Dionne Rose, Business Reporter
A stretch of highway 2000. - File
TransJamaican Highway, the vehicle used by the French construction company, Bouygues Travaux, to develop Highway 2000, is planning a US$330- million bond to help finance the proposed 33-kilometre section of the toll road between Sandy Bay, Clarendon, where it now ends, and Williamsfield, Manchester.
Some of the cash will also be used to write down expensive loans held by TransJamaican, according to Ivan Anderson, the chief executive offer of the National Road Operating and Constructing Company (NROCC), the govern-ment agency that promoted the highway and helped raise money for its earlier legs.
The Jamaica Government will not back the instrument, which TransJamaican is expected to take to market during the first quarter of 2009, Anderson told the Financial Gleaner.
"This is a private bond with TransJamaican Highway, which is not guaranteed by the Government of Jamaica," he said.
TransJamaican Highway officials were not immediately available for comment, but Anderson suggested that TransJamaican would float a 20-year instrument mostly on Caribbean markets.
Existing debt
According to Anderson, of the cash TransJamaican expects to raise from the bond, approximately 40 per cent US$130 million - will be used to pay down existing debt. The remainder will be used to finance the Sandy Bay/Williamsfield leg of the highway and meet other costs during its construction.
Initially, this segment of the highway was projected to cost US$120 million. It is unclear, however, if this price tag has since been adjusted.
Its construction should have started more than a year ago. It was, however, pushed back in favour of a spur between the existing 21-kilometre section between Kingston and Sandy Bay on the south coast and Ocho Rios on the north shore.
"The bond we expect to be in place by February and construction would start possibly in March," Anderson said.
The existing section of the highway, including a new six-lane causeway over Kingston Harbour, connecting the capital with the community of Portmore, cost an estimated US$270 million.
The highway was developed largely with debt, some of it raised on the private market by NROCC and on-lent to TransJamaican, which, itself, has been to the private capital markets for cash.
Cheaper money
Ivan Anderson, chief executive officer, National Road Operating and Constructing Company. File
Some of that, though, was relatively expensive and the ongoing aim has been to replace it with cheaper money. For instance, a US$260 million loan raised by the Government last year from Venezuela was to be used, in part, for the Ocho Rios spur and to refinance debt.
Meanwhile, Anderson said negotiations are yet to be finalised with the China Development Bank (CDB) for a loan of US$6.8 million (J$4.83 billion) to be used for the Mount Rosser bypass - a 25-kilometre stretch from Linstead, St Catherine, to Faith's Pen in St Ann, which is part of the Ocho Rios spur. This leg is to be completed early in 2010.
"This loan (from China Development Bank) is to supplement our existing finances to complete the project," said Anderson.
While the NROCC seeks to secure more funding to complete projects, it is also reporting to accumulate losses of $9.3 billion in its six years of operation. It is projecting to be $17.4 billion in the red by the end of the current fiscal year.
The road company, this year, is projecting income of $1.2 billion and new losses of $8 billion, while its debts are expected to grow to $41 billion.
According to Finance Ministry figures, outside of debt-servicing costs of $1.77 billion on debt raised to assist with financing of the island's highway infrastructure, the company's major burdens are inflation risk and foreign-exchange risk.
Only $2.3 billion of the $6 billion spend was on operations.
dionne.rose@gleanerjm.com
