New financing plan for toll highway
Published:Friday | January 21, 2011 | 12:00 AM
Minister of Finance Audley Shaw says the Government is now working on a plan to secure cheaper financing for Jamaica's ambitious toll road project that would cut at least 10 percentage points off the current loan costs.
"I now have to be working at a refinancing programme for Highway 2000 in order to give the thing breathing room so that, over time, we can expand the highway, and we can complete not just the Mount Rosser bypass," he said.
"We can't do it at 12 per cent, but we can do it at between two and three per cent, and that is what I'm working on."
Shaw made the disclosure on Thursday night, while addressing the Mayberry Investment Forum at The Knutsford Court Hotel in Kingston.
But, when pressed further on it, Shaw said he might have pre-empted Minister of Transport and Works Mike Henry, who will be making a Cabinet submission on the matter.
"The minister has a submission which is shortly to go to Cabinet and it has been submitted to my ministry for commitments, I don't want to make any announcements," he said.
But he insisted that having spent more than US$100 million on the Mount Rosser bypass the Government has to take the necessary steps to complete it.
Shaw maintained that the highway project was financed at too high an interest rate.
"You don't borrow money at 12 per cent to build highways, because it is destined to put that programme in bankruptcy," he had said, responding to questions from the forum participants.
Shaw said the Portmore leg of the highway was financed at 12 per cent, but that a government bond was also floated to finance the project at 18 per cent.
"I am simply making the point that you don't construct highway at those levels of interest rates," Shaw said, adding that users of the highway would be called upon to pay too much in toll charges, in order to generate sufficient returns on the investment.
Highway 2000 was a programme initiated under the Patterson administration at the beginning of the new millennium with a public-private partnership with French company Bouygues Travaux, whose subsidiary TransJamaican Highway Ltd holds the build-own-operate-transfer concession.
Jamaica's interest is overseen by state company, National Road Operating & Constructing Co Ltd.