as boating visitors drop
By NEIL HARTNELL
BAHAMIAN marinas were yesterday said to have slashed fee rates by up to 30 percent to maintain boat occupancy levels amid fears of a further squeeze from rising electricity costs.
Peter Maury, a former Association of Bahamas Marinas (ABM) president, told Tribune Business that industry operators have reported “the numbers are definitely off from 2023” at one of the sector’s busiest periods with the US Independence holiday weekend.
The Bay Street Marina chief, confirming the business has dropped its rates, said many competitors had adopted a similar approach which he branded as “crazy for this time of year” given the traditionally strong demand from boaters cruising to The Bahamas for the Independence holiday weekend.
Arguing that the business fall-off has left multiple industries earning less, including the Government with its taxes, Mr Maury told this newspaper that Bahamas Power & Light’s (BPL) revised rate structure - which took effect on July 1 - has made it “harder” to persuade high-end boats and yachts to remain in this nation rather than go back to Florida. Pointing out that marinas supply and sell “a lot of electricity” to visiting boats, he
explained that BPL’s Equity Rate Adjustment - which has increased base tariff rates for its largest general services customers - will result in the extra cost being passed on to these vessels and make The Bahamas further price uncompetitive.
This, Mr Maury argued, will not only impact Bahamian marinas but the numerous other local industries that benefit from spending by boat guests and crew, including
grocery stores, gas stations, restaurants and BPL.
“We were on a call just recently and quite a few people were saying the numbers are definitely off from last year,” he told Tribune Business. “They [the Ministry of Tourism] like to talk about the numbers of people, but they should be talking about the amount of dollars spent.
“I’m not going to call any names but I went around to a couple of marinas and everybody has reduced their rates, which is crazy for this time of year. It’s a sign of the times. Over-tax everybody and they choose another destination. We’re down in revenue. We’ve maintained occupancy, but we had to drop our rates like quite a bit, 30 percent.
“At least it’s kept boats in the marina. People are dropping their rates to try and accommodate. There’s been a lot of openings across the Out Islands when you couldn’t
UK legal heavyweights to decide $357m GBPA fight
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
TWO UK legal heavyweights have been appointed to determine Freeport’s fate in the Government’s $357m dispute with the Grand Bahama Port Authority (GBPA).
Tribune Business can reveal that the Davis administration has selected Lord Neuberger of Abbotsbury, former president of the UK Supreme Court, as
its representative on the threestrong panel of arbitrators who will hear the dispute and ultimately determine whether the GBPA owes the Government for public spending in Freeport over and above tax revenues generated by the city between 2018 and 2022.
And the GBPA has chosen Dame Elizabeth Gloster, the first female judge to sit in the UK’s commercial
Gov’t avoids bond markets for third consecutive year
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
THE Government is aiming to avoid the international bond markets for a third successive fiscal year as it bids to raise $360m in foreign currency bank loans to meet its $1.803bn gross financing needs.
The Davis administration’s 2024-2025 annual borrowing plan, which sets out how it plans to meet the Government’s debt financing needs, confirms that it will seek to meet these via Bahamian investors in the domestic market rather than through foreign currency borrowing.
The plan, which was released quietly on
Wednesday, confirms that the Government needs to refinance or roll over some $1.734bn in existing debt over the 12 months to endJune 2025 as well as cover the 2024-2025 fiscal year’s forecast deficit of $69.8m. Combining the two figures produces the total $1.803bn financing requirement, which is equal to 11.8 percent of Bahamian economic output or GDP. Simon Wilson, the Ministry of Finance’s financial secretary, could not be reached for comment despite numerous attempts. However, the plan itself said: “The annual borrowing plan proposes financing approximately $1.175bn
SEE PAGE A17
By FAY SIMMONS Tribune Business
spending by stopovers, or air arrivals, who represent The Bahamas’ highest-yielding visitors had grown from $323.37 in 2019 to $425.50 in 2023 - a rise of some 31.6 percent, although it is unclear how much of this may be due to inflation. Mrs Duncombe said average per capita cruise passenger spending had shown similar trends via a 41 percent increase from $77.6 in 2019 to $109.4 last year. “Stopover, cruise and day visitors spent an estimated $5.39bn in The
• BCA chief: ‘Too early to draw’ slowdown conclusion
• Says cement block demand ‘outpacing production’
• Near-$1bn pipeline despite $73m permit value fall
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
CONSTRUCTION remains “strong and healthy” despite 2023’s $128m decline in the value of new building starts, a prominent contractor argued yesterday, with cement block demand “outpacing” production.
Leonard Sands, the Bahamian Contractors Association’s (BCA) president, told Tribune Business it was “too early to draw a conclusion” from yesterday’s release of Bahamas-wide data which revealed declines in both the number and value of construction permits and starts for 2023. The only category showing some year-over-year improvement was construction completions.
The data, unveiled by the Bahamas National Statistical Institute (BNSI), revealed that the combined value of total construction starts in 2023 - for both residential, commercial/industrial and public sector projects - slumped by $128.055m or 38 percent compared to 2022, falling to $212.105m as opposed to $340.16m in the prior year. The total number of new building starts was also down by 9 percent at 491 versus 542, a fall of 51. In particular, the number of new residential building projects dropped from 488 to 433 in 2023, representing an 11 percent decline compared to the prior year, while the value of such projects dropped by 46 percent or $136.373m to $158.256m. While the number of commercial building starts was exactly the same, the value of these projects dropped by $16.362m or 38 percent year-over-year from $42.586m in 2022 to $26.224m last year. However, the number of
LEONARD SANDS
LORD NEUBERGER
DAME ELIZABETH GLOSTER
TAKING CORE VALUES INTO THE WORKPLACE
As a sovereign country for more than five decades, there is a certain degree of maturity that is expected in political, social and economic life in The Bahamas.
Our upcoming Independence celebrations should remind us of the great accomplishments of our past, allowing us to take an introspective look at where we are currently and, more importantly, focus some attention on the direction we must begin to take in the future.
The future of a country is dependent to some extent on how solid the foundations laid by the founding fathers of the nation are. Today, we take a look at their intent for our Commonwealth and the road we must continue on if we are to evidence great and continuous success. Our national symbols, in particular our motto, anthem and pledge of allegiance, give us some common themes.
They express what I will term the core values of The Bahamas: Love, Unity, Service, Progression and Excellence. Each of these core values are repeated to place emphasis on what should guide our political, social and economic actions. I challenge the private sector today to measure your organisational actions and environment against these core values. Here are a few questions that might help with this evaluation: Love - Does a spirit of love prevail in your place of work? Are we genuinely concerned about people and their well-being? Do we love enough to correct people when we see them going down the wrong path? We hear often that love is an action that requires one to demonstrate deliberate behaviours to evidence its presence.
Unity - Are we just talking teamwork or do we really have a strong desire to work with our fellow workers for a better company? Can we put our ego aside and work along with our leaders and team members for a better company? Can we celebrate when others succeed, or are we still quick to pull down the good intentions and hard work of others?
Service - What is the level of service in our company compared to others around the region? Do we serve with excellence consistently? Are the smiles that we give genuine? Are we merely motivated by money and tips, or do we still value the joys of serving others?
Progression - Are we moving forward or have we gone into decline? Are we experiencing growth in our company year after year, or are we stuck in survival mode? Have we created a plan of action to begin or continue the forward march?
Excellence - Have we set high standards for our employees, for our processes and products? Are we settling for mediocrity and are satisfied with lacklustre and sub-standard
performance? Are we pledging to excel? Perhaps these questions have allowed you to ponder your current state of affairs. Your response to these questions will determine whether you will be in the same condition 51 years from now, whether you would have expanded and experienced unprecedented growth, or whether or not you will be existing 51 years from now.
• NB: Ian R Ferguson is a talent management and organisational development consultant, having completed graduate studies with regional and international universities. He has served organisations, both locally and globally, providing relevant solutions to their business growth and development issues. He may be contacted at tcconsultants@ coralwave.com.
Stopover tourist spend rises 25%
Bahamas in 2023. Stopover visitors on average spent $2,595.57 per person per trip,” she added.
“As the arrivals to the destination grew stronger, so did the average expenditure of the cruise arrivals to the destination. In 2023, the new, completely revamped cruise port in Nassau at the Prince George Wharf opened, and was home to many new shops, restaurants and new amenities that gave cruise passengers more to spend their money on in the downtown area.”
Mrs Duncombe revealed that, in 2023, the average length of stay for stopover visitors was 6.1 days with Nassau and Paradise Island visitors averaging 5.7 day stays, Grand Bahama visitors averaging 7.3 day stays; and Family Islands guests recording an average stay of 7.3 days.
She added that total visitor arrivals for the first five months 2024 represent a 13.5 percent increase from the same period last year, which saw 9.65m arrivals.
The Ministry of Tourism is now targeting 12m visitors by the end of the year.
Mrs Duncombe said:
“We’ve seen 4.8m visitors that visited our shores for the period of January to May.... There’s also some commentary as it relates to performance because we are 13.5 percent above last year, which was our best year ever. We saw 9.65m visitors last year, and DPM Cooper said the number for this year is 12m. So we’re certainly working together to see those results.”
Total air arrivals for the first five months of 2024 were slightly ahead of preCOVID levels, standing at 821,334 through May compared to 812,534 for the same period in 2019 - a 1.1 percent increase. However, total foreign arrivals for May were 18.6 percent ahead of 2023 levels and some 52.2 percent up on 2019.
Mrs Duncombe said the amount of available hotel rooms in the destination has decreased from 17,618, spread over 322 hotels, in 2019 to 16,105 rooms across 283 hotels currently.
She added that the closure and demolition of the Melia resort has left a gap in the market for family all-inclusive resorts and the Ministry of Tourism is working on ways to provide that product. The tourism chief added: “So in 2019 we had plus 300 hotels and 17,600 rooms. Today, based on the information from our hotel licensing department, we have 283 hotels and 16,000 rooms. So there is a difference in terms of the amount of rooms that we have to offer to our visitors
“A notable mention that I will also share is that the family all-inclusive has been something that our visitors have been asking so much about. This was an amazing product when we had Melia. So this is one of the things that our investments team are looking into, and they’re doing their part from that perspective.” Short-term rentals via AirBnB currently provide an additional 5,090 room listings.
Ms Duncombe said future arrivals are currently projected to be on trend with last year’s bookings but more are expected as visitors have began booking trips closer to their departure date.
She said: “Information that we’ve gotten from the period for June 2024 shows that for the next three to six months airline tickets that were issued are pacing the same as last year.
“We have noticed a shortening in the booking window, and so although these are what we see, we do expect growth in the months to come because visitors are now booking a little shorter, rather than booking so far in advance.”
Mrs Duncombe said cruise arrivals increased by 16 percent over the same period in 2023. “From a cruise perspective, we’ve welcomed 3.9m visitors to our shores, and we’ve seen a very huge increase,” she said.
“Now, when we report on cruise numbers, it’s always the first port of entry because sometimes we may have a cruise vessel that visits multiple ports within The Bahamas at any one point in time.”
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Family Island airport fees the ‘price of development’
THE Government’s aviation chief yesterday said new and increased passenger and user fees at Family Island airports such as Bimini are “the price of development”.
Dr Kenneth Romer, director of aviation, said the Ministry of Tourism, Investments and Aviation has conducted a study into the fees to ensure they are competitive and will not disadvantage visitors, residents, airlines and private aviation operators alike.
He added that the issue had been discussed with Chester Cooper, deputy prime minister and minister of tourism, investments and aviation, and it was determined “there is a price” for ensuring Family Island airports are brought up to international safety and operational standards.
Mr Cooper said: “The concern came as a result of the implementation of new fees that seem, in some cases, exorbitant notwithstanding that many of the other airports did not really charge certain fees that were passed on to customers.
“The deputy prime minister would have indicated that there was a price that comes again with development, especially world class infrastructural development, to attract the new airlift to the islands - international, domestic - and to really support the economy of these islands. And so there was the imposition of some fees.”
Dr Romer maintained that the Department of Aviation is open to making
changes to these fees upon feedback from residents but will continue to do “what needs to be done” to ensure Family Islands have proper airport infrastructure.
He said: “Obviously, constituents and citizens have the right to voice their concerns that were raised. Deputy prime minister was provocative. He had asked again for us to take a look at those fees to ensure that we ensure that there is some competitiveness when it comes to what’s going on across the region.
“And that will segment to many other airports because the concerns are somewhat consistent in terms of the level of fees imposed on the travelling public, the price again for development.
“But deputy prime minister said he will listen to the concerns and, if there has to be amendments like it was in Bimini to delay the imposition of some fees, they would have listened, they would have acted at the same time doing what needs to be done to give our islands brand new airport infrastructure”
Bimini residents and pilots raised concerns after Bimini Airport Development Partners, the private sector consortium charged with transforming the island’s airport, unveiled a host of new charges to help pay for their investment.
“This notice is to serve as an announcement concerning the change of management at South Bimini International Airport,” the notice read. “Effective May 6, 2024,
Bimini Airport Development Partners (BADP) will assume the management, operations and development of the airport.
“BADP will begin immediate improvements of the airport to modernise and expand the facility, improve airside and navigational infrastructure, procure equipment and enhance services and processes. As a part of our endeavour to provide world-class services we will be continuing and implementing various rates and charges for all general aviation private operators and passengers.”
The principal that the customer/user pays to finance airport upgrades such as those planned in Bimini is well established, with Lynden Pindling International Airport (LPIA) in Nassau a prime example. The fees levied on commercial airline, charters and private aviation, plus their passengers, will be used by the Bimini consortium to both repay the debt financing for the upgrades and generate a return on its investment.
One Bimini home and plane owner, speaking on condition of anonymity, said that prior to May 6 incoming private pilots and operators were faced with paying a $50 Customs processing fee, along with the $29 per passenger departure tax and a security fee that is around $10 per person. While these charges remain, the BADP group is adding a host more.
BADP’s notice also sets out a variety of landing, terminal and aircraft parking fees that it plans to charge. The landing fees, set to be based on the type of plane involved and its weight, start within a range of $20 to $115 before increasing to between $30 to $135 next year. Terminal fees, meanwhile, which are based on aircraft seat capacity and turn, start at between $14.76 to $51.67, and rise to $15.20 and $53.22 in 2025.
Aircraft parking fees are to be determined by length of stay, with the daily “tie down” rate set at $30. This latter price is particularly exercising Bimini homeowners who told Tribune Business that, in the absence of any discount for residents, this would translate into a monthly cost of between $900-$930 if they kept their planes at the airport for so long. And, with 10 percent VAT, the ultimate cost would be $990-$993.
These include, according to its April 26, 2024, note, separate passenger facility and passenger processing fees. The new passenger facility fee is pegged at $20 for domestic passengers, and due to increase to $25 per person come June 1, 2025, while that for international passengers has been set at $40 per head and is set to rise to $45 next year. As for the passenger facility fee, that will start at $5 for domestic and $10 for international passengers, rising to $6 and $12 per head, respectively, in 2025. There is also a $1 per head “passenger levy”, plus a new $25 “pent handling fee” that will rise to $25.50 in 2025.
‘Wheels turning’ over Family Island airports
THE Government’s aviation chief yesterday said the “wheels are turning” on Family Island airport transformation with an assessment conducted on all 28 locations.
Dr Kenneth Romer, director of aviation, said many airports have “progressively deteriorated” and renovations are being carried out at the 14 airports in the Family Island ‘renaissance’ initiative.
He added: “We have assessed the state of all of our government-owned aviation assets. The Airport Authority has oversight for some 28 Family Island airports. We are aware of the state of these airports that have progressively deteriorated over many, many, many years.
“The commitment was not to find or make excuses. We were committed to finding solutions to them. It will not be an overnight process and the wheels might be turning exceedingly slow by some persons, but I can assure you that the wheels are turning.
“So we’ve been assessing the state of all of our government-owned assets; the navigational aids, the equipment, the state of our runways, taxiways and apron. We’ve undertaken to really prepare the Family Island airports through the PPP and also funding initiatives.”
Dr Romer said construction is currently being undertaken on the $18m renovations to Cat Island’s New Bight airport, which will see an extension of the runway and taxi apron.
“New Bight International Airport, very pleased to say that we have addressed some of the immediate short-term concerns raised again by some of the larger carriers or the heavier carriers like Western Air, but the New Bight International airport is mobilised,” he added.
“And, as we speak, construction is going on as it relates to the estimated $18m terminal facility. The runway is going to be extended in excess of 7,000 square feet, taxi apron way.
Again, the airside is also a priority.”
For North Eleuthera International airport, Dr Romer said by the 2024 third quarter there will be repairs to the apron and taxi way through a $60m InterAmerican Development Bank (IDB) loan while the passenger terminal will be renovated to accommodate 1,400 people. He said: “This will alleviate some of the concerns from the saturation of aircraft on any given day that goes into North Eleuthera, but both the North Eleuthera airside and landside have been targeted for development.”
In Long Island, the Deadman’s Cay airport is slated to be reconstructed and modelled after the airport in Great Harbour Cay. Dr Romer said the runway will be expanded to 7,500 square feet, allowing larger international flights to land in the destination.
“This will allow us to address some of the concerns that large international carriers cannot come into Deadman’s Cay, Long Island, removing the impediments by extending the runway and by causing there to be a new airport in Deadman’s Cay,” Dr Romer said. He added that Black Point, Exuma, and
Mayaguana are also slated for new airports, with Mayaguana’s airport expected to be mobilised by the fourth quarter.
Dr Romer said the airport in South Bimini is “fully mobilized” with $40m worth of renovations underway including a 400-passenger terminal.
He said: “We are pleased with what’s happening in Bimini. They’ve been speaking to airline partners, and we’re very optimistic that Bimini is going to be totally revitalised in terms of airlift and airport infrastructure over the next two years.”
Additional airports to be targeted include Arthur’s Town, Rock Sound, Marsh Harbour and Treasure Cay, Inagua, Staniel Cay, Rum Cay and Farmer’s Cay. Dr Romer said: “So we’re moving in terms of developing, delivering on a commitment to address the state of airport infrastructure. I emphasise again that the state of our airports did not just happen overnight.
“But there was a commitment, again, from all of our aviation tourism partners to make sure that the state is effectively addressed and we see again the renaissance of our Family Islands again through airport development.”
Bahamas First Holdings Limited (the “Company”) hereby notifies all its Shareholders that a Dividend of Four Cents (B$0 04) per Share will be paid on 15 July 2024 to holders of Common Shares on record as at 12 July 2024
Marinas slash rates 30% as boating visitors drop
typically find a spot in one of their marinas.”
Marques Williams, Mr Maury’s successor and the current ABM president, confirmed to Tribune Business that marina members are reporting a decline in business volumes although nothing “alarming” at this point.
“I haven’t seen or heard any major complaints,” he said. “There is an understanding that there is a decrease in visitors with regard to yachts. I haven’t head of anything that says it’s outstanding or alarming.”
The ABM chief added that the suspected causes of the decline include increased taxation such as the imposition of VAT on yacht charter fees, which the Government argued was necessary to ensure such vessels and their clients pay their fair share for using The Bahamas’ natural resources, crack down on previous avoidance/ evasion and create a level playing field with Bahamian operators.
But, when added to the existing Port Department fee, this more than tripled the tax rate for foreign yacht charters from 4 percent to 14 percent. Dockage fees were also increased in this year’s 2024-2025 Budget, while entering and clearing into The Bahamas is said to have become a lot less user friendly after the Government ordered the industry to shut its SeaZPass portal and failed to replace it.
“The sentiments are the same,” Mr Williams said. “The reasons are the same. The taxes, the high cost of
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product here, the shift by boaters to the southern part of the Caribbean, things of that nature. It’s just the same factors. Just the loss of opportunity.”
Mr Maury, meanwhile, said the increase in electricity costs will further hurt The Bahamas’ cost competitiveness as a yachting/ boating destination. “The biggest thing is the increase in everything with the cost of electricity,” he added.
“These boats consume a lot of electricity. When the electricity rates go up we have to adjust the dockage rate to accommodate and offset it. It just ends up catching everybody; everybody makes less. This thing with electricity is crazy.
“Marinas sell a lot of electricity. With the higher rates it becomes even more difficult. The rates in Florida don’t go up over one-third of our current rates. It’s getting harder to tell these guys using 480 power and $1,000 a day in electricity; it’s getting harder to tell them we want them to stay here when it goes from $1,000 to $1,500 and they’ve got to work out how to fit that in their actual budget,” Mr Maury added. “It’s cheaper to stay in Florida and only come over when they have a charter.... Just the cost of coming here. They are not taking this trip.” The ex-ABM president said there was ever-greater incentive for boaters to either remain in Florida or take shorter trips to Bimini and the northern Bahamas instead of travelling to New Providence or throughout the island chain. And, with fewer boaters and visitors from this segment, he argued that
the Government is earning less than it should from VAT and other revenue streams. “The Government hasn’t adjusted for the lower consumption or lower revenues,” he added. “It is what it is. Everybody just has to accept the loss, including the Government. We’re going to be submitting less taxes.
“VAT is a consumer tax. The Government gains when boats are in the country. They are buying groceries, using electricity, but if the boats are not here there’s going to be less electricity consumption and the gas stations and grocery stores will not benefit. VAT is a consumer tax and they will not consume if they are not here. This model of higher taxes and higher utilities is a failure.
“They are not going to the Out Islands and spending money in Out Island communities like they were and the Government is collecting less revenue. It’s all based on consumption.... They don’t talk to us; don’t understand what this industry is. This small segment of hospitality is the biggest consumer of product per capita in the entire country.”
Asserting that marinas and the wider Bahamas are paying the price for a lack of consultation, Mr Maury said: “We’ll keep doing what we’re doing and see what happens. They keep making mistakes. They don’t trust the industry to have a decent conversation with us, and just keep making mistake after mistake. “It’s a shame. A lot of businesses benefit from this segment of hospitality but they don’t think it’s important enough.”
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CONSTRUCTION ‘STRONG AND HEALTHY’ DESPITE $128M FALL IN 2023 STARTS
new public sector construction projects doubled to eight last year, with their combined value increasing from just $2.946m in 2022 to $27.626m last year.
As for new construction permits, these declined in total value by 7 percent or $73.194m year-over-year in dropping from $988.76m to $915.566m. The number of permits issued also fell by 4 percent or 65, dropping from 1,584 to 1,519. While the combined value of new residential construction permits rose by 31 percent or $130.903m, year-over-year, the number of approvals was down by 6 percent at 1,195 versus 1,266 in 2022 - a difference of 71. And, while new commercial/industrial construction permits increased
from 278 in 2022 to 285 last year, their combined worth slumped by 43 percent or $231.255m from $539.516m to $308.261m. The data was again boosted by new public sector construction projects which, although remaining flat in terms of the numbers issued, near-doubled in value from $28.867m in 2022 to $56.024m - a gain of $27.157m or 94 percent. This indicates that, while the average value of commercial/industrial projects had fallen year-over-year, that for the public sector had increased significantly in 2023 compared to 2022.
Mr Sands, though, told this newspaper it is “too early” and “too difficult” to interpret the data as confirming that Bahamian construction industry activity has slowed. While
acknowledging that the figures may show the sector returning to more typical business volumes following the surge created by pentup demand post-COVID, the pipeline signalled by new construction permits indicates almost $1bn in future activity.
The BCA president added that many developers, both foreign and local, may also hold-off on initiating real estate and construction developments until the outcome of November’s US presidential election is known as they will then be able to better gauge the policy direction that will impact The Bahamas and their overseas clients.
“The data is very tricky to interpret that way,” Mr Sands replied, when asked by this newspaper
if it shows a construction slowdown. “The data on the ground, for all intents and purposes, is construction is faring really well and strongly.
“I spoke to a few retailers in the cement block production space today, and demand is outpacing production for the most part in New Providence. So much so that the BCA has been contacted and I spoke to some persons interested in establishing another block distribution plant in The Bahamas because the demand is so strong.
“If block demand is outpacing supply it must mean a lot of block work is going on, which means a lot of construction is going on.”
As for the $128m decline in the value of new building starts, Mr Sands said: “While we may have a lot of new construction, the value of that construction appears to be less than 2022.
“What does that data tell us? Does it mean persons are starting to feel a bit of a pinch, and starting to do smaller projects and not bigger ones? Does it mean that a lot of pent-up projects have been released but these are not large ones? I wouldn’t say it’s a negative in any way.
“It’s very difficult to interpret the data. It’s too early to tell just from the raw information we are looking at. You have to really analyse what what are the real underlying factors around the numbers we are seeing. It’s not something you look at on the surface and draw a conclusion. That would be erroneous.”
Mr Sands agreed “you could draw that conclusion” when asked if construction activity was returning to more typical levels following the post-COVID boom, but added: “There’s still a lot of projects waiting to happen. We do have some economic and political factors coming into play.
“There’s an election coming up in the US, so persons are waiting until after November. Foreign investors and privatelyowned residential buildings, they’re waiting to see the
outcome of the US presidential election. That’s going to be a determinant of how much of an increase or decrease we see in construction.
“It determines what Americans and second home owners do. Investors wait and see. If it goes the way they desire it to go, we will see a lot more movement. We wait until after that date to determine construction activity. Right now, it’s too early to draw a conclusion as to what the data means. It’s not that bad; the spread [between 2023 and 2022] is small.”
Mr Sands said there is “no doubt” that the 2023 data shows the Bahamian construction industry maintaining robust business volumes. “Construction activity is strong and healthy in most quarters,” he told Tribune Business. “Persons active in the space have sufficient work and still, for the most part, there’s a shortage of labour in the islands where most construction is happening.
“I think that activity is still steady and the sector is doing well. It would to have registration of contractors and regulation of the construction industry but, as the status quo exists, construction activity is pretty strong throughout The Bahamas.
“We’re still waiting to see if we have some movement with respect to the Board for the Construction Contractors Act. We’ll also see how this deal shakes out with the new New Providence hospital. We’re going to keep our eyes on it because we believe more Bahamians can participate in building this hospital.” According to the BNSI data, only construction completions showed any year-over-year improvement in 2023 as they increased in number by 6 percent, or 43, to 743 from 700 in 2022. But, in terms of value, these fell by a combined 10 percent or $43.922m, coming in at $391.53m compared to $435.452m in 2022.
The value of residential and commercial/ industrial completions fell by 8 percent and 22 percent,
respectively. The former declined by $16.942m, from $205.356m to $188.413m, while the latter category dropped from $226.547m to $176.166m in 2022. However, the total value of completed public sector building projects rose by $23.402m year-over-year to $26.951m.
The Statistical Institute, confirming that its report is compiled using data supplied by the Ministry of Works, Grand Bahama Port Authority (GBPA), Family Island administrators and the Local Government Department.
“The total number of construction starts in 2023 showed a decrease of 51 projects when compared to 2022, moving from 542 to 491 projects started,” it said. “There was also a decrease in the total value in construction starts of $128m. The private/residential sector led the decrease in the number and value by 55 projects and $136m respectively.
“The commercial/industrial sector remained at 50 projects started, but the value decreased by $16m. Conversely, the public sector had an increase in both the number and value of projects started. The number of public projects grew by four projects, while the value increased by approximately $25m.” As for completions, the Statistical Institute added: “The total number of construction completions showed an increase of 43 projects when compared to 700 projects completed in 2022 versus 743 in 2023. There was a decrease in the total value of completions of approximately $44m.
“The decrease in value was led by the private/ residential sector, which decreased by $17 million, while the number of projects in this sector grew by 17. The commercial/industrial sector also decreased in value by approximately $50m with an increase of 23 projects completed. The public sector experienced increases in both the number of projects completed of three, and value of $23m, when compared to 2022.”
Gov’t avoids bond markets for third consecutive year
(65.2 percent) of the gross financing needs in Bahamian dollars, and $628.3m (34.8 per cent) via a combination of internal foreign currency and external loans.
Of the $392.8m in foreign currency funding to be sourced from outside The Bahamas, the majority - some $360m - is to be sourced via commercial bank loans with no attempt made to tap the international bond markets. The $32.8m balance is to come from drawing down on existing loan facilities with the Inter-American Development Bank (IDB) and Caribbean Development Bank (CDB).
“Government is currently exploring multiple commercial loan opportunities for raising approximately $360m,” the annual borrowing plan said. “In light of the multiple foreign currency financing opportunities being explored, the Government retains discretion as to the final sequencing and composition of external funding sources, which will be determined with due consideration to market conditions, cost/risk factors and cash flow requirements.”
No further details were provided on these financing arrangements. The amount of foreign currency debt to
be sourced from external sources, meaning foreign lenders outside The Bahamas, was pegged at 206 percent - just over one-fifthof the Government’s funding requirements for the 20242025 fiscal year. However, one financial source, speaking on condition of anonymity, questioned whether the lack of detail on the Government’s external funding plans will impress the global capital markets and holders of existing Bahamian sovereign debt.
“It was very thin,” they argued of the 2024-2025 annual borrowing plan. “It will be interesting to see how the bond market reacts because of the lack of detail. That’s not much of a plan at all. We’re hoping that the banks lend us money. The purpose of the annual borrowing plan is to show the market you have your intended sources identified.”
The source added that the Government’s greatest financial challenge continues to be accessing foreign currency debt financing at competitive, affordable interest rates that do not burden Bahamian taxpayers with high repayments.
They added that the all-in interest rate of 8.6467 percent, secured on the $500m foreign currency loan taken
out earlier this year and partially supported by an IDB guarantee, was only just below the 8.95 percent coupon for the $600m international foreign currency bond placed in 2020 at the height of the COVID pandemic.
The global capital markets’ reaction to the Government’s 2024-2025 Budget has, to-date, been lukewarm at best with the prices and yields on outstanding and issued Bahamian sovereign bonds dropping slightly since its end-May unveiling although they appear to have stabilised now.
The $825m bond due to mature in 2032, with an 8.95 percent interest coupon, yesterday closed on the Frankfurt Stock Exchange at 93.85 - a more than 6 percent discount to par value, and a decline from its twoyear high of 99.26 which was achieved prior to the Budget. The yield has also moved back into double digits at 10.309 percent.
As for the $300m bond set to mature in 2028, and which carries a 6.95 percent coupon, it closed at 83.82 as compared to the 91.2 twoyear high achieved prior to the Budget. The yield demanded by investors was also in double-digit territory at 11.376 percent.
“Our bonds have stabilised at a lower price point,” the source said. “I don’t know if the annual borrowing plan will give the markets confidence they have the financing in hand. It will be interesting to see how the bonds perform over the next few weeks.”
As for domestic financing sources, the Government says it plans to secure a $100m commercial bank loan and roll over the $235.5m IMF special drawing rights (SDRs) that it obtained from the Central Bank of The Bahamas. The remaining $1.176bn of its $1.511bn domestic financing needs will be secured via new bond and Treasury Bill issues.
“Maturing bonds of $907.3m are expected to be refinanced with new issuances. With an incremental $167.7m targeted to be sourced from the market during the fiscal year, the bond issuances aggregate $1.075bn or 59.6 percent of domestic fund raising,” the Ministry of Finance’s plan said.
“Treasury bill tenders remain a central aspect of the annual borrowing plan funding operations. The intent is to rollover the combined $1.138bn in outstanding bills at end-June 2024. Intra-year, Treasury
UK LEGAL HEAVYWEIGHTS TO DECIDE $357M GBPA FIGHT
the first female judge to sit in the UK’s commercial court, as its member of the arbitration panel. With the Government and GBPA each having selected their arbitrator, the two chosen must now pick a chairman to head the arbitration panel from a shortlist drawn up and approved by both parties.
The appointments of Lord Neuberger and Dame Elizabeth indicate both sides are progressing slowly but surely towards arbitration hearings that will potentially have a profound impact on Freeport’s future governance and development, as well as ramifications for the city’s economy as well as that of the wider Bahamas, depending on the outcome.
A former Law Lord who sat on the London-based Privy Council, the highest court in the Bahamian judicial system, Lord Neuberger is also an ex-UK high court judge, Lord Justice of Appeal and Master of the Rolls before he became president of Great Britain’s Supreme Court between 2012 and 2017. Upon his retirement, his One Essex Court chambers biography reveals he has focused on practicing as an arbitrator. Dame Elisabeth, meanwhile, became the first woman to be appointed a judge on the UK’s commercial court in 2004. She was later named to the UK’s Court of Appeal in 2013, and became vice-president of the latter’s civil division in 2016. Dame Elisabeth is now also retired and, in common with Lord Neuberger, is at One Essex Court where she practices as “a full-time international commercial arbitrator”.
bill issuances will be utilised to smooth out short-term cash flow requirements.”
However, with local investor appetite increasingly tilted to short-term government paper because of the perceived risk, the Government plans to raise the bulk of its 2024-2025 bond financing via one-year issuances. These range in size from $70m to $234m, but demonstrate investor skittishness regarding government debt securities with maturities extending beyond three to five years.
Raising the bulk of its financing in Bahamian dollars is a key goal of the Government’s funding strategy as it reduces the pressure on the external reserves and likely involves lower interest rates. However, the source said the increasing reliance on short-term one-year bonds and paper could eventually become “problematic”.
“They’re getting into a cycle of near-terming the debt, which is find until some of the investors decide they don’t want to roll-over and want to be paid out,” they said. “A lot of institutional investors are at their prudential limits for government paper. They are tapped out.”
Besides such refinancing running counter to
the Government’s goal of extending out bond maturities, and smoothing its payment liabilities, the source added: “All this is tied back to their aggressive stance on collecting revenue. They [the Government] don’t want to bite the bullet on tax increases or expenditure restraint for obvious reasons, but at some point they have to appreciate there is no easy out.”
The Ministry of Finance’s plan said it will “seek to broaden retail investors in the domestic debt market through the launch of the Government’s savings bond during the opening quarter of fiscal year 2024-2025”, which means the current period between now and end-September. That product is being developed by the Central Bank.
“On the domestic front, the Government intends to proactively engage with major market players in the Government securities market using its existing quarterly forums. The soonto-be launched educational campaign on the upcoming savings bond programme will seek to deepen the pool of retail investors’ through enhancing their understanding of how the Government securities market operates,” the plan added.
UK legal involvement in the Government’s dispute with the GBPA extends beyond the arbitrators.
Besides Harry Matovu KC, the UK-based barrister from Brick Court Chambers who will head the Government legal team, the GBPA is understood to have bolstered its side with Jonathan Adkin KC and Ruth Jordan, attorneys with the Serle Court law firm.
They will partner with the GBPA’s Bahamian attorneys, Fred Smith KC of Callenders & Co, and Robert Adams KC of Delaney Partners, as the arbitration proceedings move forward. However, the process is still likely some way away from actual hearings for, besides naming the arbitration panel chairman, both sides have to exchange evidence via legal “discovery” and determine what will be used in the hearings.
“The Government and Port have appointed their respective arbitrators, but the chair has not yet been selected,” one source, speaking on condition of anonymity because they were not authorised to speak publicly, told Tribune Business. “They are both kind of chugging along, getting through the process.
“The Government is taking a very hardline position. I don’t think this is going to move quickly. There will be lots of twists and turns in this one.” Although no one approached by Tribune Business was willing to speak publicly, multiple sources confirmed the selection of Lord Neuberger and Dame Elisabeth. “It will be like going directly to the Privy Council,” one contact said.
The arbitration process could take months, if not years, and questions were again asked whether - given the “huge public interest” and issues generated by the dispute - the Government will agree to invoke the waiver in the latest Arbitration Act that allows both sides to agree private
An alternate member for the UK on the International Court of Arbitration, she is one of 25 persons listed as being able to serve on an alternative dispute resolution (ADR) panel to address issues that arise between the UK and Europe as a result of the former’s so-called Brexit.
NOTICE
VIEW WIDE LIMITED
N O T I C E IS HEREBY GIVEN as follows:
(a) VIEW WIDE LIMITED is in voluntary dissolution under the provisions of Section 138 (4) of the International Business Companies Act 2000.
(b) The dissolution of the said company commenced on the 4th July, 2024 when the Articles of Dissolution were submitted to and registered by the Registrar General.
(c) The Liquidator of the said company is Bukit Merah Limited, The Bahamas Financial Centre, Shirley & Charlotte Streets, P.O. Box N-3023, Nassau, Bahamas
Dated this 5th day of July, A. D. 2024
Bukit Merah Limited Liquidator
hearings should be made public.
Besides the potential impact on Freeport’s very future, and the potential fall-out for the GBPA’s 3,000-plus business licensees and residents, the very nature of the Government’s $357m payment demand raises questions involving the spending of public/ taxpayer monies and the collection of taxes in the Port area.
“Why does the Government want to keep all this secret? An important matter like this should be transparent and open to the public,” one source told this newspaper. “Why make the demand and keep all this secret? Why not let everyone know what’s going on, the licensees and everyone else?”
The PricewaterhouseCoopers (PwC) accounting firm was hired by the Government to analyse, and calculate, just how much the GBPA owes the Public Treasury for public spending in Freeport that exceeds the tax revenues generated by the city. The GBPA denies that anything is owed, alleging that Freeport contributes
around $200m annually in tax revenues.
The Government is seeking reimbursement under section one, sub-clause five, of the Hawksbill Creek Agreement, Freeport’s founding treaty, which stipulates that it can demand payment from the GBPA for providing “certain activities and services” if the costs involved exceed certain tax revenue streams generated in the city. It plans to bill the GBPA for a further $75m during the current 2024-2025 fiscal year.
Prime Minister Philip Davis KC has consistently asserted that fundamental change is required for Freeport to achieve its true economic potential. He has argued that the GBPA has failed to live up to its governance and development obligations under the city’s founding treaty, the Hawksbill Creek Agreement, and that the Hayward and St George families are not up to the task required.
The original 1955 clause required the GBPA to provide rent-free office and living accommodation to government employees
LUCIDA ASSETS LIMITED NOTICE
N O T I C E IS HEREBY GIVEN as follows:
(a) LUCIDA ASSETS LIMITED is in voluntary dissolution under the provisions of Section 138 (4) of the International Business Companies Act 2000.
(b) The dissolution of the said company commenced on the 4th July, 2024 when the Articles of Dissolution were submitted to and registered by the Registrar General.
(c) The Liquidator of the said company is Bukit Merah Limited, The Bahamas Financial Centre, Shirley & Charlotte Streets, P.O. Box N-3023, Nassau, Bahamas
Dated this 5th day of July, A. D. 2024 Bukit Merah Limited Liquidator
involved in the “the maintenance of law and order, the administration of justice, the general administration of Government, the collection of Customs Duties and other revenue and the administration of the Customs Department the administration of the Immigration Department, Post Offices” and other functions to be mutually agreed. The GBPA was also required to “reimburse the Government annually” within 30 days of detailed accounts being presented by the latter, but only if “Customs Duties and emergency taxes received by the Government in respect of goods entered or taken out of bond at the Port Area are less than the amount” spent by the Government.
Multiple sources have questioned why the Government has waited until now - some 60 years or six decades - to try and enforce a Hawksbill Creek Agreement clause dating from the 1950s and 1960s. They argued that it smacks of the Davis administration using this as leverage to force the Haywards and St Georges, the GBPA owners, to sell and exit after they declined to accept the Government’s purchase offer.
And the Hawksbill Creek Agreement clause at the centre of the dispute may not be all it seems. It was last amended in 1960, when Freeport was five years-old, the city’s development very much in its infancy, and the only revenues earned by the Public Treasury at the time from the Port area were Customs duties. While it indeed stipulates that the Government should not spend any more in the Port area than it earns in revenues, and that any excess costs over and above the latter should be reimbursed by the GBPA, that clause has not been amended to account for either the Freeport of today or multiple taxes that have been added since then.
Thus VAT, departure taxes and a host of other revenue streams have to be factored into the calculation of whether the Government is spending more than it is earning in Freeport. Several sources have suggested that, rather than go to arbitration, the two sides should instead negotiate amendments to section one, sub-clause five of the Hawksbill Creek Agreement to ensure it is fit for purpose and attuned to the modern world’s realities.
NOTICE
FREEDOM MANAGEMENT HOLDINGS LIMITED
N O T I C E IS HEREBY GIVEN as follows:
(a) FREEDOM MANAGEMENT HOLDINGS LIMITED is in voluntary dissolution under the provisions of Section 138 (4) of the International Business Companies Act 2000.
(b) The dissolution of the said company commenced on the 4th July, 2024 when the Articles of Dissolution were submitted to and registered by the Registrar General.
(c) The Liquidator of the said company is Bukit Merah Limited, The Bahamas Financial Centre, Shirley & Charlotte Streets, P.O. Box N-3023, Nassau, Bahamas
Dated this 5th day of July, A. D. 2024 Bukit Merah Limited Liquidator
