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Row over airport payout rumbles on

Costly operation: L. F. Wade International Airport (File photograph by Akil Simmos)

Government has hit back at claims that it overpaid airport operator Skyport almost $4 million in minimum revenue guarantees by mistake.

Skyport, the airport operators, also defended the payments, and insisted that both sides had been ”duly following the prescribed MRG mechanics”.

Statement from the shadow transport minister

This morning, shadow transport minister Scott Pearman hit back saying: “The PLP spin machine seems to be malfunctioning.”

He added: “First, MP Lovitta Foggo tells ZBM the PLP made a $4 million overpayment to Skyport “above what is necessary”.

“Next, PLP MP Neville Tyrrell tells Bernews that actually “it was not an overpayment by the Government – it was an overbilling by Skyport”.

“Then the Transport Minister Lawrence Scott gives a further version of events stating that “the payment made to the Airport was made as per the terms and conditions outlined in the Project Agreement”.

“There is much confusion here, which is concerning. Let us hope Minister Scott is right and that his PLP colleagues are mistaken.

“The Government’s confusion shows why the Opposition is right to ask questions. The OBA will continue to hold the Government to account, even when our questions are met by attacks and falsehoods.”

Lawrence Scott, the transport minister, said yesterday that Government got an estimated bill from Skyport every quarter – and the Government got a $3.9 million refund earlier this year after the account was reconciled by an independent auditor.

Mr Scott was speaking after Cole Simons, the Opposition leader, accused the Government of sloppy bookkeeping.

But Mr Scott said: "The ministry is presented with an invoice every quarter to pay, and we have no option other than to pay it.

“If we do not pay the invoice, the country would have defaulted on their obligation under the agreement. That is not how we operate at the Ministry of Transport.

“Yes, the Project Agreement, negotiated by the former Government, has been structured in such a manner that ensures Skyport/Aecon have more than they need.

“Unfortunately, it is only at the end of the calendar year when they are audited by an external and independent firm that their accounts are reconciled and we have been reimbursed for the overbilled amount.”

Mr Scott added: “What is important for me to note is that the only real mistake here is the fact that we are having to make any payments at all.

“The entire country remembers that this Government opposed this no-bid privatisation of this prized asset. However, we will continue to operate under the terms and conditions of the agreement our country is obligated to."

A spokeswoman for Skyport confirmed that payments were made throughout the year, and that the account was reconciled at the end of each year.

The spokeswoman said: “While the minimum revenue targets were set considerably low to guard against the risk of the guarantee ever being triggered, the economic shock of the global pandemic has led to an unprecedented 85 per cent drop in traffic, necessitating payments by the Government to solely protect the project’s lenders.

“Skyport must cover its own significant financial losses.”

She added: “Both Government and Skyport have been duly following the prescribed minimum revenue guarantee mechanics in the project agreement, which involve periodic contributions to the minimum revenue guarantee reserve account followed by periodic reconciliations.

“The account is accessible only by the project’s lenders. The process is unfolding in full compliance with the project agreement and importantly, occurs in the context of the successful delivery of a Bermuda-owned, world-class, new passenger terminal facility.

“Skyport remains committed to working with the Government and industry stakeholders to bring about a recovery in air passenger traffic that will soon see the airport become financially self-sustainable once again.”

Mr Scott was backed by Neville Tyrrell, a Progressive Labour Party backbencher and former transport minister, who criticised the former OBA government for negotiating “a bad deal”.

Mr Tyrrell said: “Thanks to the OBA passing the bad airport deal, they forced the government into a contractual obligation to make these minimum guarantees.

“We've had to pay a total of over $20 million into a bank account of a wealthy international company since the onset of the pandemic.

“That’s $20 million that could have been invested in Bermudians.

“This was not an overpayment by the Government – it was an overbilling by Skyport.

“There are no legal means of objecting to overbilling in this bad OBA contract.

“We are obliged to pay their bill because of the deal that the OBA subjected us to.”

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Published April 28, 2021 at 10:37 am (Updated April 28, 2021 at 11:55 am)

Row over airport payout rumbles on

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