By KEVA LIGHTBOURNE, Guardian Senior Reporter, kdl@nasguard.com

Parliamentarians yesterday passed a resolution for the government to guarantee an $11 million loan to finalize settlement and complete repair works to the main runway at the Lynden Pindling International Airport (LPIA).

The re-building of runway 14/32 began in May 2004 by Canada-based Lagan Holdings Limited, and was scheduled to be completed the following year. But because of a number of construction defects, the Airport Authority has been forced to borrow money to correct the problems.

The resolution was passed just days after House members agreed to amendments to the Airport Authority Act.

In moving the resolution, Prime Minister Hubert Ingraham said while the Airport Authority ought to have been able to raise the $11 million on its own, the funds should be considered a "parting gift" from the Bahamian people.

"This guarantee is in some respects a parting gift from the people of The Bahamas to the Airport Authority, which has been graduated from government guarantee and placed on a path of self-sustaining growth and development," the prime minister told MPs.

However, he explained that the bank is not prepared to give the Airport Authority an $11 million loan on its own, and therefore the government has agreed to guarantee the loan to pay for the increased cost of the job of repaving the runway.

"We think that under all of the circumstances it is a justified payment by the Airport Authority," Ingraham said.

Lagan was contracted to carry out the works in 2004 at a cost of $35.6 million. But according to the prime minister, the company has received payment in the sum of $38.2 million.

He explained that Lagan had made a claim for payment in the sum of $55 million, which the Airport Authority did not accept. But after discussions, Ingraham said the parties have agreed that the sum of $49.2 million, which represents the contract cost after variations and increases, and based on the advice of Earth Tech Canada Inc. and the Ministry of Works.

And, that is where the additional $11 million comes in.

"The measured works by the engineers is $39.7 million. They have agreed to the sum due for increased customs duty of $1.3 million. They agreed to the variation order, that is the acceleration of the works due to the arrival of works due to the arrival of Virgin Air at $1.4 million. They agreed to the prolongation cost of $4.3 million, increased costs of $635,200, reclaimed asphalt payment surplus material etc., and they all come to the $49.2 million."

Last week, Ingraham disclosed in the House that improvements to the LPIA will cost $450 million, and will be funded exclusively from money derived from the airport through aeronautical, landing and terminal fees, passenger facility charges and other fees applied directly to air carriers, aircraft operators and passengers.