Groundbreaking Ceremony Rio Cobre Water Treatment Plant
Keynote Address
By
The Most Honourable Andrew Holness ON, PC, MP
Prime Minister of Jamaica
At the
Groundbreaking Ceremony Rio Cobre Water Treatment Plant
St Catherine
On
March 14, 2024
_______________________________________
Good afternoon, everyone. Thank you very much. I don’t want to break the protocol that has been established but I will say, today is a great day and I thank you all for coming. And I thank you for your patience because I was a little bit long in coming. As you probably would have already excused me because there were many things happening this morning for which I paid very close attention and indeed had to give direct attention to some issues. I see here, which I will make some specific observations.
I want to acknowledge our Ambassador from the European Union, Marianne Van Steen. You have been at many of our groundbreakings and handovers because the European Union continues to be a very solid partner for development in Jamaica.
And our French Ambassador, Olivier Guyonvarch. Forgive me. Ambassador, thank you for coming. Vinci, of course, is a French company.
Today is a great day as we gather to break ground for this significant project, the Rio Cobre water supply system upgrade. In 2009, the NWC presented the Jamaica Water Supply Improvement Project, a substantial capital investment programme to the Cabinet. The NWC’s intention was to implement various initiatives, including the procurement of a 15 million imperial gallons per day capacity water treatment plant at Content, St Catherine, also called the Rio Cobre Water Treatment Plant. The submission was approved and authorized the NWC to enter into contract with Vinci Construction Grand Projects, (VCGP), to execute the Jamaica Water Supply System Improvement Project.
At the time, this was intended to be a medium-term initiative geared at meeting the growing water supply needs in St Catherine as well as to reduce the shortfall between the demand and supply of water in the Kingston metropolitan area. However, circumstances dictated that the project financing was redirected for the NWC to address the severe drought conditions in the northern and western parishes of the island at the time.
Upon the completion of the Drought Mitigation Projects in the northern and western parishes, the NWC sought to reactivate the project in 2016. So, it has taken us many years to reach to this point, and I must confess that I had hoped this would have happened sooner, but I am thankful we are finally here today to break ground.
The NWC Supplies 180 million imperial gallons of potable water each day to its more than 500,000 registered accounts representing approximately 2 million Jamaicans across the island. However, within the last five decades, the growth of residential business and industrial users have resulted in the establishment of several new commercial entities and residential communities in various sections of the Kingston metropolitan area, which has resulted in a significant increase in the demand for potable water.
Now, I’m going to present some statistics that I want you to pay close attention to. Prior to the significant investments and improvements made by the NWC over the last seven years, the NWC was required to supply an average of approximately 55 million imperial gallons daily to meet the water requirements in the Kingston metropolitan area. After the investments and improvements over the last seven years, including the non-revenue water project, the requirement is now down to 38 million imperial gallons daily. This is a reduction of 17 million gallons per day in what was previously simply wasted water.
During the dry season our supply capacity is approximately 28 million gallons per day. These periods of drought understandably cause a great level of frustration and inconvenience to our citizens and great stress to the NWC team and myself who must respond through the trucking of water particularly to alleviate the aggravation and dissatisfaction experience by our customers.
Further, as the economy continues to grow and with increased climate variability and change, the situation will get worse. A solution therefore had to be found. This project is therefore one of many solutions being implemented across our island. The project involves the design, build, finance, operate, maintain, and transfer of a 15 million imperial gallons daily water treatment plant. And the scope of the works entails the construction of an intake system inclusive of lift pumps, duty and backup pumps, the construction of a conveyance pipeline from river to treatment plant site, the construction of a 15-million-gallon capacity treatment plant and the interconnections to the NWC’s distribution network. When the project is complete, we can expect improved water supply and reliability for St Catherine and the KSA areas, better resilience in the water sector during periods of drought and improved water supply to facilitate our continued development in the business and residential sector.
In the worst of our worst droughts last year, the supply shortfall for the Kingston metropolitan area was 12.5 million gallons daily. When the additional 15 million gallons per day comes on stream from this project, that supply will be totally covered plus a surplus. But with worsening climate change, we have to continue to build even more capacity to ensure that we have enough buffers. The construction of this project is estimated to be completed within two years followed by a 23-year period of operation by the private partners after which ownership of the plant will be transferred to the NWC. The PPP arrangement may also be renewed for an additional five years after the expiration of the initial 23 years.
This plant will be the second largest in Jamaica and the largest, of course, is the Constance Spring Water Treatment Facility. The project is expected to positively impact over 150,000 NWC customers in the Kingston and St Andrew metropolitan area in Portmore, the new parish and Spanish Town. So, if you took all the areas that will benefit, the overall number of beneficiaries would be about 600,000 Jamaicans by this project. In addition, it will reduce the need for the trucking of water and reduce, if not eliminate, the need for water restrictions to affected areas during our periods of drought. This is a win win for the NWC, its customers, and for all Jamaica.
Let me be a bit more specific about what this billion-dollar investment means. It means that communities, like West Kingston, Arnett Gardens, Seaview Gardens, Majestic Gardens, and a community that’s very near and dear to me, Olympic Gardens- and I hear my friend say, “oh boy”, so that there is no belief that there is any favouritism in this project. Some time ago, about two years ago, you may recall that there was a break in our pipeline infrastructure running along the Mandela Highway. Some of you may recall that. That massive pipeline feeds Kingston and St Andrew by taking water from the Tulloch Springs. The communities that are fed by that are West Kingston, Arnett Gardens, Seaview Gardens, Majestic Gardens, and Olympic Gardens. In fact, the entire western end of Kingston and St Andrew is fed by that pipeline so when that pipeline broke, all of those communities were without water. The pipeline broke in Christmas, and I remember my constituents calling me complaining bitterly that whilst everyone else was able to enjoy their Christmas, they did not have water to do their basics.
So, I stand here today feeling a sense of achievement. We were able to repair that pipeline and some of you may have seen the intense work that took place in repairing that pipeline along Mandela, but we did more than that, Natalie. We extended the pipeline through using new technology for underground boring and extended that pipeline all the way down past Tivoli gardens on Spanish Town Road and I believe that that pipeline is going to end up in Port Royal, which has actually started already.
Now, I say this and go into this detail, which obviously is a departure from my script, because the conversation about the government’s rate of investment in critical infrastructure like water and roads progresses on a pathway as if nothing has been done. And I always take the opportunity to bring to the public the work of your government. The pipeline that broke along Mandela Highway was built some almost 50 years ago. The pipeline had outlived its useful life. In fact, the entire pipeline running from Six Miles through to three miles going all the way down past West Kingston; all of those pipelines reached their useful life, meaning that they were just only surviving by the grace of God.
When water pressure falls, the pipes collapse because it is the pressure in the pipe that keeps the flow. The material has decayed. The flow in the pipes lessen because there is a build-up of material inside the pipes. The question that really must be asked is why didn’t we replace those pipes 20 years ago? Yes, we’re complaining about them now, but why wasn’t it done then? And why is it that we are able to do it now? Those are the relevant questions that must be asked. The frustration about the pain points that people experience with water and roads, Natalie, the road here wasn’t bad since 2016. The bridge that you require across the river wasn’t needed since 2016.
On my way in, I heard a lady calling one of the radio stations and I listened to her very carefully. She said, “Prime Minister, you born and grow in Spanish Town, when last, you have been to Spanish Town?” I go to Spanish Town quite regularly because I have family in Spanish Town, and she was talking about the conditions in Spanish Town. From I was born, the conditions in Spanish Town have been that way and I don’t intend to leave it like that. The conditions of the market, the selling on the roads; all of those problems have been there for a very long time. So, the conversation which seems to start yesterday is an unfair and unrealistic conversation because if you are honest to yourselves, and look at what the government has done, we are the only government, the only one that has made the investments in improving infrastructure and in dealing with the issues that affect people.
She mentioned, and I listened to her very carefully, she mentioned the situation that people have to be waiting in long lines in the tax office. I remember when I had to go to the tax office how uncomfortable it was and when I drove past a post office and I saw a long line of pensioners and PATH beneficiaries lining up to get their benefits, and it really hurts and that is why in the budget the Minister of Finance announced a programme of building out new customer friendly tax collection buildings right across the country. The question must be then, so these things have been happening for so long, why didn’t they fix it when they had the authority to do it 20 years ago? Why couldn’t they do it?
You know why they couldn’t do it, because they did not run the economy in such a way that they could find the resources to do it. Let’s be fair. This project is a multi-billion investment, the chairman says this is a big deal and it is a big deal. Do you know why it is a big deal? Many of you probably won’t see it. You will say oh, it’s building 15 million gallons treatment plant that will offset the need for water in Kingston and St Andrew and the other areas, but that’s really not why it is big and I’m saying this for the benefit of my Jamaican people who are complaining every day, but not seeing the transformation as to how that transformation is going to address the issues you complain about.
If this plant were being done 20 years ago, it could have only been done by the government borrowing the money. In other words, to solve your water problem, to solve your road problem, the only way that those governments knew how to do it would have been to borrow and so while you may get improved water, you get more debt with it. And when you get more debt, inevitably you must get more taxes so you will get budgets coming with more taxes.
Now, we have made a commitment that we’re going to run the economy in such a way that we care about you, that we don’t place a burden on you and so we are going to find the creative ways of making these investments so that these investments do not become a burden on you. We are doing this, and we have read a budget where there are no new taxes to fund any of the investments that we are making in infrastructure. This has to be said because if it is not said, people will run away with unreasonable critique of the performance of the government. We have been this way before and if it is one thing that we must do, we must learn from our past.
The western communities of Kingston and St Andrew will benefit from this. They will now have an adequate source of water. Another critical project that I must mention is the Forest Hills Distribution Network upgrade which will be happening in parallel with this project to ensure benefits to the people of West Rural St Andrew, that is Red Hills to Cooper’s Hill, which have faced chronic water issues for certainly as long as I’ve been alive. I must also mention the Marescaux Road Wells Rehabilitation Project, which will be commissioned shortly, and this combination of project investments will ensure that we will be well on our way to achieving water resilience in the Kingston and St Andrew metropolitan area, Portmore and St Catherine prior to 2030.
This will also diversify our resources and reduce reliance on the Hermitage Dam and the Mona Reservoir which by the way, I should point out, the Mona Reservoir is over 70 years old that was built by the colonial government and that is what has carried us for many decades. We will have to make some new investments in the Mona Dam. We are going to do a special investment there, which Minister Samuda spoke about, which is the implementation of a solar project and that will give electricity to drive the treatment plant, which will reduce the cost to the NWC.
The Hermitage Dam is close to a hundred years old. Any infrastructure like that must go through a series of routine maintenance and upgrades so we are examining how to treat with that infrastructure. It’s critical to our water network so it is likely that the next big announcement you will hear about water is something to do with the Hermitage Dam and how to improve that dam so that it will last us for another hundred years. These are the levels of investments that we are making to ensure that the that we have water resiliency in our system.
The overall estimated project cost is 77 million United States dollars or 12 billion Jamaican dollars, this is a massive project. Since the announcement of this modality for executing the project, that is the PPP modality, when we signed the contract in November 2022 there has been some debate regarding the private sector involvement in public infrastructure like this project. And I know that there are many Jamaicans who when they hear private sector involvement in the delivery of public good, they are automatically concerned.
I remember when I announced a few months ago that we’re going to seek to have private sector involved in garbage collection in municipal waste collection, there were people saying we are going to be charged. There are many different models in which we can incorporate the efficiency of private sector operations without the private sector directly interfacing with the public. So, for the public, you will see, you will not be charged by an independent entity of the public service. No, the public service maintains the forward face of the service delivery but in the background, the private sector operates.
So, the access for which people worry about, that access will be maintained. You won’t have to worry about having to negotiate with a private person for the provision of a public; no, that’s not the intention. What we want to do, is to get the innovation, the good management, the good business practices of private sector involved in the production of the service. Government continues to be the front end of the distribution of the service, so the public won’t have to worry. What the public will see is an improvement in service.
What the government gets is a reduction in its cost of operation, because let’s face it, governments aren’t set up really to specifically manage every single operation of for example, water treatment. No matter how good you are as a public sector, you will end up with all kinds of inefficiencies where it is better that the government insulates itself from those inefficiencies and let the private sector deal with it. The role of the government, therefore, becomes to ensure that the service standard is maintained so government becomes a proper regulator on your behalf and that’s the model that we will have to pursue. So, I want to reassure Jamaicans that you’re not going to see an increase in cost. In fact, it is highly likely that your costs will go down and your service will improve.
So, let’s discuss some of the issues that would have crossed the minds of the public. Now, generally, there are two methods by which government may finance public infrastructure, either through public financing that is direct use of the nation’s resources, or through public private partnerships using private financing; government engaging private investors to undertake capital expenditure for specific projects and that’s what this project is.
While public financing is self-explanatory with private financing, this is usually done by way of project finance where a special purpose vehicle is created by the private investors to deliver a particular infrastructure project. The private investors have the responsibility of raising funds and they contract with the government to design, build, operate, and maintain the asset. The private investors at the end of the contract period, transfer the assets to the government at no additional cost. This project is being financed in that way and that is why we say this is a public private partnership. At the end of the financial life of the project, it will be handed over to the government. At that point in time, the government can decide to operate it, the government can decide to make more investments in it, to expand it, to upgrade it, and it may very well go to another public-private partnership for its operations.
So, the next question is, who are the participants in the Rio Cobre public private partnership project? The Rio Cobre Water Limited is a special purpose vehicle incorporated to build, operate, and manage the water treatment plant, and comprises the following partners: Vinci Construction Grand Projects, a member of the Vinci Group, which is among the largest construction groups in the world operating in over 100 countries. The company has been involved in several major engineering projects and construction projects around the world and has been in Jamaica since 1999 where they implemented several large scale water projects including projects along the Rio Cobre here. Then there is the Jamaica Producers Group Limited, a diversified multinational group focused on Caribbean logistics and global specialty foods, which is publicly listed on the Jamaica Stock Exchange. And then there is the Eppley Limited, an investment company focused on credit, real estate, and infrastructure opportunities in the Caribbean, also a listed company on the Jamaica Stock Exchange. exchange. The arrangers of the deal are Sagicor Jamaica Limited, Proparco, and IDB Invest. These entities arrange the financing required to construct the project.
Another question that may be on the minds of the public is, will the Rio Cobre project result in increased cost to customers? I have said that the NWC as a prescribed utility service regulated by the OUR and is permitted to charge customers at the rate approved by the OUR so, in effect, there can be no rate increase spurred by the PPP. Any rate increase must go through the regular process of the OUR. Furthermore, the Rio Cobra Water Limited would also be regulated by the OUR on the license. As such, any charge to the NWC by the Rio Cobra Water Limited must be approved by the OUR. This is no different from how any other utility operates or is regulated.
Another question that may also be on the minds of the public and the staff is will the implementation of this project by the private sector result in staff layoffs at the NWC? The answer is no. The NWC staff will not be affected. This is an addition, not a replacement. The private consortium will produce and deliver the desired quantity and quality of water to the NWC distribution network. Existing staff operating our water supply network within the area will continue to do so. The water treatment plant will have its own independent staff and will be under the management and control of the Rio Cobre Water Limited.
I wish to congratulate all who made this morning’s activity possible. The Ministry of Economic Growth and Job Creation Permanent Secretary Arlene Williams is here and former permanent secretary now Cabinet Secretary Audrey Sewell both worked on the project, and I want to thank you for your efforts in having this project come to fruition.
The NWC is here led by the chairman, the Vinci Construction Group, Eppley and Jamaica Producers. I also want to acknowledge the Development Bank of Jamaica who led the entire enterprise to this point, the Sagicor Group, Proparco and IDB Invest for their role in the financing of this important project that will benefit our people. Public-Private Partnerships like this one are so valuable for the growth of our economy, which creates the means by which we improve the lives of our people. The NWC says water is life and we continuously work to improve the lives of our people.
The government has been very strategic and successful in partnering with the private sector and attracting private capital to develop critical public infrastructure. We have successfully used PPPs to develop our airport and seaports and our roads, in power generation, in water, in the provision of housing, and in other areas. We plan to continue to expand the use of PPPs in other areas such as national security, health, and education. As I have often said, but it is worth repeating, the government cannot do it alone. We need all hands on deck.
As I close my presentation, I will say to my good friend, Natalie, the government has made an allocation of 150 million dollars in the first instance to be used for critical local, secondary, and possibly some community roads. There is another allocation which will be done on a prorated basis, meaning that depending on the number of miles of roads that you have relative to the miles of roads in Jamaica, you will get an allocation relative to that so you could possibly get another 150 million dollars. So, each constituency could get up to 300 million dollars.
Now, I want everyone who is listening, who you might be today facing challenges about the road in your area, you get up every day you’re dropping potholes, you vex; in 2003, a good friend of ours said Jamaica will be pothole free by 2003. The struggle, Natalie, to improve our roads has been an ongoing struggle but no government has ever been in the position that this government has put itself in to actually be able to repair roads. You tell me when in the budget, this is not now a promise, this is in the budget that has been read those 300 million dollars per constituency has been allocated.
Now, even if we could snap our fingers and all roads are repaired, it still couldn’t be done in one year. We will never be able to repair all our roads that are in need of repair in one budget here. We need to identify the roads then it needs to go through a process of ensuring that whatever money we are spending on those roads makes sense; that is called the public investment process. Then once we say alright, the road that we identified, it makes sense to spend the money on it then we go through a process called procurement. Who gets to fix the road? And then when that is done, the road has to actually be fixed. Tractors have to be mobilized to dig up the road to lay the surface, all of that takes time. We presented a budget where we have identified the financing. We have put in place a process of consultation so I would urge you, Member of Parliament, to consult with your constituents to come up with the priority list and I’m sure based upon what I have seen that the road that we drove on would be a priority. Use that process let’s get that road fixed this year. Next year we get another set fix and then next year we get another set fix.
What has changed my Jamaican family is the process by which government can respond to your needs. No government has ever been in that position because if they even tried to do it, the only way they could do it would be to borrow and then when they borrow, they come back and put more tax on you. And then when they come back and put more tax, they say, you know what, let’s put a wage freeze. And then all the dreams and hopes are shattered. We going to a political cycle and then people change.
Now, you made a change for a government who will run the economy well, not be a burden on you, and then be caring enough to take those dividends from the good governance and the good management and spend it back on your roads; not one year, but for budget years to come to solve these problems that should have been dealt with 20, 30, 40, 50 years ago. They are being dealt with now so, Natalie, the one thing that I will take from your presentation, which I always agreed with, because when you drive along the flat bridge, you can see the communities having to walk to go to the Flat Bridge and they use the flat bridge to cross, which is quite dangerous. So, I agree with you that what you should now do, Natalie, in this new dispensation of how the country is run, is that I would invite you to develop a project. You have the project developed? Well then, you developed it in your time, we will be happy to implement it for you, Natalie. We will be happy to get it done for you.
So, Natalie, please don’t write to me as prime minister, write to me as the minister of economic growth and job creation with responsibility for works and other things. Send the project over. Let us look at it. This is why it’s very important because my friend Natalie is saying politics. You know what we have done to avoid that criticism, which is quite unfortunate? The government can spend no money on capital unless it goes through the public investment process. You know how we suffered for that by the Troy Bridge?
It would have been good politics for the government of the day to just take up the money and fix the Troy Bridge. You wouldn’t say it is politics, right, because that would be hidden by the fact that the people wanted the bridge to be able to cross but it is inherently a political act. We have insulated the expenditure of public resources by instituting this business called public investment assessment so any project that is going to come must go through that investment assessment. And it’s not led by us. The greatest complaint I have from politicians on both sides is the time it takes in public investment assessment and the time it takes in procurement. You know what has happened, the people are arguing in 2010, 2009, 2008, the old Jamaica. The new Jamaica now has so many institutions in place to protect public expenditure and ensure that we make the right decisions. We are in Jamaica 2.0, and we are building it out every single day.
Bear in mind as I close, this project was developed by Minister Chang in 2009. We lost the election in 2011. Developed the project, ready to execute, and we are only now able after almost 15 years to have the project done. Let’s just reflect on that. And who is doing it? I’ve spent almost 70 percent of my time treating with projects that were started by previous administrations that they didn’t have either the technical capabilities to carry through, the implementation capability, or the financial wherewithal. I don’t come here, Natalie, telling you that all the infrastructure work and everything that we’re doing is my original idea. No, I am doing the job that should have been done decades ago, that’s what we’re doing. And I really hope that the Jamaican people spend the time to honestly reflect on the situation that exists.
Ladies and gentlemen, you have been such a wonderful audience. Thank you so much.