The fate of a $65 million loan from the Inter-American Development Bank (IDB) to support New Providence's controversial roadworks project should be decided early next week. After months of sitting in the "preparation" stage, the supplementary financing will be dissected and analyzed by the board of directors in Washington on Tuesday. The key meeting should play a pivotal role in the future of the capital's streets.
The New Providence Road Improvement Project, first initiated in 2008, has run drastically behind schedule and over budget. While the previous government signed an agreement with Argentinian firm Jose Cartellone Construcciones Civiles (JCCC) for $119.9 million, the final price tag has been estimated at $206 million. Meanwhile, local business has been severely impacted by long delays and road closures. In fact, James Smith, a key advisor to the current administration, pegged the total financial toll of the road works, so far, at $300 million.
Astrid Wynter, the IDB representative to The Bahamas, said a presentation will be made to the board on the project's economic viability and what overall impact it should have on the development of the country. The much publicized cost overruns and the reasons for them will also be considered. "I can't pre-judge what the board will do, but I think the loan is very well documented, substantiated, and the team is in a position to answer questions reasonably," Wynter told Guardian Business.
"A lot of work hard has been done. So I'm hopeful." The IDB representative further revealed that a new study, not yet released to the public, has indicated that cost overruns are common among worldwide infrastructure projects. In other words, the problem is not exclusive to The Bahamas. The findings, still in the preliminary stage, suggest a change in how contracts are constructed, she explained. The kinds of incentives in place, and who bears the risk, are issues being actively questioned and considered for future projects of this nature.
"Each country is unique, but I think one of the things we're learning is major infrastructure is such that we're looking to find ways to change the incentives and the risks involved," she told Guardian Business. "How can we build a different allocation of risk. Who bears the risk? If you're going to have cost overruns, a lot of it is design. But when you mobilize, things have changed."
Wynter views the current roadworks in The Bahamas as a way to contribute to a solution for a worldwide problem. The $65 million in supplementary financing isn't the only outstanding loan at the IDB for The Bahamas. The Baha Mar Seawater District Cooling Project has also been sitting in the "preparation" phase for quite some time. Ocean Thermal Energy Corporation is seeking financing for the construction of a renewable energy plant for the $3.5 billion mega resort rising on Cable Beach.
Confirming rumblings in the business community, the IDB representative noted that recent meetings have occurred with the relevant stakeholders, and despite some setbacks, all does not appear lost. "We have had some meetings, and I believe discussions are ongoing to find a way to deal or mitigate the environmental issues," she said. At issue is the location of the plant, with piping and other infrastructure possibly inferring with local neighborhoods and reef systems in the Goodman's Bay area. Since it is a private sector deal, Wynter explained the IDB is relatively "hands off" until the agreement is finalized between the relevant parties.
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