Palau International Airport (Rhealyn C. Pojas) File Photo
The $28 million dollar loan from Japan International Cooperation Agency (JICA) to renovate and expand Palau’s existing airport terminal no longer require a guarantee or signature from the Republic of Palau, according to the letter from President Remengesau to Senate President Hokkons Baules and House of Delegates Speaker Sabino Anastacio.
The loan has been offered to the Palau International Airport Cooperation (PIAC), the airport management company, on a “non-recourse” basis, “with a step-in right to management concession as collateral, according to the letter. As a collateral, JICA will step in and appoint a new company to manage the airport until the debt is paid if the loan defaults.
“This means Palau will not be borrowing any money, nor will Palau be responsible for any loan payments….We get the benefit of having our airport improved and expanded without committing any public money, undertaking any public borrowing or risking public asset” stated President Remengesau’s letter to Palau congress leaders.
Subsequently JICA requested for Palau’s approval of this arrangement since Palau is the owner of the airport. In addition, JICA requested for tax exemption for prime contractor, in line with Japan’s ODA policy. The tax exemption is for gross receipt and import taxes and applies to Taisei, the prime contractor. This exemption does not apply to any subcontractors or to PIAC, the airport management company.
Last Friday, Senate added a floor amendment to House bill 10-99-8S, HD3, SD1 to allow the President to provide a GRT and import tax exemption to the prime contractor of the airport for the construction phase of the airport. House adopted the measure onits third and final reading on Tuesday and transmitted the bill to President Remengesau Jr. for action.
The airport improvement and expansion project is expected to break ground next month and projected to be completed before the OCEANS 2020 Conference here in Palau. (L.N. Reklai)