A. W. SangsterIN EARLIER papers the implications of Highway 2000 were discussed and a number of questions raised as to its feasibility and prospects. The fundamental question was asked as to whether the country could afford, or ought to afford the project with its high overall projected capital cost of some US$850 million.
It was noted that the current position on the project is for phase 1- Kingston to Williamsfield with the Portmore Causeway and the Dyke Road - to be started first. This would be followed subsequently by phase 2A (an exchange at Bushy Park to connect to Ocho Rios) and 2B (Williamsfield continuing to Montego Bay).
It was also pointed out that phase 1, with an indicative costing of some US$300m, does not involve any foreign borrowing by Jamaica. This total consists of US$50m in contractor's equity, $150m in contractor's debt and $100m in local infrastructure bonds. It was pointed out that the overall success of the project is critically dependent on the success of phase 1. Some of the questions that must concern us are the following.
The Environmental Impact. Mr. Kingsley Thomas advises that the National Resources Conservation Authority (NRCA) has given the green light to the project in terms of the process leading to the approval of the initial environmental impact assessment analysis. It should also be noted that the early proposals - which showed the highway going through the Cockpit Country - have been altered, partly due to the outcry at the time from the environmentalists.
The Social Impact: A number of obvious social concerns must be raised. How would Jamaicans react to the discipline of a toll road? How would the road be built when our recent experiences with overseas contractors - the North Coast Highway - have been so disastrous? It is projected that the highway will be fenced, properly controlled and will have a different management system associated with both its construction and maintenance.
The Financial Implications: Limiting the discussion to phase 1, there is a 35-year concession period for the operators and the returns are projected as follows:
The revenue from tolls will be used for the operation and maintenance of the highway.
The equity and debt portions will be amortised over a 15-year period.
The infrastructure bonds will be amortised over a 30-year period.
The 5-year period (between 35 and 30) years will be the subject of a revenue-sharing agreement.
The Development Implications: This is undoubtedly the most important aspect of the overall project. In the previous article I quoted World Bank figures which identified highways as a catalyst for development. What are the possible development ideas and projects which could spin off from the highway and lead to job creation and wealth generation? Among those that are listed are:
The development of the old Vernamfield base as an international airline hub for cargo traffic.
The development of the Milk River Spa and its environs as a major health and recreational centre.
The establishment of an industrial park, recreational facility and mixed residential areas on some 11,000 acres (4,450 hectares) of land in the Clarendon panhandle. (See Figure)
What will be critical will be the nature of private sector involvement and partnership in the venture. The ultimate question is should the country go ahead with the project? There are still many sceptics who are not convinced of its viability. Others argue that the returns on that kind of money spent on information technology would bring more certain and quicker returns.
Having spent several sessions with the enthusiastic Mr. Kingsley Thomas I have tried to critically evaluate the project for Jamaica's good.
I would support phase one for the following reasons:
It does not involve an increase in our
foreign debt,
It involves some major international
partners who have bought into the
concept and
It can be used for an evaluation of the project and its overall feasibility. Like all projects there are risks but this one is no worse than some of the ones we have seen in recent times in this country.
A.W. Sangster is former
president of the University of Technology.
