Howai considers borrowing on international market to complete $7.5 billion Point Fortin road project
By Ria Taitt Political Editor LOAN FOR HIGHWAYGovernment may have to borrow money to complete the $7.5 billion Point Fortin Highway.
Finance Minister Larry Howai told the Standing Finance Committee of the House of Representatives, at Tower D, International Waterfront Centre, Port of Spain, that Government, which had been funding the project through the Treasury since its inception in 2011, may have to turn to the financial market to raise the funds needed to complete the project because of the fall in oil and gas prices.
Oil settled at US$48.65 yesterday, almost 60 per cent below the figure upon which the 2015 budget is premised. Government had based the 2015 budget on an US$80 a barrel oil price.
The project, officially called the Solomon Hochoy Highway Extension, the largest infrastructural project ever undertaken in the country, has been embroiled in controversy from the start.
“We have funded the project in the most appropriate way...out of Treasury deposits...since 2011, without increasing our overall debt position. But given where we are now, perhaps we may decide that we have to get supplementary funds from the market because of what is happening now with the price of oil and gas,” Howai said.
Works Minister Suruj Rambachan told the committee the project was 43 per cent complete.
He said the total payment to the contractor to date was $2.8 billion, and the total expenditure on the project to date was $3.7 billion. This included “everything”—advances that were paid to OAS, land acquisition, consultancy to Acom, management fees, outreach, design, contingency and construction.
In response to questions from ColmImbert, he said this left a payment of $3.7 billion still to be disbursed.
Both ministers were speaking in the Standing Finance Committee Meeting, in which Government sought approval for an additional “supplementary appropriation” of $450 million in expenditure for the fiscal year of 2014. Government also sought approval for a variation of expenditure of $505 million.
In explaining the supplementary expenditure, Rambachan said his ministry had asked for $900 million to enable Nidco (National Infrastructure Development Company) to meet its financial obligations for the Point Fortin Highway in fiscal 2014.
He said savings under Local Gov-rnment and the Ministry of Housing of $250 million and $200 million respectively provided $450 million. He said an additional $450 million was required by way of supplementation of the appropriation for his ministry.
Rowley said this development was troubling because the country was “now being told” that . “Why was this information withheld from all of us in this country and we are only now finding out that Nidco was not successful in raising money...even though a Government guarantee was offered and, in lieu of that, we are now told that this significant sum was floated from the Treasury,” he said.
Rambachan said the Government was “just about getting ready” to open the section of the highway between St Mary’s and Grants Trace, which is a substantial section and would be opened by the end of April.
He said the Dunlop section to Road No 8 would also be opened this year. He said by the end of February, the Debe Interchange would be opened.
“We are just about completing working on the Mosquito Creek area.... We had some challenges because of the soil, but we have overcome those challenges and paving works will soon begin there, including the completion of the new Godineau Bridge and the new Bridge at Paria Suites,” he said.
“I assure you (the committee members) that the work that has been completed (on the project) is in line with the payments that have been made,” he stressed..
Finance Minister Larry Howai said the funds for the highway had been raised by Treasury deposits from the inception since funding was approved in 2011.
“Initial disbursements were made from the Treasury and there was no need to go out and increase Government’s borrowing, given the fact that through our Treasury deposits, we had funding that would have been sufficient to meet the required costs.
“We decided not to proceed to raise additional loans, unless we absolutely need to do so. Where we can fund it out of our existing cash flows, we would seek to do so. And during the course of 2014, we were able to do so,” he said.
Howai said one did not need the $7.5 billion right away but needed this money over a period of time.
“And it didn’t make sense raising the money, putting it on a deposit and incurring interest costs while you are waiting for the drawdowns to take place,” he said, adding there was no intention of mislead.
He said he recalled two previous occasions where sums were taken from the Treasury and that was on the record.