Cayman officials will get the chance to see if the island missed a golden opportunity or dodged a bullet after the United Kingdom vetoed plans for a $200 million partnership with a Canadian government company to redevelop Owen Roberts International Airport.
The Bermuda government announced last week that it was entering into an agreement with the same firm, the Canadian Commercial Corp., to develop its airport in a public private-partnership similar to one that was on the table for Cayman in the early part of 2013.
The deal collapsed in Cayman after the U.K. expressed concerns about a lack of open tendering for the development, according to a statement from Cline Glidden, the tourism minister at the time. The proposal would have involved the Canadian firm financing and building expansions to the airport and runway in exchange for a 30- to 40-year operating concession and the right to collect “aeronautical and non-aeronautical revenues.”
Concerns were expressed about a loss of direct government revenue, loss of control over a key strategic asset for the country and potential loss of jobs at the airport. On the plus side, the deal would have led to an extensive redevelopment and expansion of the airport with no up-front cost to the cash-strapped public sector.
Cayman Islands officials have since opted for a more modest redevelopment of the terminal to be financed through existing Cayman Islands Airports Authority revenues, following an analysis of the options by PwC. An outline business case, produced in July, recommended $120 million investment in the islands’ three airports over the next two decades, beginning with the expansion of the severely overcrowded terminal at Owen Roberts International Airport.
Meanwhile, the Canadian Commercial Corp. appears to have taken a version of the deal mooted for Cayman to authorities in Bermuda.
Officials last month signed an agreement with the company “to pave the way for the re-development of the Bermuda airport” through “various sources of financing.” Bermuda’s Finance Minister Bob Richards told the media in the territory that the development would be financed through “future revenue streams from the new airport itself.”
He suggested it could play a crucial role in the renaissance of the Bermuda economy which, like Cayman’s, has large public sector debt and difficulty financing large capital projects through annual revenues. It is not clear what input, if any, the Foreign and Commonwealth Office will have in determining whether the Bermuda proposal goes ahead.
According to Mr. Glidden, who headed the Ministry of Tourism in the Cayman Islands when the deal fell through in March, 2013, the FCO’s economic adviser had indicated that Cayman’s government needed to follow a competitive tendering process.