Premier says UK reviewing airport business case
Premier Dr Natalio Wheatley has confirmed that the United Kingdom is reviewing the business case for the proposed Terrance B Lettsome International Airport expansion and that the territory is awaiting approval before moving forward with the next stage of the project.
Speaking on a recent airing of Talking Points, the Premier said the government is ready to proceed but remains constrained by borrowing limits that require UK consent.
“Right now, we are waiting on the United Kingdom to give us the go-ahead so we can send out the RFP because, of course, we will exceed our debt ratios,” Dr Wheatley stated.
He explained that exceeding the territory’s borrowing thresholds means the government cannot advance the project without approval from London. “That’s our hold-up right now,” he added.
The proposed expansion of the airport has been a longstanding policy objective of the government. The administration has argued that extending the runway would improve airlift, increase visitor arrivals and strengthen the tourism product.
During the programme, Dr Wheatley said the business case has already been prepared and that the government intends to release details once certain elements are addressed.
“I believe the minister was saying that once they redacted some aspects of it so that, you know, when they send out the RFP, it doesn’t distort the process, I believe he was willing to send out some information,” he said.
The Premier noted that the government would determine “what redacted version of the business case can go out” once clearance is received.
Under the territory’s constitutional and financial framework, the UK retains oversight of borrowing beyond agreed ratios. The Premier indicated that the runway extension would likely exceed those limits, making UK approval a necessary step before issuing a request for proposals.
The airport project forms part of the government’s broader infrastructure agenda, which also includes road rehabilitation, water improvements and sewage upgrades.
Dr Wheatley did not provide a timeline for when a decision from the UK is expected. He maintained, however, that once approval is granted, the government would be positioned to move to the procurement phase.
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So, what happens if UK analysis concludes that the business case does not support increasing the Territory’s debt ratio?
Some facts to consider:
1. Territory just borrowed $ 100 million, under somewhat opaque terms (i.e. interest rate, terms, how default would be handled, etc). At some point, payments will come due. At 5% for 20 years, comes to about $ 8 million/ year that has to come from somewhere
2. Projected airport costs are in the $ 500 million range today. That is more than our current GDP
3. Given that it would take going on 5 years, and factoring inflation, and the fact that the Territory has yet to finish any project within budget (and on time), final costs will in excess of $ 1 billion.
4. At an interest rate of 5%, $ 1 billion over 20 years works out to monthly payments of about $ 6.6 million. Passing it on as airport tax would make airfares here absurd. Consider also that $ 6.6 mill/mo works out to close to 20% of the Territory’s GDP. So where is that money going to come from? And, what happens if there is a default?
Presumably all this discussed in the business case that the public has yet to see. One hopes it is released since the airport expansion is a massive project for such a small Territory
The histories of FedEx and Ring offer a useful reminder of the limits of relying solely on a business plan. Fred Smith first proposed the FedEx concept as an MBA student, only to see it repeatedly dismissed—not merely over the numbers, but because the idea itself was judged impractical; today, it is an $88-billion company. More recently, Jamie Siminoff’s Ring doorbell business plans was rejected on Shark Tank by a panel of 4 accomplished business experts, yet it went on to generate more than $1 billion in sales before being acquired by Amazon.
These cases underscore a broader truth: a business plan should be understood as a guide—a framework for assessing possibilities and risks—not as a final verdict on whether an idea deserves to proceed. Intuition is a core leadership competency, while the business plan reflects the discipline of management; the two are complementary, not interchangeable. At critical moments, leadership requires the willingness to move forward even when conventional analysis insists failure is inevitable—and that willingness, more than spreadsheets alone, is often the essence of leadership itself.
Fair enough but neither Mr. Smith (FedEx) or Mr. Siminoff (Ring) wrote business plans for project funding in the same range as the US GDP. And, both had a substantially larger potential customer base.
What a stupid, undergraduate business school point to make.
“here are 2 examples of people who succeeded despite the advice!”.
What about the other million that failed because it was obvious their plan didn’t add up?
Premier said that he will spend every penny of the 100 millions he borrowed..however I want to make it very clear that giving away does not count as spending.
Redacting what? Oh yes, the names of the rich BVIslanders who will build the airport and make themselves even more cash by destroying our nature and overcrowding/stressing our islands infrastructure.
without a strong business case anyway.
Let’s hope the UK sees that this is all about the big guys making themselves more money while damaging the BVI.
The existing airport is more than adequate in size, all it needs is internal work to make better use of the space. That leaves just the runway to deal with and estimates should be obtained from the US, China and other countries that have runway experience. Stop the stupidity of insisting it should be carried out by locals, go for the best price the territory can get.