TransJamaican still has some right to road-rival compensation

Despite an amendment to the highway concession agreement to waive any right to compensation by TransJamaican Highway with respect to the widening of the Nelson Mandela Highway, the Jamaican Government will still have to pay if it further develops that corridor.

That’s according to Managing Director of the National Road and Operating Constructing Company, NROCC, Ivan Anderson, who said that in relation to the work that has been done on the Mandela Highway so far, TransJamaican, the toll concessionaire for the East-West corridor of Highway 2000, cannot claim for loss of revenue, given the amendment.

But it still can claim for other improvements to the Mandela Highway that impact its operation, he said.

“In relation to the widening that has been done, they can’t claim for that. But if we were to go back and widen Mandela from six to eight lanes, going to Spanish Town for example, then TransJamaican can still claim,” Anderson said in an update to a story carried in the Financial Gleaner on February 21 regarding the adjustment notated in the TransJamaican Highway IPO prospectus.

The second restated concession agreement was amended as of January 29, 2020, to waive any claim or right to compensation by TransJamaican Highway in respect of the widening of Nelson Mandela Highway and the completion and commissioning of the North-South Highway Phase 2A, according to the prospectus.

Anderson said there was indeed a revision in the concession agreement for the widening of the Mandela Highway work that has already been done.

“But they can claim for any work which is done in future or any work within the relevant transport corridors, meaning anything around the highway,” he said.

“There’s a map included in the concession agreement which basically creates a buffer around the highway, and that includes all the roads which run parallel to the highway, like Mandela, like Old Harbour Road.”

According to the prospectus, subject to certain exceptions provided in the concession agreement, NROCC is liable to compensate TransJamaican for revenue lost if the Jamaican Government promotes transportation means that compete with the toll road or does not approve toll rate adjustments in line with the concession agreement.

The second amended and restated concession agreement also grants an option to renew the agreement for a further 35 years on certain terms and conditions; acknowledge routine and periodic maintenance of roads within the relevant transport corridors, even if the result is to increase the speed limits on such roads, will not trigger a right to compensation payment; and permit the transfer of shares in TransJamaican pursuant to trading on the Jamaican Stock Exchange or on any recognised stock exchange.

NROCC’s principal business is to represent the Jamaican Government’s interest under the toll road concession agreements, which includes monitoring TransJamaican’s performance to ensure compliance with the requirements of the concession agreement and monitoring any new toll roads added to the network.

TransJamaican Highway’s current business activity is the development, operation and maintenance of the toll road in Jamaica known as ‘Highway 2000 East-West’ under a concession agreement with NROCC, as grantor.

In accordance with the concession agreement, NROCC must compensate TransJamaican for the loss of revenue to the Jamaican Government or any third party acting on behalf of the Jamaican Government, if NROCC either develops a new public passenger rail link between Spanish Town and Kingston or enhances the speed or capacity of competing roads within the transport corridor served by the toll road, and, as a consequence of such developments or road enhancements, the toll road’s traffic is reduced.

mcpherse.thompson@gleanerjm.com