AAJ to downsize after NMIA sale
Published:Wednesday | October 27, 2010 | 12:00 AM
K divestment of the Norman Manley International Airport would likely increase the possibility of a merger of air and seaport oversight agencies, Earl Richards has said.
The Norman Manley divestment, which is structured to include the domestic aerodromes as sweet-eners, will result in Airports Authority of Jamaica (AAJ) being stripped of its management role for Jamaica's airports.
Richards, who is the AAJ's president, is not sure his agency will remain intact once a deal has been closed for Jamaica's second-largest airport. The largest, Sangster International, was divested in 2002 and will remain in private hands for three decades.
"We will continue to administer the assets as well as to have oversight over the two master concessions (but), under the public sector reorganisation project, they are thinking about amalga-mating the AAJ with the Port Authority of Jamaica," Richards told Wednesday Business.
The airports boss said the merger is expected to be done after the divestment of the airport, as laid out in a Green Paper tabled in Parliament.
"After privatisation, all the operational functions which now belong to the AAJ will go to the new entity," Richards said of the transfer of planned transfer of functions to the party to which the facilities are to be privatised.
It is understood that the NMIA and aerodromes would be managed under a concession agreement similar to that which governs Sangster's.
The AAJ will become a small operation, whose role would be limited to contract administration, said Richards.
At the Montego Bay airport, the agreement between MBJ Limited, who are the private operators, and the AAJ, the approved airport operator, the private firm is responsible for the management of the day-to-day operations in keeping with specific perform-ance criteria and prescribed international standards.
Regular performance reviews and other contract administration oversight functions are conducted by AAJ, as specified under the concession agreement. In addition, an airport forum is held biannually to provide stakeholders with the opportunity to provide progress reports and to address issues.
Under the 30-year concession and lease agreement, operational responsibility will revert to the AAJ unless the agreements are successfully renegotiated.
The AAJ is vested with the ownership of government airports and several aerodromes and other assets valued at J$12 billion.
The PAJ, at triple its size with assets estimated at J$42 billion, is set to take on increased business once the Caymanas Economic Zone located at the Kingston-St Catherine border, and the development of the railway linking it to the sea port, take off.
Under the CEZ, Jamaica hopes to tap into a US$33 billion international trade flow by opening transhipment and warehousing hub. The idea is that goods from China and other Asian countries would be readily available to investors from the Jamaican economic zone, thereby cutting travel cost to the East.
The aerodrome now at Tinson Pen in Kingston, which is excluded from the NMIA divestment, is expected to be relocated to the Caymanas lands.
"When all of this will happen is another question," Richards said.
The NMIA divestment terms are also still being finalised.