11 May Jamaica got a good deal on highway, says Phillips
Opposition Leader Dr. Peter Phillips today laid out the benefits of the major development thrust that began in 2011 which saw hundreds of acres of government land transferred to Chinese developers. The project has delivered a modern highway, significantly reduced transportation costs and flung wide open a corridor to new jobs, housing and tourism opportunities.
“The benefits that will come about in the midterm and long term as a result of the construction of the North South Highway are invaluable to the country.” Phillips told reporters at a press briefing at the West Kings House Road office of the Leader of the Opposition.
“Already there is a reduction in the cost of transporting goods and service across the country, reduction in rental cost in Kingston and increase in local tourism.”
According to Phillips there is the potential for development along the strip in terms of housing, communities and businesses.
In clarifying the Opposition’s position on the North South Highway land issue, Phillips walked the time line that led to the Peoples National Party supporting and eventually inking the agreement that had started with the JLP-led government.
Dr. Phillips said the project was started by a French firm that was to work on Section 2 of the highway – the Linstead (St. Catherine) to Moneague (St. Ann) of the route. He explained that the French firm had abandoned the project when it encountered unexpected geological challenges, the correction of which neither they nor the GOJ had the financial capability to fund.
He revealed that it was the Golding-led JLP Administration that had initiated contact with the Chinese Government about the project. Dr. Phillips said as a result of these initiatives, on May 27, 2011 a Framework Agreement was signed by the GOJ and CHEC, which sought to address not only the corrective measures for Section 2 but also the construction of Section 1 – Caymanas to Linstead and Section 3 – Moneague to Ocho Rios.
The Implementation Agreement, which emerged from the May 27, 2011 Framework Agreement was duly signed, on behalf of the GOJ on November 16, 2011, by the then and now Minister of Finance Audley Shaw, the Minister of Transport & Works Mike Henry and the Minister of Housing, Environment & Water Horace Chang.
The Opposition leader told reporters that all financial analyses of the project recognized that, given the high cost of solving the various engineering challenges, the revenues from the toll would never be adequate to service the loans used to construct the highway.
“It should be noted that, in addition to the US$600 M expended for construction, the agreement with CHEC called for the GOJ to be repaid US120 M which it the GOJ had invested in Section 2, when the French firm was in charge of the project. All in all, this represented a total commitment of US$720 M by CHEC in this project.
In recognition of the non-viability of the project, the Implementation Agreement called for the transfer of five square kilometres (500 hectares) of land owned by the GOJ and/or its agencies, to CHEC for development purpose.
Dr. Phillips pointed out that CHEC had identified lands belonging to the UDC that it wanted to utilize.
However, the UDC wanted compensation for the property and a valuation was to be done before it was handed over.
The lands would be used for the construction of hotels and housing, as well as commercial and industrial developments.
The rationale was that the profits from such developments would partly offset the losses which would be incurred from operating the highway.
The development was an idea that promised huge job opportunities and would be economically viable and placed no cost on the public coffers.
According to Phillips, Jamaica was getting a highway along with major commercial development on unused land in a single deal and without forking out the funds that the nation did not have.
Apart from the transfer of the 500 hectares of land, there is no other financial input required of the GOJ.
As part of the agreement the lands have to be fully developed within 12 year or will revert to GOJ ownership.
“It is generally accepted that this is a good deal and great value to Jamaica,” Dr. Phillips said.
The Opposition Leader applaud Golding for going forward with the development when he did as it would have been shortsightedness on the part of government to not have done so.
“When Norman Manley built a highway in swamp land in Westmoreland people said that he was wasting money but had the road not been built we would not have Negril with its thousands of hotel rooms. At the end of the concession period of 50 years the highway reverts back to the ownership people of Jamaica, and the hotels or any other entities that are built will always be there to the benefit of the people of Jamaica,” he said.