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The Sangster International Airport in Montego Bay, Jamaica.

J’cans face multimillion-dollar claims from airport, toll road operators

The Sangster International Airport in Montego Bay, Jamaica.

Jamaicsan taxpayers are now faced with multimillion-dollar claims by the operators of the island’s two main international airports and TransJamaican Highway, operator of the East-West leg of Highway 2000 toll road, as a result of losses sustained from COVID-19.

The claims also arose from the resultant ban on travel imposed by the Government of Jamaica (GOJ). The claims by MBJ Airports, operator of the Sangster International Airport in Montego Bay, and Mexico-based Grupo Aeroportuario del Pacifico SAB De CV, operator of the Norman Manley International Airport in Kingston, were done under the force majeure clause of their private/public partnership (PPP) with the GOJ. A force majeure clause in law is for unforeseeable circumstances that prevent an entity or someone from fullfilling a contract.

(Photo: El CEO)

The claims were made on the people of Jamaica given the continued negative impact of the pandemic on international travel and the resultant revenue loss by the operators. The claims by the airport operators are now being assessed by the Government.

On December 14 last year, the Cabinet approved the claims and appointed a negotiating team to assess further proposals by the concessionaires to facilitate economic recovery and long-term sustainability. The exact amounts of the claims are not known but the Jamaica Observer has been reliably informed that each of the claims are in the order of several million dollars.

Auditor General Pamela Monroe-Ellis highlighted in her examination of the GOJ’s interim Fiscal Policy Paper (FPP), which accompanied the First Supplementary Estimates for 2021/2022 that “there was no reference in the Fiscal Risk Statement, regarding the size of the claim, funding arrangements or implication for the Public Debt”.

Jamaica’s Auditor General Pamela Monroe-Ellis (File photo)

According to her, “In a context of Jamaica’s commitment to achieving the revised debt to gross domestic product target of 60 per cent by end-FY2027/28, we expected some indication in the Fiscal Risk Statement of the magnitude of the size of the claim, source of funding and implication for the public debt stock. However, the interim FPP did not quantify the size of these losses or claims from the concessionaires and whether an assessment was done to measure the potential impact on the fiscal accounts and the public debt stock.”

In spite of the losses being claimed by the airport operators, the auditor general pointed to the interim FPP, where it was reported by the Jamaica Customs Agency that passenger arrivals for the April to July 2021 period increased by approximately 758 period when compared to the similar period in 2020. This was the result of the reopening of the country’s borders and the subsequent corresponding increase in traffic.

A toll both on East-West leg of Highway 2000

It has been assessed that, “nonetheless, given the continued impact of the pandemic and the attendant uncertainty, continued, effective monitoring will be critical”.

KCT COVID-19 impact doesn’t warrant a force majeure claim

The interim FPP pointed to other PPPs, which were affected making reference to the case of Kingston Container Terminal (KCT) operations, which was not significantly impacted by COVID-19. According to Monroe-Ellis, the operation at KCT “has not been significantly impacted by the pandemic to warrant a force majeure claim“.

A section of the Port of Kingston in Jamaica (File photo)

In the case of TransJamaica Highway, the company has already submitted a notice of claim for revenue losses. However, these claims would be subject to further assessment based on a clause in the north-south highway concession agreement that allows for an extension of the agreement to facilitate the recovery of losses incurred.

The extent of the losses impacting these concessionaires has however not been quantified as the primary cause, the novel coronavirus pandemic, is still in effect. The Auditor General’s Department has advised that the National Road Operating and Constructing Company, which is the public body responsible for the two highway concession agreements, closely monitor the situation to manage potential fiscal risks.