Thu | Aug 17, 2017

Shaw heading to China for Southern Highway funds - Southern highway redesign to save US$100m

Published:Friday | January 20, 2017 | 1:00 AMSteven Jackson
Minister of Finance Audley Shaw speaks at the Mayberry Investors Forum on Wednesday at Knutsford Court Hotel in Kingston.

Finance minister Audley Shaw says that Jamaica will save about US$100 million ($12 billion) from revamping the first phase of the Southern Coastal Highway.

Shaw said at a forum on Wednesday night that he plans to travel to China next month to sign the loan agreement for the project.

Phase 1A of the project linking Harbour View to Morant Bay was projected to cost US$500 million and an additional US$400 million under Phase 1B to extend the highway onward from Morant Bay to Port Antonio.

The redesign, according to Shaw, will chop the first leg to about US$385 million and the second leg to US$200 million. The savings under 1B would fund other road networks.

"It's important that we set the record straight," said Shaw while departing from his wide-ranging speech on the economy at the Mayberry Investors Forum.

"When we took over, we saw a plan for US$500 million to build a toll road from Harbour View to Morant Bay. We said to ourselves, 'How on God's Earth would this one carry the economic return?'."

The former Simpson Miller administration indicated at the time of the announcement of the project in December 2015 that 1A would cost an estimated US$385 million. However, Shaw said that the US$385 million represented the preferential loan agreement with China and that land acquisition would have pushed the price tag to US$500 million.

"How would we justify that expenditure from Harbour View to Morant Bay? It is not a statement of disrespect to the people of St Thomas, but business is business and expenditure is expenditure," he said.

Last June, the Holness administration announced changes to the Southern Coastal Highway but did not quantify the savings at the time.

"So we said to the Chinese Government that this cannot work. We went back to the drawing table. We have now re-scoped it such that of that US$385 million, land acquisition has been brought down to a nominal US$15 to US$20 million because much of that land is owned by Government," said Shaw.

The previous administration approved a contract for China Harbour Engineering Company (CHEC) to undertake the design, improvement, and construction of sections 1A and 1B of the Southern Coastal Highway Improvement Project. The Harbour View to Morant Bay section covers some 43 kilometres, with Morant Bay to Port Antonio measuring approximately 65km.

Shaw says that the US$200 million of savings from Phase 1B will finance the East-West Highway from May Pen to Williamsfield.

"Now isn't that good re-scoping of money," he said. "And that toll road will become a part of the payment plan for the money we borrowed from the Chinese. I am going to China next month, God willing, to sign that agreement with the Ex-Im Bank."

steven.jackson@gleanerjm.com