OT 305: Letter to the Chairman of the Committee from Douglas Alexander MP, Secretary of State for International Development

 

Thank you for your letter of 5 February to Douglas Alexander, about the St Helena Airport.

 

The decision to pause the negotiations on the project has been taken in the light of the changed global economic climate which now presents a very different setting from when the project was tendered in 2007. As you will appreciate the government has a responsibility to be absolutely sure that possible levels of expenditure remain appropriate. Pending a decision in regard to the future of the negotiations, it would be inappropriate to comment further at this time.

 

The uncertain medium and long term consequences of the changed economic conditions have inevitably complicated a range of issues associated with undertaking a project of this kind, which is already a significant logistical challenge. These additional considerations need to be taken into account.

 

I cannot say how long it will be before we are able to announce a way forward. However, Mike Foster had a meeting with representatives of Impregilo, the bidding company, and have explained the Government's position to them.

 

You will, I hope, understand that we cannot enter into detailed discussion of our estimates of relative cost between air and sea access for St Helena at the present time.

 

In regard to the contribution that tourism could make to St Helena's economic and social development, a previous (and publicly available) feasibility work has made a case for seeing the sector as the cornerstone of a regenerated economy, contributing to an eventual end-point of moving out of aid dependency. Given the very long horizons involved, these forecasts must at all times be subject to significant uncertainty and treated with necessary caution.

 

I note your Committee's own conclusions on the project in its recent report on the Overseas Territories that it is important for the government to be satisfied that this is the appropriate way forward.

 

I am copying this letter to Malcolm Bruce MP, Chairman of the International Development Committee.

 

 

17 February 2009