Mon | Jul 25, 2016

'No rush to divest NMIA' - Government to consider airport upgrade

Published:Monday | January 4, 2016 | 12:00 AM
Norman Manley International Airport in Kingston.
Dr Omar Davies
Mike Henry
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Transport Minister Dr Omar Davies says he has informally indicated to the board of the Norman Manley International Airport (NMIA) that it should prepare a capital investment plan for the airport.

Despite prequalifying five entities to compete to take over the airport, no bids were received when the period expired on December 31.

But Davies said that given the financial performance of the airport, the State can afford to keep operating the airport.

"There is no rush," the minister said yesterday.

"We are not on the Budget and, more than that, we are actually making money. I have no need to rush to privatise. We have to examine what are the factors that did not allow us to get a bid, but we are in a position not only to keep running but also to initiate the investment programme," he told The Gleaner.

The NMIA has posted increased profits, with Davies stating that 2015 was one of the best years financially for the entity, with all figures up by at least five per cent.

Expanding the airport is expected to cost some US$76 million as part of a wider capital investment plan, government documents said. The total cost of capital investments has been billed at US$134 million.

Speaking with The Gleaner yesterday evening, Davies explained that there are many factors that may have resulted in no bids being made and hinted at a change in posture in regards to the timeline for a possible divestment.

"As I have said on many occasions, whilst we are embarking on the privatisation process, there is not going to be any fire sale," he said.

In his contribution to the 2014-2015 Budget Debate, the minister announced that the airport would be in private hands by mid-2015. That timeline was later extended to early 2016 when five potential bidders were shortlisted in April of last year.

 

LACK OF TRANSPARENCY

 

Opposition Spokesperson on Transport and Works Mike Henry said yesterday that the absence of bids from any of the five prequalified bidders is indicative of mismanagement and a lack of transparency in the divestment process.

"It is quite shocking to me that none of these would have pursued the bid. Applying a bond of US$2 million has made the whole issue too expensive to pursue and there are other underlying things which have not made any of the international companies go forward with their interests ... . After a process of close to five years, we have this debacle" he said.

Henry called for an investigation of the divestment process, noting that the ministry and the NMIA board should come before the Public Accounts Committee to explain what went awry with the potential bidders.

Chairman of the Enterprise Team for the privatisation, Michael McMorris, told The Gleaner that a bond of US$2 million is within the normal range expected for the divestment of an airport and added that he would not speculate on whether or not the value of the bond required may have scared away the potential bidders.

McMorris also pointed out that an assessment will be done and recommendations made to the Ministry of Transport, Works and Housing.

"We are going to have to assess where we are. We have been having negotiations with various parties. We didn't receive any bids at the deadline, so we are going to assess exactly what the issues are, where we were with the parties, and provide the Government with our assessment and we will recommend how to go forward," he said.