In the May 13, 2016 draft of the business case for the Terrance B. Lettsome International Airport expansion, private consultants suggested reducing costs by “assessing cost of local rock,” but they didn’t explain what that could mean.
A recently leaked tender document from government’s preferred bidder, the state-owned China Communications Construction Company, provides more clarity.
According to the May 5, 2016 document, which was obtained by the Beacon, CCCC bid $153,432,572 on the project, but is willing to reduce that price if government is willing to allow the state-owned firm to “mine the required amount of rocky materials.”
It doesn’t seem that government is planning to take CCCC up on its offer, however, as the price quoted in the company’s tender document is the same as the one government quoted when it announced late last month that it’s moving forward with CCCC.
The two-page tender document also outlines more details of the project, including other costs that will have to be borne by taxpayers.
Aspects of the project that would need to be funded by government include the design for the runway embankment structure; the environmental impact assessment; and other costs associated with receiving permission to build, according to the tender.
Government would also need to provide land “free of charge” so CCCC can set up a site office, “camp,” storage yard, precast yard, concrete and asphalt batching plants, a disposal site, parking, and other temporary structures, the document states.
The tender document also states that CCCC’s $153 million bid would require exemption from taxes such as customs duty, value-added tax, income tax “and so on.”
The other bidder — a consortium made up of the Canada-based IDL Group, the Cayman Islands-based McAlpine Limited, and the Virgin Islands-based ADC Construction Company — bid $198,810,525, according to government. It is unclear if that consortium, whose bid has not been made public, made similar stipulations as CCCC.
When the CCCC tender document was aired in the media last week, its provisions raised questions as to what Premier Dr. Orlando Smith meant when he said recently in House of Assembly that government is not negotiating any “concessions” with the project bidders, such as exemptions from income taxes, social security taxes, National Health Insurance taxes and work permit fees.
At a press conference on Monday, Dr. Smith told the beacon that it “depends on what you mean by concessions.”
“In projects involving government — the hospital, all these projects — the material imported, normally we don’t charge duty,” he said.
In response to a Beacon inquiry, Financial Secretary Neil Smith further explained government’s position on the issue.
Government designed the runway embankment structure in order to deal with environmental issues, and the design was included in the tender documents sent to the bidders during the procurement phase, according to Mr. Smith.
“This is not a concession,” he said.
Mr. Smith also said the territory does not have an income tax or VAT, and thus exemptions from those are also not concessions.
“Payroll tax is a potential concession, but the government of the Virgin Islands has not indicated that they would like to make any concession on this, at least not to the best of my knowledge,” he added. “As a point of information, the construction of the hospital benefitted from a payroll tax concession if I recall. However, I have not up to this point received any indication that this is to be done on the airport expansion.”
The financial secretary also stressed that the government “has not negotiated yet.”
In its Dec. 27 announcement that CCCC would be its preferred bidder, government stated that it hoped to finalise a contract within three months.