincent Codrington Avatar
    Vincent Codrington

    @ PLT at 8:51 PM

    Good question. What are the benefits of this PPP ?

  50. John A Avatar
    John A

    @Vincent

    Come now we all know what it’s about. It’s those magic words the IMF love. They are FX and privatisation while reducing government payroll and exposure.

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