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Good news for the economy

Tuesday, November 30, 2010

The decision by the Government to move ahead with the construction of the Mamoral Dam and Reservoir project and the Solomon Hochoy Highway extension project to Point Fortin is very good news for the local manufacturing sector, the providers of construction services and the sub-contractors who will work on both projects. The fact that the Minister of Works and Transport, Jack Warner, called a news conference at his offices on Saturday and invited his colleague, Finance Minister Winston Dookeran and the head of National Infrastructure Development Company (Nidco), Dr Carson Charles, to attend is a welcome signal that these gentlemen are prepared to work together for the good of the nation.

The projects themselves are sizeable and should have a strong positive impact on the economy. Dr Charles, speaking at the news conference, said the highway project is expected to cost $5 billion and employ 20,000 people over a four-year period. The Government is expected to spend $1 billion on the dam and reservoir project with 7,000 people expected to gain employment. From the news conference, it seems that the rationale for the dam has expanded from purely flood mitigation to the collection and treatment of the water for use by people in the neighbouring districts. The construction of the four-lane highway will definitely spur the development of Point Fortin in ways that only the siting of the Atlantic LNG liquefaction facilities in that southern town has done recently.

In fact, the highway has the potential to open up all of southwest Trinidad by facilitating easy and quick access to areas that have seemed remote to people living in north Trinidad because of the poor condition of the roads. Improved road networks have been proven over time and in different economies to lead to investment decisions by businessmen who may wish to take advantage of the greater access by establishing new businesses along the highway and in both the cities that it will connect. This means that south Trinidad will receive potential long-term economic stimulus as a direct result of the highway. But there are also short-term benefits to be derived as thousands of workers get paid on a regular basis for several years and spend that money in their communities.

Presumably, the contracts for both the highway and the reservoir will involve significant purchases of goods and services in the local economy—expenditure that will stimulate the producers of cement, concrete, steel bars, paint, asphalt, aggregate and sand. With contracts for such large sums of money, it is important that the Government sets the pace early by ensuring that procurement improvements that were spoken about ad nauseum on the campaign trail for the May 24 general election should be put in place as soon as possible. This administration should really avoid repeating the mistakes made by the previous administration which attempted to fast-track infrastructural development without putting in place the required procurement framework. The second important issue for the Government to consider is that it must ensure that the two main contractors for the highway and the reservoir source as much of their labour requirements locally as possible.

The third crucial issue is that the Ministry of Works and Nidco should ensure, to the fullest extent possible, that the scope of works for both projects has been thoroughly checked off before the project financing gets disbursed. One of the factors contributing to cost overruns, even with fixed price contracts, is that the clients do not spend enough time ensuring that all possibilities are explored with regard to the scope of works. This includes careful attention to soil testing, drainage patterns and the slope of the land. While the nation is grateful to the People’s Partnership administration for proceeding with these projects at a time when the money is not flowing as freely, as always with infrastuctural projects, it is most important to maintain a firm grip on project implementation.


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