A contract valued at US$115 million was signed on December 15, 2011 between the National Water Commission (NWC) and the Bank of Nova Scotia for funding of the second phase of the Jamaica Water Supply Improvement Project (JWSIP).
The contract was signed at the Ministry of Housing, Environment, Water and Local Government, in New Kingston.
In his remarks, Minister of Housing, Environment, Water and Local Government, Hon. Dr. Horace Chang, noted that part of the objective of the NWC is to not only improve efficiency and reliability, but to expand the facilities to ensure that urban Jamaica has a reliable and safe water supply.
“It seems a very daunting task at the beginning, because that takes a significant amount of funding. In fact, I didn’t fully appreciate the cost of a water system until I got into the Ministry. It is far more expensive than most other infrastructure,” Dr. Chang argued.
He noted that the US$115 loan from the Bank of Nova Scotia is the largest loan for infrastructure in Jamaica that is being organised by a local bank.
“It is not the easiest thing to put together a loan of this size. The team persisted and the government is committed to making the National Water Commission a viable and efficient company,” Dr. Chang said.
“In addition to renegotiating this particular loan and a number of others, we had to demonstrate changes within the NWC that will ensure that the NWC will be able to repay these loans. It is essentially a commercial loan and we are a public company, backed by government guarantee, but the intention is that we cannot go back to the Consolidated Fund for funding,” he added.
Dr. Chang further noted that, “not only did we have to look at water rates, but we had to look at the structural management of the Water Commission and we had taken steps to make changes that our financiers are satisfied that we are going in the right direction.”
For his part, President and Chief Executive Officer of the Bank of Nova Scotia, Bruce Bowen, emphasized the importance of getting water to people, and that building the infrastructure of the country was something that attracted the bank to the project.
“It was also being done in a manner that was going to be able to pay for itself and as a commercial financier, this is something that you are looking for,” Mr. Bowen said.
Under the agreement with the bank, the principal loan will be repaid by the NWC by way of 18 equal quarterly instalments of US$1.916 million, following the 30-month moratorium period, with a final payment of US$80.5 million. There is also an interest rate of 5.80 per cent, per annum.
The JWSIP, which is divided into segments A and B, is the single largest project ever undertaken by the NWC. It has a total cost of $17 billion (US$211 million) and, on completion, will bring an additional 20 million gallons of water to residents in Kingston and St. Andrew, St. Catherine and other areas of Jamaica.
By Latonya Linton, JIS Reporter