VENEZUELA seems set to lend Jamaica up to US$200 million to help government accelerate the construction of Highway 2000 and retire more expensive debt associated with the project, highly-placed government sources confirmed yesterday.

So keen did the Venezuelan president Hugo Chavez appear to be for Jamaica to have the cash that he sent a plane to Kingston on Thursday to whisk Kingsley Thomas, the out-going chairman of the National Road Operating and Constructing Company (NROCC), and other senior Jamaican officials, off to Caracas for talks with Venezuelan finance ministry officials to tie down the funds.

Thomas apparently returned to Jamaica in time to catch a late night flight to London where he will take up an assignment as head of the Gleaner Company’s UK subsidiaries.

So neither he nor the finance minister, Dr Omar Davies, were available for comment on the loan.

But according to Sunday Observer sources, Prime Minister P J Patterson pitched the idea of the loan to Chavez during the Venezuelan president’s one-day visit to Jamaica last Tuesday when both men signed an agreement for a US$200 million expansion and modernisation of Jamaica’s Petrojam oil refinery as part of Chavez’s PetroCaribe initiative. Under PetroCaribe Venezuela will sell its oil cheaper to regional countries and turn part of their oil payments into development loans.

“The proposed loan is not part of the PetroCaribe initiative,” a Jamaica government official explained last night.

“What is happening here is Jamaica is facilitating a loan specifically for the highway which is primarily a private sector project.”

Venezuela, like other oil producers, has earned huge windfalls because of the galloping price of oil, which has topped $67 a barrel.

Much of the windfall cash is invested in US instruments at very low rates. Jamaica, therefore, has proposed to pay interests above what the Venezuelans would get on those instruments but below what Kingston and its institutions can hope to command on the international money markets.

“It would be a win-win situation for everybody,” said the Sunday Observer source.

Highway 2000 is an ambitious plan by the government to build a 236-kilometre tolled expressway between Kingston, the capital, on the south shore, and Montego Bay, the second city, on the north west coast.

A spur is planned from the south coast to the north coast town of Ocho Rios, which, like Montego Bay, is an important tourism resort.

The French construction and engineering company Bouygues won a 35-year concession to build, own and operate the first segment of the highway, 74 kilometres between Kingston and Williamsfield, in the central parish of Manchester.

This segment will include a new six-lane causeway over the Kingston harbour, linking the satellite community of Portmore with the capital.

The Kingston to Williamsfield portion of the project – of which 22 kilometres between the Mandela Highway, near the capital and Bushy Park, St Catherine – will cost an estimated US$400 million.

Bouygues, under the agreement, is to raise about 74 per cent of the financing cost (US$284 million) on its own in equity and debt.

NROCC, the vehicle used by the government to spearhead the project, was to raise US$108 million for on-lending to Bouygues. NROCC raised some of that cash on the Jamaican market, but last year borrowed US$75 million from Wachovia Bank, some of which was apparently used to write down an earlier US$40 million from AMRO Bank NV.

It was not clear precisely how the loan from Venezuela would be utilised, but it would likely be used in part to retire the Wachovia debt as well as provide seed cash to push-start the Ocho Rios spur of the highway.

At present, Kingston is linked to that north coast town via a narrow, winding road that passes through a dangerous gorge and mountain passes with steep drops.

At one place the road comes down to a single lane of traffic over a stone bridge built by the Spanish more than 300 years ago.

“There a very important economic reasons for the Ocho Rios leg to be done,” said the government source. A price tag has not yet been placed on this segment of the project.