(Following is a statement in full, provided The Freeport News by former Prime Minister Rt. Hon. Hubert Ingraham. A three-time prime minister, Mr. Ingraham and Free National Movement Governments ran the country during the periods 1992-2002 and 2007-2012. He now says, today’s government should buy the Grand Bahama Port Authority instead of Our Lucaya Hotel):
“Grand Bahama has been a special economic sector since its inception. It has had booms and, if not busts, then periodic economic doldrums. An overview of its recent history will help us to understand and appreciate the current situation.
The exemptions in respect of real property tax and business licence fees provided for under the Hawksbill Creek Agreement expired in 1990 and sometime between then and the General Election in August, 1992 the last Pindling-led Government extended the provisions to take them up to August 1993.
To stimulate investment interest in Freeport, the first FNM Government caused the Freeport Grand Bahama Act of 1993 to be enacted. The Act extended the life of the expiring real property and business licence exemptions for an additional 22 years, that is, up to 4th August, 2015.
As a requirement for this extension the Grand Bahama Port Authority (the Port) was obligated to fulfill a number of infrastructure and other works. These included: providing the land and contributing to the cost of construction of two new senior high schools (later named to honour Sir Jack Hayward and Edward St. George); construction of the new Judicial Centre; providing land for constructing of the new Northern Police Force Headquarters; build the Grand Bahama Sports Centre, construct a library; enhance the Conch and Vegetable Market; make a specified dollar contribution toward the implementation of Local Government in Freeport; develop a number of new second home subdivisions and collaborate with the Government in the promotion of Freeport as a desirable place in which to invest.
The extended exemptions in respect of real property tax and business licence expired in 2015. These were extended once more by the Christie-led Government for a one year period to May, 2016.
I am advised that the Grand Bahama (Port Area) Investment Incentives Act of 2016 conditionally extended those tax concessions for a further 20 years.
Hutchison-Whampoa (Hutchison), an Anglo-Chinese international business conglomerate owned by Hong Kong-based Li Ka-Shing, entered the Grand Bahama (and Bahamas) economy in the 1990s when it became a 50 percent owner of the Grand Bahama Harbour Company (GBHC), and later a 50 percent owner of the Grand Bahama Development Company (DevCo), the land-holding company of the Grand Bahama Port Group of Companies.
Hutchison developed a Container Transshipment hub at Freeport – one of the principal purposes for the creation of Freeport in the mid-1950s.
It very successfully developed the Freeport Container Port - now in its 4th or 5th expansion.
The development of the Grand Bahama Shipyard followed.
Subsequently the upgrade of the Freeport International Airport and the beginning of an airport transshipment facility were undertaken.
As owner of 50 percent of all the vacant land owned by the DevCo in Grand Bahama, Hutchison had an interest in the economic success of the island. It gave support to the development of upscale housing in Freeport.
The hotel sector in Grand Bahama had been in decline for some time before the 1992 election of the FNM to Government and before the entry of Hutchison into the Freeport Economy.
In keeping with the Hutchison’s development of a hotel division within its international holdings, the Company ventured into the hotel sector in Freeport in the late 1990s. Hutchison purchased the Government-owned hotels – Lucaya Beach and Holiday Inn.
The Government also facilitated Hutchison’s purchase of the old Atlantic Beach Hotel, which was subsequently imploded. The Our Lucaya Hotel was constructed on the site. It is now called the Grand Lucaya Resort.
An additional government-owned property in Freeport, opposite the old Atlantic Beach Hotel, was sold to the Christiansen group who developed the Pelican Bay Hotel and Marina property.
Hutchison has invested heavily into its hotel properties in Grand Bahama offering some of the best terms of employment in the sector including health insurance for its employees. Hutchison has kept the Grand Lucaya Resort open notwithstanding sustaining heavy operational loses.
Further, the economic fallout from the hurricanes impacting Freeport beginning in 2004 has been compounded by the loss of Edward St. George, Freeport’s principal promoter, the subsequent passing of its other significant investor, Sir Jack Hayward, and the great global recession beginning in 2007/8.
The disastrous legal battle over ownership of the Port which ensued following the passing of St. George left the Port a sorry shadow of its former self.
The Port Authority needs new leadership. And, Freeport needs new and additional investment.
The owners of the Port, even before the passing of Sir Jack Hayward, have from time to time indicated an interest in the sale of the company, however satisfactory terms have not been reached.
In light of the foregoing and considering the future of Grand Bahama, I am of the view that the Government should not purchase the Grand Lucaya Hotel; instead it should seek to purchase the Grand Bahama Port Authority from the Hayward and St. George families and also acquire their families’ 50 percent ownership interest in the DevCo, the Harbour Company, the Airport Company and other related entities.
Grand Bahama needs a reset, and the ownership of the Port by the Government with some other financially capable strategic partner(s), including Bahamian investors, could be that reset.
The ownership of the Port and 50 percent of the Port Group of Companies by the Government (and its private sector partners) should establish a New Entity heavily managed and directed by private experts.
Such a permanent solution to the vagaries of the Freeport economy will obviate the “boom” and “bust” experiences associated with this area of The Bahamas for years that I choose not to recall.