President Surangel Whipps Jr. said the Public Private Partnership (PPP) entered into by Palau to renovate and expand the airport terminal building is a “revenue lost” for the country.

In his State of the Republic Address (SORA) on Tuesday that the PPP has put Palau into a $40 million debt.

“Another hurdle we are facing is revenue lost when we entered into a Public-Private Partnership (PPP) to expand our airport terminal building.”

In 2019, the Japan International Cooperation Agency (JICA) signed a $28 million loan agreement with the Palau International Airport Corporation1 for the renovation, expansion and management of Palau International Airport for a period of 20 years.

PIAC, the Palau International Airport Corporation (a partnership between Palau government and SOJITS and JATCO) took out a loan for the construction and improvement of the new terminal and is responsible to pay back the loan. The joint venture company manages and operates Palau international  airport terminal and pays back the loan for the next 20 years.  

The project was touted as Palau’s first-ever major public-private partnership (PPP) for infrastructure development and is expected to serve as a model for other projects. 

The PPP was done during the term of former President Tommy Remengesau Jr. 

The project involves the construction of an extension to the existing terminal building of 3,700 square meters as well as the construction of support buildings. In addition, the existing terminal will be renovated to expand processing and commercial facilities.

 Whipps said the PPP not only put the country in debt but has reduced revenue that used to pay the operations to the tune of $3 million.

He also said Palau has to give up control of the fees for the next 25 years. 

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