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Highway plan not viable

Published:Wednesday | May 2, 2012 | 12:00 AM

A STUDY commissioned by the National Road Operating and Constructing Company Limited (NROCC) has revealed that the proposed US$600-million Highway 2000 north-south link project was not commercially viable.

The government-owned company also divulged in April to the Office of the Contractor General (OCG) that China Harbour Engineering Company (CHEC) advised the administration it would not participate should the project be put to competitive tender.

In a 12-page statement to the media yesterday, Contractor General Greg Christie said his office was alarmed at NROCC's position set out in a letter to the National Contracts Commission (NCC) that the project was not financially viable in terms of return on investment over the life of the proposed concession.

According to Christie, NROCC, in a presentation to the NCC on March 13, 2012, advised the commission that, "In order to determine the viability of the project [it] also commissioned its own advisers Steer Davies Gleave (SDG) to review the project".

The results of the analysis using SDG revenue projections showed that the project was not viable if it was to be undertaken on commercial terms at the available interest rates.

The study also showed differences in projected "SDG versus CHEC revenues ranged between 268 per cent and 277 per cent for the period 2015 through to 2019.

"Based on the foregoing, the ability of the project, even over 50 years, to repay the loans is extremely doubtful and could not be undertaken by any other company but a Chinese firm given their availability of cash," the study pointed out.

SDG is said to have been the traffic adviser to NROCC since 2000.

Irregular transaction

Christie argued that the purported tender in the form of an "unsolicited proposal", which has been submitted by CHEC, was a highly irregular transaction which could not be matched by any other entity and/or person and would, as a consequence, have no relevance in a competitive tender process.

The OCG boss highlighted that the Ministry of Transport and Works and NROCC had placed on record that there was no bilateral agreement between the Government of Jamaica (GOJ) and its Chinese counterpart "which is informing and or which has informed the GOJ's acceptance of the 'unsolicited proposal' from CHEC.

"It is also the case that the GOJ is purportedly not in receipt of any form of concession from either the Chinese government and/or CHEC, as it regards the construction of the north-south link for Highway 2000."