In the light of falling oil prices, Government may have to seek a loan to finance the completion of the $7.5 billion Solomon Hochoy Highway extension to Point Fortin. This was revealed by Finance and the Economy Minister Larry Howai in response to questions from Opposition MPs during yesterday’s Finance Standing Committee meeting in the Parliament Chamber, Tower D, Waterfront Complex, Port-of-Spain.
The price of oil dropped to below US$50 per barrel this week and Prime Minister Kamla Persad-Bissessar is scheduled to make a comprehensive statement today on government initiatives to deal with the reduced earnings. The 2015 budget was based on an oil price of US$80 a barrel. Yesterday’s Standing Finance Committee meeting was called to vary and supplement the 2014 budget. It was chaired by House Speaker Wade Mark.
Howai, responding to a question from Point Fortin MP Paula Gopee-Scoon, said, “Given what is happening now with oil prices, we may need now to consider going into the market to borrow the funds and if we need to do so, we will do so,” Howai said. He added that “up to the time when we did this particular transaction, we were able to fund it out of our existing cash flows.”
Earlier, in response to questions from Opposition Leader Dr Keith Rowley, Howai said the “initial disbursements” for the project were from treasury notes. He said “there was no need to 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.”
Howai said it would not have been sensible to raise the money and put it on deposit, as Government would have incurred interest costs prior to drawing down the funds. He said there was no intent to mislead the nation on that issue and stated repeatedly the Government did not want to borrow funds for the project unless it was necessary.
Howai said he was unable to say when the project manager, the National Infrastructure Development Company, was stopped from securing a loan for the project as he was not in office then. The Works and Infrastructure Ministry was the first to be examined by the committee. It was given an additional sum of $450 million for the highway project. Works Minister Dr Surujrattan Rambachan said the funds were transferred from the Ministries of Local Government and Housing and Urban Development.
Rambachan said the money was required to “retire” advances from the Treasury. “Arrangements for financing of the project have not as yet been finalised,” he said. He said the project was 43 per cent complete and several segments of the project would be opened to the public later this year. A sum of $2.8 billion was paid to the Brazilian contractor OAS Constructora and an additional $4.7 billion has been paid to cover other expenditure, including advances to OAS.
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Leader of the Highway Re-route Movement Dr Wayne Kublalsingh has been on a hunger strike for over 100 days in an attempt to get the Government to accept calls for mediation over the Debe to Mon Desir segment of the highway. He said the route would have a negative impact on the environment, but the Government has rejected his claim and the project continues apace.
Also, leader of the Movement for Social Justice (MSJ) David Abdulah last month called for the controversial segment to be halted and the entire project reviewed in the light of falling oil prices.