THE National Road Operating and Constructing Company (NROCC), the vehicle used by government to facilitate the construction of Highway 2000 – the nation’s high-speed motorway – recorded losses of $1.6 billion at the end of the 2006/2007 fiscal year, and is now leaning on the Ministry of Finance and the Development Bank of Jamaica (DBJ) for support.

“NROCC has a problem in terms of relatively high cost debts with commercial interest rates and market interest rates, but has long-term investments for which the debt will be amortised over a longer period,” minister of finance and planning, Dr Omar Davies told journalists at his post-budget press briefing at his ministry in Kingston yesterday.

“We are seeking to pay off some of that high cost debt and pull the whole financial management of NROCC together under the aegis of the Ministry of Finance and the Development Bank of Jamaica,” Davies added.

Dr Davies told reporters that the Government had already accessed some lower cost money, which would be used to pay off some of the high cost debts.

“There will be debt obligations for NROCC, which we will have to find ways of servicing over the next few years above and beyond the revenues being generated,” said the finance minister.

Davies admitted that the rescue was necessary for NROCC, which the Jamaica Public Bodies, a publication of the Ministry of Finance and Planning, projected would incur a loss of $2.45 billion by the end of 2007/2008.

The publication reported that the company had an estimated loss of $1.6 billion at the end of 2006/2007. Revenues for 2007/2008 were projected at $885 million, while the company’s expenses were projected at $3.3 billion, including a finance cost of $1.65 billion.

“The company has not realised any profits since 2003 and the losses have been growing. As per contract, the entity has not began earning toll fees as the TransJamaican Highway Company has not reached its targeted traffic flow on the two completed highways,” the publication said.

“TransJamaican Highway has to have first cut in terms of some of the obligations they have to meet and then NROCC gets the rest (of the toll payments). The difficulty, as I said, relates to the fact that the financing which they utilised for the construction is more expensive than had been anticipated,” Dr Davies said.

“And secondly, I would think that, in certain instances, the tolls have not been at the level which the company would have wished them to be imposed,” Davies added.

However, Junior Finance Minister Fitz Jackson assured the public that there would be no further increases in tolls this year.

“You have seen increases on two of the toll legs already – Spanish Town and Vineyards – and for the period which the operators can apply for a rate increase, between January and July.

“Come July, at the end of the six months, as is provided for in the concessionary agreement, they can apply. When they apply we will see what happens from there, but we won’t jump off that bridge before we reach it,” said Jackson.

Questioned about the future of NROCC, the finance minister said that in terms of the additional sections for Highway 2000, particularly Sandy Bay to Mandeville and the north to south link, “we are assessing the cost and there is going to be a more direct role of the Ministry of Finance in determining the pace of that expansion”.

However, he said the first step would be to pay off some of the high cost debt with more concessionary loans.

NROCC, a fully state-owned company, has the overall responsibility for the design, financing, construction, maintenance and operation of Highway 2000.