Mon | Oct 23, 2017

CHEC land deal excluded from toll - 1,200 acres still unidentified for transfer

Published:Sunday | May 1, 2016 | 12:02 AMMcPherse Thompson
An aerial view of sections of the North-South Highway.
1
2

The land that Government agreed to give China Harbour Engineering Company (CHEC) as offset for the cost of developing the North-South Highway appears to have not been a factor in the calculation of the toll, which motorists have bashed as being exorbitant and unaffordable.

The explanations given by state-run highway agency National Road Operating and Constructing Company (NROCC) are at best opaque but seem to suggest that one of the reasons that is the land parcels are yet to be identified.

It costs $600 to $3,700, spanning four classes of vehicles, to use the North-South toll road, which runs from Caymanas in St Catherine to Ocho Rios in St Ann.

Some 1,200 acres of state-owned lands have been promised to CHEC. However, ownership of the properties could revert to the Government of Jamaica (GOJ) were the Chinese company to fail to develop them within an agreed time frame.

“Please note that the lands to be provided as part of the concession agreement are provided on condition that they be developed within the time frames agreed. If the lands are not developed, they are returned to the GOJ,” NROCC said.

The time frame appears to be specific to each parcel at transfer to CHEC-controlled Jamaica North-South Highway Company (JNSHC), the vehicle used todevelop the road link.

NROCC said in written responses to Sunday Business queries that since the full 1,200 acres have not yet been agreed on, “no costing can be attributed to the lands at this time” – an apparent confirmation that the land did not factor in the computation of the toll rates.

The time frames for development of the properties have not been finalised with JNSHC.

The North-South highway cost US$730 million to develop, inclusive of the Mount Rosser Bypass started by TransJamaican Highway.

CHEC has been granted a 50-year concession to recoup the investment. The agreement is 20 years longer than other concessions granted by the State for other public assets. That, plus the side deal for the land were sweeteners handed to CHEC for essentially bailing out the former Simpson Miller administration when it ran into technical problems and could not get the highway link built.

The agreement called for the developer to undertake whatever rectification work was required on the Mount Rosser Bypass.

So far, none of the 1,200 acres has been handed over to CHEC, though at least one prospective property have been identified.

Back in October 2014, NROCC managing director Ivan Anderson told Parliament that the Chinese had set their sights on property at Roaring River, St Ann, as part of the financing agreement to construct the highway.

Then, in May last year, then Transport and Works Minister Dr Omar Davies indicated that CHEC was interested in a 150acre property near the highway in St Ann, saying that the Chinese company would invest another US$500 million to build 2,400 hotel rooms there.

Davies did not name the property as Roaring River, but the location he identified as situated west of Ocho Rios, St Ann, suggests that it was.

Director of Technical Services at NROCC Stephen Shaw told Sunday Business that the 1,200 acres due to CHEC could be used for housing, hotels, and any other development that the operators believe could generate added traffic for the tolled highway.

Following the opening of the North-South link in early March this year, motorists and groups such as the Truckers Association voiced strong objection to what they described as the exorbitant toll rates to travel on that corridor.

In that context, Sunday Business asked NROCC what the implications would be for the agreed capped toll level and revenue forecast over the life of the concession agreement.

MODIFICATIONS

The state agency said that any modifications “as it relates to extension of the concession period or capped toll level would be based on negotiations” between CHEC as developer and NROCC as grantor.

It added, however, that “We are not aware of negotiations taking place to modify either the concession period or the capped toll level.”

CHEC also has exclusive rights over advertising boards, signage, and any other form of marketing and advertising for profit along the highway, with all revenues from the activity it is to keep.

It also has exclusive rights to construct gas stations, food and beverage facilities, restaurants, restrooms and resting places, or motels, and to retain all revenue derived from the commercial activities.

mcpherse.thompson@gleanerjm.com