The Deputy Premier and Minister of Finance
The Hon. Everard T. Richards, JP, MP
Airport Redevelopment Paper
Response to Burchall/Mayor Report
19 December 2016, 3:30 pm
Good afternoon.
The Government has reviewed the paper prepared by Messrs Mayor and Burchall (the Commentators). With the advice of its advisors, the Government has prepared a point by point response to the items raised by the Commentators. This is available on the Government portal.
I would like to note that I personally have responded to written concerns by these two gentlemen as well as extended an invitation to the Ministry to provide further information. They have chosen, instead, to make public pronouncements on the project that totally ignore information already provided to them by the Government.
The Government has retained several independent third party advisors in order to help assess the airport project, each of them world class, with expertise in different disciplines and experience having worked on similar projects globally. This list of advisors includes: KPMG Canada/Bermuda; Bennett Jones; CIBC: Infrastructure and Project Finance team; Leigh Fisher; HNTB; independent Value For Money consultant Steer Davies & Gleave. Their expertise and experience can be found in our detailed response.
The Commentators have no such expertise or experience. The tenor of their entire commentary starts from a position of “not” as opposed to, “how can we.” Their commentary and analysis is reverse engineered to lead to a predetermined conclusion. They propose no alternative plan, only criticism. The Government, on the other hand, has a duty to think positively, provide solutions, and in this case, the G2G P3 solution ticks all the boxes in terms of the strategic objectives for the Government and value for money. The independent VFM report by Steer Davies & Gleave confirms this.
The paper prepared by the Commentators is replete with errors and presents a flawed analysis of the project. I cannot go through all of them here, as time does not permit but, I invite members of the public to read our response that identifies each one. I would, however, like to clarify three points:
- Fact:- The “missing $27mn” the Commentators refer to is based on a false premise and is not the standard way project finance professionals evaluate alternative project options. Therefore there is no missing $27mn.
- Fact:- The Minimum Regulated Revenue Guarantee does not guarantee Aecon’s profits. The guarantee will only be triggered if traffic for a particular year falls below the worst case scenario threshold. Government will make up the revenue shortfall and place that money into a trust account which can only be used to support lenders. It is specifically forbidden for that money to be used to support Aecon or other equity investors in Bermuda Skyport Corp.
- Fact:- Millions of Government revenue will not be “shipped out to Canada.” That money will go to paying interest, repaying debt, airport operations and maintenance of our airport. Equity investors’ profit will be capped, above which a 50/50 revenue sharing arrangement with Government will kick in, so that your government will share in the success of this enterprise.
Overall, it is evident through the numerous errors and incorrect assumptions made by the Commentators that they lack the knowledge and experience in several areas and their conclusions are not credible. The Government retained several third party advisors with global experience such that these types of errors would not be made and that the correct conclusions would be reached.
Again, I encourage everyone to visit the Bermuda Government Portal to get the facts about the Airport Redevelopment Project.