Government has delayed work to clean up Morgan's Point while it seeks "alternative funding sources", the Ministry of Works and Engineering revealed yesterday.

Permanent secretary Robert Horton told The Royal Gazette that the "main clear-up" of environmental damage and pollution at the former US Naval Air Station in Southampton had yet to be done.

The US Navy vacated the 243-acre site 14 years ago, leaving it heavily polluted with asbestos, metals, petroleum products and other chemicals. The former base land is polluted with 500,000 gallons of jet fuel, while Bassett's Cave has a layer of viscous oil some two feet deep.

Work to remove the pollution will cost taxpayers tens of millions of dollars. The Premier said in 2007: "The Government is going to absorb the costs of the clean-up."

Government agreed two years ago to swap 80 acres of Morgan's Point with local company Southlands Ltd. for the 37-acre Southlands estate in Warwick.

A luxury five-star tourist resort is planned by Southlands Ltd. for Morgan's Point if the exchange is ever legally completed.

Southlands director Brian Duperreault said earlier this week that his company was promised a swap of "clean for clean" land — meaning Government would clean up Morgan's Point before any development began.

He said: "We don't see that that has happened. We know of no contract that has been signed. There is no apparent action there."

Mr. Horton said yesterday that the clean-up of Morgan's Point was split into two contracts and work associated with the first contract, to clear vegetation from a landfill area, had been completed.

"However, the second contract has not been awarded," he said. "The 'main clear-up' contract has not been awarded, although tenders have been received from five companies.

"The decision was taken to delay the second phase of the clean-up of Morgan's Point pending Government's pursuit of alternative funding sources. The tender prices remain confidential."

Andy Pereira, president of the Construction Association of Bermuda, said yesterday: "Currently the only information I know about the project is there were three overseas firms bidding for the work and subcontracting portions of it to local firms.

"To date I don't believe the local firms know what the status of the project is."