Legacy Of Debt!

The First Project:

Newton Business Park

The Government said May 25 it is constructing Newton Business Park, a 23.5-acre business complex. The first phase, an environmentally friendly design, valued at Bds$21 million (US$10.5), will be on 6.5 acres outside of Bridgetown. The first two buildings, scheduled for completion by Aug. 2006, will provide 60,000 sq ft for information technology, high-tech service and manufacturing companies. Newton Business Park is owned and managed by the Barbados Investment and Development Corp.(BIDC).

Source: All Business

 

 

 

 

 

As we drove by the Newton Business Park last weekend we felt a rage brewing deep in our gut that here is another project which the government has been unable to complete on time and the tax payers now have to absorb the inevitable over-runs. Clearly from the above quoted text the building was scheduled to be completed one year ago. We were told by Deputy Prime Minister Mia Mottley in June 2007 that the Barbados government had to fire the Trinidadian contractor Hafeez Karamath Construction Ltd (HKCL). We were also told by Deputy Prime Minister Mia Mottley “the government’s action had been guided by an independent engineer’s assessment and that the delayed Government project, under construction for about four years, should have a new contractor in place “no later than August”.

The original cost of this project was stated as BDS21 million dollars. No doubt court and other professional fees incurred by government in the interim would have increased the cost of the project.

The Second Project:

National Housing Corporation Building (NHC)

The five-storey office complex project began in 1998 with a 90-week construction deadline and a price tag of $36 334 793, but has run for eight years and is still to be fully completed.The project started with an original $36 million, but costs have skyrocketed to over $80 million

Source: Nation Newspaper

 

 

 

 

 

If we are not mistaken the NHC Building has since been completed by the Chinese but the litigation continues between Barrack Construction (original builders) and Government (NHC) and has the potential to create a BDS50 million liability for government if they lose the appeal currently being argued before the High Court. The amazing statistic on this project: it started at an original cost of BDS36 million in 1998 and stretched to BDS80 million dollars exclusive of possible court damages being awarded to Barrack Construction.

The Third Project:

Government is spending $20 million to retrofit Greenland but not before spending an earlier $20 million, after which engineers said it was still not fit to receive garbage. The new site will be about 33 per cent bigger than the original design and equipped with a modern system for channelling and collecting leachate that utilised over 10 000 tonnes of stone imported from Canada. Greenland was originally presented in August 1997, but never opened. It will replace Mangrove Pond Landfill in St Thomas.

Source: Nation Newspaper

 

 

It has been 10 years and BDS40 million dollars since the start of the Greenland Landfill project from 1997 and it is still to reach completion. Of all the mis-managed projects the incumbent administration have had to deal with; Greenland ranks high as the project which will spark heated debate so many years later. The “fool hardy” idea of building a landfill in the St. Andrew parish with all the challenges of land slippage and not forgetting how it is nestles into the face of one of the islands most popular and scenic parks continues to boggle the mind. The country has been promised that from 1 September 2007 Greenland will be finally in a position to receive its first load of garbage.

The Final Project:

The final government project we want to feature is GEMS aka JAWS. Despite our best effort we have been unable to ascertain an official cost to attach to the GEMS project. Our best estimate suggests the debt being carried is in the range of BDS400 to BDS500 million dollars. When we consider the room plant of GEMS in the face of such debt burden it has ensured that the return on investment will be decades in coming. Barbadians were recently told by Minister of Tourism Barney Lynch that the conversion of the former Dover Convention location to high end condominiums would be used as a strategy to recoup on the GEMS investment. The GEMS project will prove the most interesting come next general elections if only from the view point of how Mascoll deals with the questions which are sure to be directed at him. From his position as Junior Minister of Finance he is sure to be able this time around to speak from knowing the facts!

By our conservative calculation the four projects discussed account for BDS700 million dollars. We have not factored loss of rental income, bank interest charges, the value of money and many other considerations which should apply and would lead to increasing the cost of the projects. We have simply taken the declared or approximate costs of the four projects. The concerning issue for BU is the reality that we could have rather easily found four other government projects which would highlight gross mis-management of public funds.