Augustine: THA must find funds for 'critically-needed' projects

CHIEF Secretary Farley Augustine says the Tobago House of Assembly (THA) is on the hunt for money, outside of its annual development allocation from central government, to fund  “critically needed” projects on the island.

But he said the main source of income for the THA will continue to be the subvention from the national budget.

“That is how we pay for everything,” Augustine told Sunday Newsday on Wednesday.

“However, we are actively working on a strategy to increase revenues outside of the subvention. Hence the reason we have been pursuing an export licence for Studley Park (Quarry).”

In September, Tobago received an allocation of $2.5 billion in the $57.6 billion budget to manage its affairs over the next year. Augustine had requested $3.9 billion in the THA budget presentation in June.

Of the $2.5 billion, $2.2 billion was allocated for recurrent expenditure, $300 million for the THA development programme, $18 million for URP and $9.2 million for CEPEP.

Augustine is currently in the UK as head of a Tobago delegation at the World Travel Market. The contingent comprises Secretary of Tourism, Culture, Antiquities and Transportation Tashia Burris and other tourism stakeholders. The event ends on November 13.

But earlier this week, he presided over a meeting of executive and administrative heads to discuss, among other things, a reprioritisation of projects after the THA’s $1.4 billion shortfall in the budget allocation.

At the meeting, he said he will present, later this month, a stream of projects/programmes that the THA intends to execute across the island.

“So that you will be at home and be able to create your own checklist and be able to check off with us as we deliver on these projects.”

Augustine said the meeting also addressed the “inescapable need” for alternative funding sources to drive the island’s development programme.

“So we are looking just beyond what we were allocated in the budget. We are looking at alternative ways of funding public projects.”

He added the THA will also be making some unconventional moves.
“You will see the THA, in a very bold way stepping out into the world and seeking investments and investors, attracting them to the Tobago space.”

Augustine said some projects are desperately needed even though the THA does not have the money to fund them immediately.

The newly-constructed Smithfield-Dutch Fort connector roads in Scarborough are an example.

On October 28, Augustine revealed that the THA did not pay any money up front for the connector roads which links the communities of Mt Marie and Dutch Fort.

He said Trinidad company, California Stucco Ltd, which the THA contracted to carry out the project, did all of the work with its own money.

Augustine said this was the case because the THA simply did not have enough money in its development budget to do the project. The project began on October 7 and was completed on October 26. Augustine said the first payment is due in July, 2023 and the second in April, 2024. The value of the contract is $19,480,61.06.

The THA also awarded a $54,781,820 contract to a Trinidad-based roofing company, Innovative Roofing and Construction Solutions, to construct the Milford Court/Pigeon Point Connector Road.

It also awarded a contract for $25,872,595.88 to Construction Services and Supplies Ltd for roadworks from Argyle to Roxborough/ Bloody Bay Road.
In the Sunday Newsday interview, Augustine assured that the THA will be able to pay California Stucco Ltd and any other company it has contracted for development work at the designated times.

“We were quite calculated in deciding on the payment terms.”
He said smaller payments stretched over a longer period is better than trying to have large payments all at once.

But Augustine noted, “Paying smaller amounts over a longer period of time will attract a higher cost because it is like a hire purchase essentially.”
He said this approach will not be used for every development project as it will affect cash flow.

“But we will be using strategies to get projects going.”

Asked if the THA can be taken to court for late payment, Augustine said, “The THA can always be sued and has been sued in the past. In fact, we are paying off lawsuits from the previous regime. But we intend to honour our contracts.”
He said it is wise to use a mixture of approaches.

“It is not a one-size, fix-all approach. But there are some infrastructural works that Tobagonians cannot afford to wait on. Our public road infrastructure is crumbling. We have a situation of 21 years of neglect and Tobagonians want their roads fixed and they want it now. And they have every right to demand their fixes now. We have to therefore use a fixed-funding approach to get the work done.”

Augustine said this challenge is not unique to Tobago.

“We are seeing the protests in Trinidad every Monday morning about public infrastructure. This country needs a comprehensive plan to overhaul our failing public infrastructure.”

On the issue of borrowing to fund projects, he said, “The THA cannot borrow without the permission of the Minister of Finance. The previous administration did some borrowing. But we have not borrowed any money and there is no decision to borrow any money at this juncture by my administration.”

Sunday Newsday sought the views of the TT Contractors Association about the arrangement between the THA and California Stucco Ltd.

The association’s president Glenn Mahabirsingh said there are basically two models for procurement work – design-build-finance, design-build and construct – all of which are used internationally.

He said it appears as though the THA used the design-build-finance model in which there were some negotiated and contracted repayment terms.
Mahabirsingh said in such situations, the contractor usually takes some risk in terms of carrying the financing and agreeing to some repayment terms at specific periods.

“Once the business model is studied and understood and he allows for it, I guess the contractor takes the business risk.”

Augustine, at the commissioning of the Scarborough connector roads, said “the contractor that had to do this work had to have their own money up front.”
“Because you will appreciate, you are coming to the end of the fiscal year, we inherited a fiscal year that was already started and did not have any $300 million for development anywhere.

“And given the constraints we have with funding for development, we have to continually use some of these alternative financing mechanisms in order to get projects completed.”

On that occasion, he also claimed the former PNM-led THA had spent all of the development budget on “careless” projects in the lead up to the December 6, 2021 THA election.

The PNM and others have called on the THA to say how a roofing company was able to tender and later awarded the contract for the connector road.

Editor's Note: This story has been updated to include the value of California Stucco Ltd's contract.