Today’s Editorial for November 27: A case for PFI

Here we go again.

The government has entered into contracts to build major infrastructure projects and serious problems have arisen.

Two weeks ago, general contractor Tom Jones International walked off the jobs sites of two high school projects because of a dispute with the government. Yesterday, the government served notice of termination of the contract it had with Tom Jones, citing breach of contract.

It’s not that government is always at fault in these matters – indeed the issue of fault in this case will likely be decided years down the road in a court of law – it’s just that every time government wants to build as major infrastructure project, major problems seem to arise.

Just in recent history we’ve had problems with the George Town Hospital project; problems with the Boatswain’s Beach project; and problems with the Royal Watler Cruise Terminal project. And while the Government Office Accommodation project has appeared to be moving forward without problems, we’re aware of an unsolved mediation process on the job that could turn nasty if an amicable resolution isn’t reached.

Regardless of why the problems always seem to arise, the question has to be asked: is there no way to stop this pattern?

One possible way would be to utilise a Private Financing Initiative or Private/Public Partnership. With these schemes, a private entity designs and builds the infrastructure project for government. Government then leases the property for a set number of years, before eventually acquiring ownership. Government stays out of the building process and the developer takes on all of the construction risks.

It is true the total cost of the lease arrangement usually exceeds the cost of building the project alone. But government doesn’t have to pay for or borrow all of the money to fund the project up front, and, just as importantly, government doesn’t have to deal with all of the expensive problems that always seem to arise every time it attempts to build a major infrastructure project on its own.