Honduras’ Palmerola airport concession at risk

Concessionaire Palmerola International Airport (PIA), operator of the main airport serving Honduran capital Tegucigalpa, is at risk of losing its contract after the infrastructure and transport ministry (SIT) accused it of irregularities and said the tender process was opaque and fraudulent. 

On Tuesday, minister Mauricio Ramos offered a press conference, accompanied by members of the country’s airports authority, in which he slammed the operator for benefiting from the concession at the expense of state coffers, orchestrating what he called a “con.”

According to the minister, capex for the project was US$191mn, of which the State invested 66% and the concessionaire only 33.8%.

“Total investment in Palmerola tops US$191mn, with an investment from the concessionaire of US$64.6mn, and from the state of Honduras of US$126mn. Nearly US$103mn was [invested] in works and direct purchases to meet the airport’s operative needs, and giving away US$22.9mn to the concessionaire,” Ramos told reporters. 

“The State of Honduras should be receiving 66% of the profits that the airport generates,” the official added.

As a result, the minister said the concession would reviewed by the attorney general’s office (PGR), while a delegation of government officials will travel to the United States to negotiate with EMCO group, of which PIA is a part.

PIA won the tender to design, build, finance, operate and maintain the airport, which was opened in 2021 during the administration of Juan Orlando Hernández – who currently stands trial in the US accused of drug trafficking.

Among the supposed irregularities, Ramos claimed EMCO had no expertise in the construction and management of airport infrastructure and had not been transparent about its relationships with partners involved in the project. 

“EMCO had no expertise or experience in airport management whatsoever, and back then it could not show that it had the financial ability to carry out these works. It fraudulently reported that Munich airport was a joint operator, but they only had a consulting relationship,” said Ramos. He added that PIA has been exempted from paying taxes, which represents losses for the government that amount to US$16mn.

On Wednesday, PIA published a release denying the accusations and stating that the airport was “functional and successful, and brings multiple benefits for Honduras.”

Erick Spears, legal representative for PIA, said in a press conference the same day that the intention of the government is to give the concession to a Chinese company after the recent visit of President Xiomara Castro to Beijing.

“With these comments about a company from a country that we have recently established relations with, it has come to our attention that they already have the company that will manage Palmerola,” he said. 

Should the negotiations between the government and EMCO fail, the latter said it will request international arbitration.

Palmerola international airport is the largest airport in Honduras, with a 40,000m2 area, 13 boarding gates and four levels. It also has a 3,000m2 cargo terminal and 1,200m2 of parking lots. 

Photo: Former president Juan Orlando Hernández during the opening of Palmerola airport. (Source: AFP)