Opposition Leader Perry Christie said he considers it "scandalous" that the New Providence Road Improvement Project (NPRIP) is more than $40 million over budget.  As reported exclusively by The Nassau Guardian, officials from Argentinian contractor, Jose Cartellone Construcciones Civiles (JCCC), estimated when they testified before the Public Accounts Committee (PAC) of the House of Assembly recently, that the NPRIP will eventually cost the government $154 million.
The final price represents cost overruns of more than $40 million above the $113 million the government borrowed in 2008 for ongoing works.

"I am shocked about that," Christie told The Nassau Guardian. "I'm expecting the Public Accounts Committee to speak to that issue.  "We [the PLP] at the time [we were in office] indicated that we made a commitment to Bahamians, doing the project in slices, not disrupting the entire country at the same time."  Christie added that the project in its current form is the result of the government's "unwise decision that we are paying a heavy price for".

He pointed out that at the time the contact was signed back in 2008 the government justified the use of JCCC, which is an Argentinian company, to save money.  "Now the fact that he (the prime minister) can be $40 million to $50 million over run -- it is an extraordinary development. It is a scandalous development," Christie said.  "I anticipate that it's going to be an interesting discussion in our country as to how a commitment like that could have been made and through almost irresponsible application of policy to get such a dire result -- manifestly in the worst interest of The Bahamas and at a time when those resources could have been dedicated to creating jobs."

Christie added that he expects the PAC report to be tabled in Parliament, at which time he said the opposition will seek answers from the government on the project.  According to information obtained by The Nassau Guardian, the project was $23 million over budget as of June, due to new components to the project, unanticipated costs, delays in design and the rising price of raw materials.  Testimony given to the PAC said the Ministry of Finance could have prevented much of the cost overruns had it decided to hedge its bets on the possible rising prices of raw materials for the project, as was advised by some in government.

JCCC estimates that the cost of raw materials is now 25 percent higher than prices benchmarked in the original contract.  As of June, nearly $10 million in cost overruns was due to the fluctuation in the price of raw materials, mainly because of the Arab Spring this year, which drove the price of light sweet crude higher due to decreased production in key oil producing nations like Libya.

However, the spike could have been avoided, according to testimony given to the committee, if the Ministry of Finance had implemented a hedging strategy; such as investing in long-term oil futures -- the profits from those investments would have offset the increased price in oil.  The government has committed to paying for the cost overruns, which likely means that it will have to borrow more money from the Inter-American Development Bank or another international lending institution to cover the $40 million shortfall.

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