|Smith: Delay to road works loan costs $6M a month|
Guardian Business Editor
Published: Jul 12, 2012
Former state minister of finance James Smith says the country has incurred an additional $6 million in costs for every month of delay in approving the $65 million supplemental loan from the Inter-American Development Bank (IDB).
The disclosure from Smith, who is also a key advisor under the Progressive Liberal Party (PLP) administration, serves as unwelcomed collateral damage in a controversial project inherited from the previous government. "Every month they hold out, we pay from our own resources," Smith said. "I believe we end up paying around $6 million a month."
Indicating that The Bahamas may receive some kind of "reimbursement", the chairman of CFAL noted that the loan application, stretching back several months, was unfortunately timed with the national election.
The Free National Movement would have made the application to the IDB, but "sat on it" until after the election in case the new administration decided to pull the plug.
Nevertheless, Smith said that the loan is likely to move forward.
Guardian Business understands that the issue should go to the board of the IDB in the next couple of weeks. Non-performing loans in the region have caused additional reticence on the part of the bank. Meanwhile, if added up over a number of months, the delay in loan approval has cost the country tens of millions.
Under the new financial plan, the IDB would loan the government $65 million. Up to $12 million should be kicked in by The Bahamas, bringing the latest capital injection up to $77 million.
Astrid Wynter, the IDB representative for The Bahamas, did not return messages before press time.
According to the IDB document, the overall final cost to complete the construction works is in the order of $191 million, which is also inclusive of environmental works to the Big Pond Recreational Park. That compares with the original $119 million contract signed by the government and Jose Cartellone Construcciones Civiles back in 2008.
Engineering and supervising fees should push the $191 million up another $5 million, the report noted.
"It is proposed that this financial gap will be financed from an additional supplementary loan of $65 million from the bank and $12 million in counterpart from the Government of The Bahamas," the report stated.
Back in March, Wynter told Guardian Business that an IDB technical team was expected to fly into the country and make a final determination on the loan.
"I can't speak for the board, but I think the project, as long as it meets criteria for approval and is justified, and has a positive development impact, should be approved," she said at the time. "In this case, when you look at the project, how could it not be completed?"
Several months down the road, there has been no formal indication that an end is in sight.
Meanwhile, widespread road works continue throughout New Providence, causing traffic chaos and major disruptions to businesses.