Honduras looks to restart Palmerola airport P3

The conversion of the Palmerola into a civilian airport, on and off the agenda in Honduras for roughly a decade, is once again on the table.

After the most recent public-private partnership (PPP; P3) to develop the airport was cancelled last year, the Honduran government has announced it is seeking private partners for the project.

In last year's tender, Honduran company Constructura de Servicios Aeroportuarios Integrados (Saisa) was the only bidder on the project, and was awarded the contract to design, finance, construct, maintain and operate the airport last January by PPP agency Coalianza.

But the project was cancelled after a delay in contract signing on the part of the concessionaire that resulted from the government's lack of a USD$30 million financing partner to compensate adjacent landowners around the airbase and invest in public works, according to former superintendent of PPPs and ex-commissioner of Coalianza Carlos Pineda. He also noted that Saisa “failed to establish guarantees for financing the project” in an interview with local news outlet LaPrensa.hn.

Then, in January this year, ElHeraldo.hn reported that specialists from Spanish firm Advanced Logistics Group (ALG) were working with Coalianza and the Ministry of Infrastructure and Utilities (Insep) to “define the investment programs for Palmerola,” quoting Secretary of Infrastructure and Public Services Roberto Ordonez as saying that the government expects construction to start this year and be finished by 2017.

The newly-revised PPP contract was developed with the help of ALG and the Peruvian Helios Corporation, who together with the Honduran government completed financial and technical viability of the project.

The overall cost of construction for the project this go around is estimated at roughly $136 million. The Spanish government agreed to finance the first $52 million, leaving about $84 million to be financed by a private partner. The Saisa contract, by comparison, came with an estimated total investment of $107 million.

According to Coalianza member Miguel Angel Gamez, who spoke about the project with Tiemo.hn, four companies – one from Honduras and the others from the US, Mexico, and Italy – had purchased tender documents for the construction of the airport as of Thursday, April 16, and at least four more were expected to purchase the documents by the weekend. In addition to those eight interested parties, ALG reportedly told Tiempo that another 22 companies expressed interest in the tender when it was first announced.

Also known as Soto Cano Air Base, Palmerola is home to the Honduran Air Force Academy and has for many years housed about 500-600 US military troops, which use it as a launch point for counter-narcotics missions in the region. At the height of Contra operations, there were 10 times as many US troops based out of the airport. As part of the conversion to a civilian facility, it has been reported that US military operations could possibly be relocated to the more secluded Mosquitia region that lies along the coastal region and near the Nicaraguan border.

The airport originally cost about $30 million to build. Opened for operations in 1981, it has by far the most capable runway in the country at 8,850 feet long and 165 feet wide. It is hoped that by converting Palmerola into a civilian airport, much of the country's air traffic could be redirected from the allegedly inadequate Toncontin airport in Tegucigalpa, the capital city 30 miles to the south, which services almost one-third of Honduras' international air travellers.

The Honduran airport system is currently composed of four international airports, which in 2011 serviced 1.8 million travellers. Gamez reported that Coalianza hopes to reach final close on the Palmerola contract by August this year at the latest.