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A $30 million loan guarantee to help pay for improvements to the water and sewage system in the East End has been issued by the Government.

Curtis Dickinson, the finance minister, told MPs yesterday the loan guarantee was given to the Bermuda Land Development Corporation.

Mr Dickinson, speaking in the House of Assembly, said the loan would be used to back work in St George’s and St David’s.

He added: “This development will be crucial to the Town of St George's, as well as the new St Regis Hotel.

“It will connect water storage infrastructure at BLDC with the town and introduce new water production and sewage treatment facilities.”

Mr Dickinson said: “The end result will be a solution to the failing sewage infrastructure within the town, increased water production to service the town, as well as residents of St George’s and St David’s, and it will introduce a new resource of non-potable water available for flushing, irrigation and service to the new hotel.

He added: “This initiative is the end result of the East End water master plan study undertaken some years ago.

“It will in the future be replicated on a much larger scale for the entire island during future phases of the integrated waste and water master plan.”

Mr Dickinson said the guarantee was one of three issued by the Government, but, despite a request for details of the other two, no further information was released.

The Ministry also declined to reveal how, or if, the $30 million guarantee was linked to the $5 million in contracts announced last year for the waterworks project.

But Mr Dickinson released a list of bodies that had outstanding guarantees.

The list included the Bermuda Housing Corporation, the West End Development Corporation, the Bermuda Economic Development Corporation, the Bermuda Hospitals Board, the Morgan’s Point resort development, and the Bermuda Tourism Authority.

The Bermuda Casino Gaming Commission, Hotelco, the firm behind the new St Regis Hotel in St George’s, and the BLDC were also listed.

The Government announced earlier this year that it planned to push ahead with a $10 million guarantee for the Bermudiana Beach resort in Warwick.

Mr Dickinson said if the guarantee had been given, the resort would have been included on the list.

Mr Dickinson added that the BLDC guarantee was consistent with the Government’s “deliberate approach” to guarantees that would benefit the island.

He said: “This initiative is focused on revitalisation of central infrastructure, which will not only provide future services to residents, but also provide opportunities for employment as contractors execute the works.

“Whenever possible, we will continue to take proactive steps to help to spur job growth and facilitate initiatives with positive short and long-term impact on the Bermudian people and economy.”

Lieutenant-Colonel David Burch, the public works minister, announced last year that a steering committee, in collaboration with the BLDC, had “initiated a project that would provide potable water, sanitary sewer and reclaimed water infrastructure to the areas of Southside, the islands of St David's and St George's, which includes the new St Regis Hotel”.

Colonel Burch added that the project would be a template for an island-wide water and wastewater master plan and Chicago-based Milhouse Engineering & Construction had been retained to supply programme management and some engineering services.

He said the first phase would include seven contracts with a combined budget of $5 million that would be put out to tender.

Colonel Burch added: “A financial feasibility report for Phase 1 has been completed and delivered to BLDC and is being used to raise capital for the construction phase of the project.

“Both local and international financing entities are being considered.”