$1.2B deficit signalled doom for airport – 2016 audit report

Jul 17, 2019 News

The Cheddi Jagan International Airport Corporation (CJIAC) has had issues being profitable for a number of years. That has resulted in a deficit which could spell its demise. This is according to the audited financial statements of the corporation for the year 2016.
The contracted auditors, Chartered Accountants PKF Barcellos Narine & Company, have audited the financial statements, comprising the corporation’s financial position as at December 31, 2016, the statement of comprehensive income, statement of changes in equity and the statement of cash flows for the year then ended, a summary of significant accounting policies and other explanatory information.
In the firm’s opinion, the statements presented fairly, and its financial performance and cash flows for the year ended in accordance with International Financial Reporting Standards.
However, attention was drawn by the firm to a Material Uncertainty Related to Going Concern; a key audit matter.
The corporation’s total operating income had amounted to $1,427,904,021 and its operating expenses amounted to $1,464,753,207, which resulted in an operating loss of $36,849,186. There were also non-operating expenses of $70,471,305.
That took the total net comprehensive loss in that year to $107,320,491.
Added to the accumulated deficit brought forward from the previous year, the corporation’s accumulated deficit as of December 31, 2016 became $1,217,698,664.
In its address of this deficit, the auditors stated, “We draw attention to Note 29 in the financial statements, which indicates that the corporation has an accumulated deficit of G$1,217,698,664.”
It continued, “As stated in Note 29, these conditions, along with other matters, indicate that a material uncertainty exists that may cast significant doubt on the corporation’s ability to continue as going concern.”
That was repeated by the Auditor General, Deodat Sharma.
The audited financial statements for that year were the last statements to be laid in the National Assembly, so it is unclear what developments could be made.
The airport’s management has been advised to evaluate its operations with the view of addressing and reducing the deficit.
Attempts to contact the corporation’s Chief Executive Officer, Ramesh Ghir, were unsuccessful.
Over the past eight years, US$150M was committed and expended to facilitate a renovation of the corporation’s port, so business would improve.
The former People’s Progressive Party (PPP) administration had marketed the plan as one that would make the airport a hub for Africa.
Even then, there were issues.
When the current administration took over in 2015, it claimed that major issues were found, and that changes needed to be made.
Further, it claimed that the Chinese contractor, China Harbour Engineering Corporation (CHEC) had claimed for US$90M with only seven percent of the work completed. A significant portion of that money was paid out. The contract was supposed to be completed in 32 months after being signed in 2011, but has dragged on to 2019.
The plan that was passed from the PPP to the Coalition Government in 2015 included a brand new terminal and eight air bridges, among other things.
Now, instead of a brand new terminal building for the Arrivals and Departures along with a longer runway, there was renovation of the old terminal buildings and a smaller structure for the Arrivals. The number of passenger bridges has been reduced from eight to four.
The public is yet to see the modified design. Opposition Leader Bharrat Jagdeo has said that he believes that about US$30M is unaccounted for.
Patterson told reporters last week that the airport should have been completed and handed over on June 30, 2019. That date has passed. The public waits.

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