Deputy Premier and Minister of Finance, Bob Richards today responded to allegations made by the Opposition who accused him of “constantly dismissing the people’s concerns” and“misleading the people of Bermuda”.

“As I have said previously, we have been much more transparent on the airport redevelopment project than any other development in Bermuda’s history,” said Minister Richards.

“This is evident in both the Deloitte Report and the Letter of Entrustment which are public documents and speak to accountability, transparency and openness. The Deloitte Report is a helpful guide for ensuring value for money. The Government is committed to communicating regularly about the progress of the project and providing opportunities to answer questions about our progress.”

“The Bermudian public should not be deceived by innuendo, false allegations and political rhetoric over the airport development project.”

In their statement, the Opposition claimedthat the Bermuda Government will have to put up a significant amount of funding for this transaction.

That is not true.

This Government has indeedspent money on financial, technical and legal advisors. World class advice on a project such as this is necessary.  The former government spent $3.5 million on airport consultants and kept it secret.

There was $13 million budgeted.

However that money, put there while details were being negotiated, is now not necessary.

Only money raised by the Airport Improvement Fee - some $6mn which Parliament has already passed - will be spent, and by financial close it will have already been accumulated.

Minister Richards said: “I was happy to see that the Chamber of Commerce has agreed that the Bermuda Government decision to contract with a reputable third party to build a new terminal and maintain it into the future for Bermuda is reasonable.

“As the Chamber acknowledged, this arrangement transfers the risk of cost overruns and other unforeseen events from the taxpayer to a third party. It is similar to the model that was used when the new acute care wing of the hospital was constructed.”

The Chamber President stated that with a proven track record, Aecon was a “well-considered” choice and that through CCC – and the financial backing of the Canadian Government - they have built large infrastructure projects, including airports.

They questioned the sole source route taken and encouraged the Government to show value for money through benchmarking, somethingthe Government has already publicly agreed to do.

“The reasons we didn’t put this out to tender – as we have discussed in the past – is because we would have then had to add to the national debt to pay for it, which we are in no position to do,” said Minister Richards.

“We would have never been able to control cost over-runs for the project and the tax payer would again be on the hook for it all. Our plan transfers such risks away from the taxpayer.”

Minister Richards continued: “It should be very apparent to everyone that Bermuda cannot afford any initial expenditure for the airport redevelopment.”

The options available to Bermuda are as follows:

1. Do nothing (renovate and maintain - the expensive band aid approach)

2. Borrow the money and put it out to tender to design & build

3. Putit out to tender to design, build, finance, operate and maintain.

OR

4. A bilateral government to government (G2G) approach.

The first three options would require the Government of Bermuda to either guarantee the finance costs and/orincrease the national debt–both of which would impair Bermuda’s credit worthiness and increase the cost of debt.

The bilateral Government to Government strategy not only avoids the impairment of government’s creditworthiness but it shifts construction risks to the other partner. The Government has selected this, the best option, a win win and one that we can afford.

The current dilapidated terminal is deteriorating. There will be millions of dollars of expenditure in the near, intermediate and long term future that will be REQUIRED to be paid by the Government of Bermuda. Remember it would cost over $400 million to completely refurbish that terminal.

If Bermuda does not build a new terminal, skyrocketing maintenance and various remedial capital costs will be inevitable and must be accounted for in our calculations.

“There really is no “do nothing option”, we will have to do something! We can’t just let the terminal fall down,” said Minister Richards.

“Renovating the existing airport building will increase the deficit with very little to show for it, all of which will increase the national debt.”

The Airport Redevelopment Project, under the chosen G2G model, will be financially self-sustaining as the new airport development will pay for itself.

The taxes will go to paying for OUR, NEW, STATE-OF-THE-ART AIRPORT terminal. The proposed newbuildingwill belong to the Government and people of Bermuda. Taxes and fees form the bulk of the cash flow that will repay the debt raised to build the structure and to operate and maintain the facility for the next 30 years.

Aecon/Projectco will make a profit from operating the airport, but their profit margin is precisely prescribed in the Project Agreement (IRR=15 -16%) – market standard for transaction with this risk profile. The Project Agreement also specifies that any profit greater than that will be split 50/50 with the Government of Bermuda. So the Government of Bermuda and Aecon are effectively partners in this projectwhich will create hundreds of jobs for Bermudians.