Strapped for cash; JDIP subcontractors said living hand-to-mouth

Total payout to CHEC tops US$313 million

BY BALFORD HENRY Observer senior reporter

Monday, February 04, 2013

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PARLIAMENT’S Public Administration and Appropriations Committee (PAAC) is threatening to summon Chinese contractors China Harbour Engineering Company (CHEC) to explain delays in payment to local subcontractors of the Jamaica Development Infrastructure Programme (JDIP).

PAAC Chairman Edmund Bartlett made the disclosure in an interview with the Jamaica Observer on the weekend.

"We have the power to bring CHEC to book on the issue, and anyone else who the committee believes is critical to resolving this issues because the contractors are hurting and the projects are being delayed," Bartlett said.

"We are taking a very strong position on these things," the PAAC chairman added.

He was speaking against the background of multiple complaints from subcontractors that CHEC’s payments have been late.

The issue popped up at last Wednesday’s meeting of the committee at Gordon House, after Bartlett noted that he has had complaints from contractors in his constituency who are not being paid on time. But executives of the National Works Agency (NWA) which contracts CHEC, told the committee that the agency has made all 16 payments owed to CHEC up to December.

National Works Agency (NWA) deputy CEO Earl Patterson said the contractors have also complained to the agency. He suggested that CHEC was operating the programme in a "hand-to-mouth" fashion.

"We are all acutely aware that the subcontractors continually complain that they are strapped for cash," Patterson said, adding that the NWA has been working "assiduously" with CHEC to relieve the situation.

"I have argued that it would only seem to me that the general contractor has not been able to properly fund the project. You know, I would like to refer to it in Jamaican parlance that almost sometimes the feeling you get out on the street is that it is ‘hand-tomouth’. The cash flow should have been there so the general contractor is better able to fund the project and take the heat off the subcontractors," he said.

Patterson said the amount on the last invoice it received has been paid to CHEC, which has brought the total payout to over US$313 million. "We don’t have any money owing to the general contractor (CHEC), but we are told that there are people on the ground who are hurting," he said.

"We can only pay the general contractor and we can only push for the conditions of service to be able to support the general contracting with subcontractors. That is all we can do, lobby and pay the certificates…we have no money outstanding at this time," he added.

Clement Watson, executive director of the Road Maintenance Fund (RMF), which pays the local component or 15 per cent of the cost of JDIP, supported Patterson. He said that as of Wednesday, the NWA had paid certificates 1-16 presented for payment by CHEC. The last certificate was presented on December 12, bringing total payments from both the RMF and the Chinese Ex-Im Bank — the Chinese financier — to US$313 million or 76 per cent of the total loan of US$340 million.

The delays in the cash flow situation, Patterson said, have created lessons for the NWA going forward.

JDIP has US$87 million left in the fund, of which US$37 million will be spent by March 31 when the current financial year ends. The other US$50 million will be spent during 2013/14.

The projects should have been completed by March 31, but NWA CEO EG Hunter told the meeting that delays, many of which have been blamed on the subcontractors, have resulted in an extension to June 2013/14.

Bartlett said that the committee would need details of the problems faced by the subcontractors, but said that the committee was concerned that "the main contractor is getting paid, but the little guys are having difficulties getting their payments".

"Believe me, they are hurting out there, and we would want to play our part to help relieve them of that situation, so that they can deliver on their contracts," Bartlett said.




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