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Gov’t clarifies NMIA agreement
The Norman ManleyInternational Airport onthe Palisadoes
Business
Balford Henry | Observer Writer  
November 3, 2018

Gov’t clarifies NMIA agreement

There is no doubt that there is still some confusion in the minds of some Jamaicans, both at home and in the Diaspora, about the latest development concerning the operations of the Norman Manley International Airport (NMIA) in Kingston.

Has the airport been sold to foreigners; or has the Government signed a concession agreement giving a private company, based in Mexico, the daily operations of the facility which is still owned by the Government?

In an effort to clarify the issue, the Government issued a full-page advertisement last weekend in the press which sought to clarify the issues in the mind of the public.

In the advertisement it was made clear that on October 10, 2018, an agreement for the operation of the airport, under a 25-year concession, was signed between the Airports Authority of Jamaica ( AAJ) and PAC Kingston Airport Ltd, a wholly owned subsidiary of Grupo Aeroportuario del Pacifo, SAB de CV (GAP), and the special purpose vehicle incorporated as required under the concession agreement.

The advertisement explained that a concession agreement gives a private entity the long-term right to use all the assets granted to the concessionaire, including responsibility not only for operation and maintenance of the assets, but also for financing and managing all required investment.

Asset ownership typically rests with the awarding entity in this case, AAJ/Government of Jamaica, and all rights in respect to those assets revert to the awarding entity at the end of the concession period.

With respect to the NMIA public-private partnership (PPP), the ownership of the NMIA remains with the AAJ and the responsibilities of operation will revert to AAJ at the end of the concession period.

The advertisement also listed the terms of the concession agreement as follows:

a) AAJ as the owner will retain ownership of the airport’s assets;

b) The concession will be for 25 years (with an option to extend for an additional 5 years) and will be a finance, design, build, operate, and transfer arrangement;

c) The concessionaire will pay an upfront amount and a monthly concession fee to AAJ over the life of the concession;

d) The concessionaire will upgrade and return the operation of the airport to the AAJ/Government at the end of the period;

e) The concessionaire will be required to meet specified service levels as established over the life of the agreement.

It also advised that the concessionaire is expected to invest a minimum of approximately US$110 million over the life of the concession, of which approximately US$60 million will be within the first 36 months after the handover.

It will include upgrades to the runway extension and runway end safety area and utilities, and the concessionaire will be responsible for the design, procurement, construction and management of the rehabilitation of the terminal apron and cargo apron works that form the airside pavement.

In terms of the financial structure of the deal, there will be an upfront concession fee of US$5 million payable to AAJ prior to financial close and a project development fee of US$2.1 million payable to the lead advisers, International Finance Corporation.

A concession fee of 62 per cent of the total revenues earned by the concessionaire is payable to the Government on a monthly basis by the concessionaire, and an investment of a minimum of US$110 million in capital investment works is also required.

An internal view of the Norman Manley International Airport

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