The primary form of income for the Project Company is revenue from the operations of the airport, and there are no subsidies from the Procuring Authority or government. The Project Company income includes regulated revenues, such as airport-related taxes, as well as non-regulated income from airport operations. At the time of writing, the Project Company's revenue is roughly in line with expectations.
The payment mechanism during construction is such that the Project Company only receives half of the revenue it earns during the construction phase, with the other half being held in an escrow account until construction is complete. The Procuring Authority sees this as a key to success, as it provides a strong incentive for the Project Company to complete construction on time. In previous brownfield projects, the Procuring Authority realised that operational revenue was being used to finance construction, and this was delaying progress. Incentivising prompt financing and construction was particularly important for the Barranquilla Airport, given the fact that a lot of construction work was due to be completed in a relatively short period of time. As this can result in significant financing costs for the Project Company, following a new law passed in 2018, future contracts will allow for more regular milestones permitting a more progressive release of revenue as the construction advances.
The PPP contract has a defined mechanism for the Procuring Authority to allow for an extension of time. The Project Company can request, and pay for, an additional three months to complete the construction.
Once this period has expired, the Project Company can present its case for an additional 60 days to complete any remaining, non-essential works. In the case of certain one-off events, the Project Company can also request a time relief in case of delays. There is no provision in the PPP contract for economic rebalancing; if any changes regarding the economics of the project are needed, they will have to be effected through contract renegotiation.