UK Greenlights PLS International Airport Redevelopment Project

UK Greenlights PLS International Airport Redevelopment Project

A critical step toward the construction of a new passenger terminal at the Howard Hamilton International Airport (formerly Providenciales International Airport) has occurred with the United Kingdom’s Foreign Commonwealth and Development Office (“FCDO”) giving its approval for the redevelopment of the Airport as outlined in a Business Case recently presented by the Turks and Caicos Islands Airports Authority (“TCIAA”) requesting permission to proceed with the project through a Public Private Partnership (PPP) programme.

In addition to the construction of a new passenger terminal, the redevelopment project includes expansion works to the airside of the airport – increasing the current apron, extending the current runway, and adding a taxiway.

On Tuesday, 23rd May 2023, Paul Chandler, Director of Overseas Territories & Polar Directorate for the FCDO wrote to the Premier, Hon. Charles Washington Misick to communicate the UK’s approval of the project.

In his letter, Mr Chandler noted, “It’s clear that a lot of time, effort, and expertise has gone into it for which I commend you and the team…We fully recognize and support the urgency of the project. We are also aware, however, of the risks surrounding major infrastructure projects and want to ensure that these are mitigated as far as possible. To that end, FCDO officials have been liaising with TCIAA since we received your letter on a few outstanding issues, all of which have now been resolved.”

On 4th May 2023, the TCIAA wrote to Lord Zach Goldsmith, Minister of State (Overseas Territories, Commonwealth, Energy, Climate and Environment to formally request written approval for further consideration and pursuit of the redevelopment of the Howard Hamilton International Airport through a Public Private Partnership (“PPP”) programme.

A copy of the business case justifying and outlining the proposed project was enclosed. The Hon. Premier accompanied by Her Excellency, Anya Williams the Governor (Acting) then met with His Lordship on 9th May 2023 in the UK to further discuss the project and to make the formal request for approval.

Noting the approval with favour, Premier Misick reiterated his government’s commitment to redeveloping the Howard Hamilton International Airport with a relevant life cycle of at least 40 years.

The Premier commented, “The need for the redevelopment of the Airport has been classified as critical, necessary, and long overdue by the government. Though the process has been long in getting to this point, it was a necessary and responsible one. The TCIAA has spent the past year engaged with international expert consultants conducting the relevant studies, doing the necessary market testing, and developing what in the end was a very highly technical, meticulously prepared, and strong business case that the UK has now endorsed. The next step is for the project to be appraised by the House of Assembly to allow the TCIAA to proceed with its planned Pre-Qualification of Interested Bidders Stage. The Government is committed to progressing this quickly.”

Arlington “Chuck” Musgrove, Minister with responsibility for the Airports Authority praised the TCIAA for its achievement noting, “Several people fail to understand that the work the TCIAA has been doing over the past year to reach this crucial point in the redevelopment of the Airport is commendable. Many across the region have done similar projects and have responded to the TCIAA’s process with admiration and expressed the sentiment of wishing they had taken a similar approach with its research and stakeholder engagements to establish a project of integrity and with the execution of good governance. Since the decision was made to pursue a PPP in the summer of 2022, on a nearly weekly basis the Hon. Attorney General and her team assisted by the UK Firm, Ashurst, along with the Director of Contracts, the Chairman and Legal Counsel for the TCIAA, and a legal team (GIDE) acting for the Consultants and the TCIAA have been meeting to review and consider the necessary measures to be taken and adjustments needing to be made to not only facilitate the project but to secure good governance.”

“The TCIAA and TCIG want the public to know that the decision to pursue a PPP programme for the redevelopment is not premised on a situation where the TCIAA and/TCIG cannot self-fund the project,” said Hon. Musgrove. “The decision to pursue a PPP is premised on a ‘big picture’ understanding and approach to value for money and the benefits which can be achieved for the greater social good of the investment need through a PPP. Together, the TCIAA and TCIG are working to develop a programme delivery that improves the quality of the infrastructure and service and increases capacity in local skills development and business opportunities.”

In the last quarter of 2021, the Government received various unsolicited presentations for the redevelopment of the airport, all of which varied in size of scope and proposal, making it abundantly clear that a consultancy was required to present the best options for the life of the redevelopment based on TCIG’s goals, preferred funding, and managing mechanism.

In May 2022 the TCIAA contracted ALG Transport & Infrastructure Advisors PLC (“ALG”) as feasibility and transaction advisors for the Howard Hamilton International Airport Redevelopment Project.

The scope of the engagement includes defining an appropriate scope, structure, and risk allocation for the Public Private Partnership (PPP) or Public Finance Initiative (PFI) transaction through the required technical and legal studies to ensure maximum value for the use of public resources for the modernization and operation of the airport; developing a comprehensive Invitation to Tender for the tendering process; conducting a transparent tendering procedure to attract a private investor to finance, design, expand, operate and maintain the airport; and leading in the implementation of the PPP.

Under the proposed programme, the TCIAA will retain ownership of the Airport with a maximum 30-year period for the funding/payback arrangement.

It is envisioned that through a meticulously designed and executed procurement exercise involving a pre-qualification stage, a renowned international airport operator could be engaged for the operation and maintenance of the airport while the construction of the terminal will be via a local investor or a consortium thereof, who would in the process of preparing themselves for construction of the project contract the requisite skills and project experts experienced in the construction of airports within the similar scope contemplated. Another feature of the redevelopment project is that there will be no impact on TCIG’s debt status. TCIG’s remuneration would be the result of a structured revenue share scheme or dividend repayment policy depending on whether the project is structured as a PPP or developed with Public funding/financing.

Godfrey Smith, CEO of the TCIAA commented, “With the approval now given by the UK, it is important to know that the Business Case continues to develop. As the project progresses we will need to continuously assess our data, measuring our risks and opportunities, to procure a contract and development that a decade from now, we can remain proud of and have confidence in.”

Smith and the Chairman accompanied by the Permanent Secretaries for Finance and Border Control will attend the Global Airport Development (Americas) Conference next week where the TCIAA will be presenting a session on the TCI, the project, and the significance of airport developments on reflecting and enhancing the Islands’ identity.

The following week, other members of the Board along with members of the Management Team will attend an IATA-sponsored Master Planning Course aimed at improving local skills in the planning and project management of Airport Master Plan development. The development of a Strategic Master Plan covering all of TCI’s airports is a priority project for the TCIAA during the 2023-2024 fiscal year.

The TCIAA is currently committed to a timeline in which it hopes to complete the procurement exercise within the current calendar year. With UK approval now given and local Government approval now imminent, the TCIAA has now shifted its attention to the preparation of data and documents related to the tendering process for the assignment of the concession of the Airport including Project Information Memorandum, Invitation for Prequalification (IFP), Invitation to Tender (ITT), legal/tender evaluation criteria and Draft PPP Contract. With swift approvals as desired, TCIG and TCIAA could commence the procurement stage of the project as early as late June 2023/ early July 2023.

As a further observation of the project, Premier Misick commented: “The current approach to the project is a process aimed at striking a balance between four internationally established principles around what amount to value for money. That is, the process and development itself, must be economic, efficient, effective, and most importantly equitable. To this end, the success of the deliverables intended under the redevelopment project will be measured beyond the product output (i.e. the airport terminal). What matters most in the project’s success is its social and economic impact on the people of the TCI and our ability to design a programme which effectively monitors and manages it to the advantage of the TCI.”

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