Vanuatu Paper Obtains Copy Of Controversial Airport Agreement

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Singapore-based company granted 50-year deal to build, own, operate facility

By Bob Makin

PORT VILA, Vanuatu (Vanuatu Daily Post, June 10, 2014) – Four months after the formation of their government last year, former PM Carcasses and DPM Natapei signed a 50 year Agreement with the company called Vanuatu Trade Development Pte Ltd (VTDPL), incorporated in Singapore, to build, own and operate an international airport for Port Vila.

It was agreed that four unconditional and on-demand promissory notes for a total of US$350 million would be issued to VTDPL whose membership is unknown.

Daily Post has obtained a copy of this first major development Agreement of the Carcasses Government, achieved without any recourse to a tendering process.

The document clearly lacks any advice of the State Law Office.

It is simply signed by the former PM and DPM and Mak Kum Hoong David and Eric Ong Kok Eng who had presumably set up the company VTDPL, the seal of which was attached.

Daily Post has been advised that changes were made to the Agreement, possibly following the huge public outcry when the existence of such an agreement previously became known. However, these changes have not been made publicly known.

The document was continually kept secret by the former government and still is effectively ‘secret’ whilst the ad hoc committee investigates and whilst its enquiries continue.

There had not been any aviation or tourism industry pressure for a new airport of any kind for the capital — only demands by the airport managing authority (Airports Vanuatu Limited — AVL) and airline users of Bauerfield. This was for funding of urgently needed runway repairs and taxi-way and plane parking extensions. Indeed the concessionary company (VTDPL) was requiring the termination of AVL in the Agreement. (AVL, it should be noted, also has responsibilities for outer island airfields.) VTDPL was to be given the operator status for Bauerfield immediately commercial operations under the Agreement were to begin.

The Agreement contains a variety of ‘conditions precedent’, such as the promissory notes already mentioned. If these were not met by either side it seems the Vanuatu Government would be required to pay for the Bauerfield works.

The Agreement signed on 27 July last year was to give VTDPL the exclusive right to "develop, finance, design, construct, modernise, operate, maintain, use and regulate the use by any Person of the Airports in any manner it deems appropriate and without any interruption or intervention by the Government or any Government Authority." State authority and responsibility were in this manner to be assigned to the already contracted company.

In addition, VTDPL would "determine, adjust, demand, collect, retain and appropriate the Aeronautical Charges and Non-Aeronautical Charges and such other revenue and income as may be generated from the operation of the airports." It could also sub-lease or license any part of the airports to anyone. VTDPL, initiating the Agreement, effectively put itself in a position to collect any and all profits for the fifty year term of the Agreement. The government agreed.

VTDPL was to be given precedence in any new Vanuatu airport development. One wonders whether this meant even Sola and Motalava. All current projects were to be likely to stoppage for 6 months to give VTDPL the chance to consider whether their precedence right would operate. Overflight Agreements with Fiji, already operating, were similarly to be suspended to give VTDPL the chance to consider purchase of the necessary equipment. VTDPL is required to take over Tanna and Norsup re-development with no compensation required to AVL for work possibly already undertaken.

One of the requirements of the Agreement is for the Vanuatu Government to assist VTDPL bring into the country free-of-charge any persons VTDPL might require visas or entry permits for. Ni-Vanuatu may well wonder whether the company intends to bring its membership to a less crowded island than Singapore, where certainly some reside.

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