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Friday, January 25, 2008
PRIME Minister Bruce Golding says the Government will have to restructure the huge debt accumulated by the National Road Operating and Constructing Company (NROCC), which operates Highway 2000.
The prime minister told the House of Representatives on Tuesday that NROCC will be in no position to meet its loan servicing obligations beyond 2008/2009, after which it will experience negative cash flow accumulating to $9.7 billion by 2012/2013.
Golding told the House said that unless budgetary provisions were made by the Government to meet this shortfall, the Development Bank of Jamaica (DBJ), would be forced to take an "impairment loss" on its balance sheet which would have a severe impact on its financial viability.
"Following discussions with the board and the management of the Development Bank (of Jamaica), I have directed them to undertake efforts to restructure NROCC's indebtedness, including hedging the euro 204 million, because we are exposed to serious foreign exchange losses because of the movement between the euro and the dollar.
"In addition to that, some US$4.8 billion of those funds were deposited in the Bank of Jamaica in Jamaican dollars and, therefore, NROCC is also exposed, and the DBJ is exposed to the foreign exchange losses based on the movement between the Jamaican dollar and the US dollar.
"They are now working to see to what extent they can minimise that exposure, but the issue as to how the NROCC indebtedness is going to be covered remains a major challenge for the Government," said Golding.
He added: "When the plans for Highway 2000 were rolled out, it was not our understanding that the taxpayers of Jamaica were going to be called upon to pay for it. It is now the reality that we are going to have to face," Golding said.
NROCC racked up losses of more than $1.6 billion in 2006/2007 and had projected losses of more than $2.4 billion for the current fiscal year, according to a ministry paper tabled in the House of Representatives last April.
Since it began operations in 2003, the company has not realised any profits and is yet to earn toll fees, as TransJamaican Highway, operators of the toll road, has not reached its targeted traffic flow on the completed highways - Portmore to Kingston and Mandela Highway to Sandy Bay.
PRIME Minister Bruce Golding says the Government will have to restructure the huge debt accumulated by the National Road Operating and Constructing Company (NROCC), which operates Highway 2000.
The prime minister told the House of Representatives on Tuesday that NROCC will be in no position to meet its loan servicing obligations beyond 2008/2009, after which it will experience negative cash flow accumulating to $9.7 billion by 2012/2013.
Golding told the House said that unless budgetary provisions were made by the Government to meet this shortfall, the Development Bank of Jamaica (DBJ), would be forced to take an "impairment loss" on its balance sheet which would have a severe impact on its financial viability.
"Following discussions with the board and the management of the Development Bank (of Jamaica), I have directed them to undertake efforts to restructure NROCC's indebtedness, including hedging the euro 204 million, because we are exposed to serious foreign exchange losses because of the movement between the euro and the dollar.
"In addition to that, some US$4.8 billion of those funds were deposited in the Bank of Jamaica in Jamaican dollars and, therefore, NROCC is also exposed, and the DBJ is exposed to the foreign exchange losses based on the movement between the Jamaican dollar and the US dollar.
"They are now working to see to what extent they can minimise that exposure, but the issue as to how the NROCC indebtedness is going to be covered remains a major challenge for the Government," said Golding.
He added: "When the plans for Highway 2000 were rolled out, it was not our understanding that the taxpayers of Jamaica were going to be called upon to pay for it. It is now the reality that we are going to have to face," Golding said.
NROCC racked up losses of more than $1.6 billion in 2006/2007 and had projected losses of more than $2.4 billion for the current fiscal year, according to a ministry paper tabled in the House of Representatives last April.
Since it began operations in 2003, the company has not realised any profits and is yet to earn toll fees, as TransJamaican Highway, operators of the toll road, has not reached its targeted traffic flow on the completed highways - Portmore to Kingston and Mandela Highway to Sandy Bay.
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