Ex­ec­u­tive chair­man of NH In­ter­na­tion­al, Emile Elias, says the Gov­ern­ment pro­cured the new, sev­en-storey Min­istry of Health build­ing on Queen’s Park East with­out hav­ing to put out one cent dur­ing con­struc­tion.

“The tax­pay­ers of this coun­try have a fixed in­stal­ment for 15 years. They will save hun­dreds of mil­lions of dol­lars in rent, which will be paid to­wards own­er­ship of the build­ing in 15 years...It is a mod­el that works very well be­cause it does not add to the coun­try’s debt,” said Elias, as he ex­tolled the virtues of the build, own, lease, trans­fer (BOLT) arrange­ment un­der which the build­ing was de­signed, con­struct­ed and fi­nanced for a to­tal of $280 mil­lion start­ing in ear­ly 2021.

Asked whether the project came in on time and on bud­get, Elias said: “That’s one of the ben­e­fits I want to talk about when we speak about BOLTs.

“There is no such thing as on bud­get. There is a com­mit­ment to con­struct a build­ing at a price, so if the con­trac­tor does not bring it in at that price, they lose mon­ey.

“The ques­tion you asked is based on a tra­di­tion­al con­tract for a build­ing, that is there could be cost over­runs. With a BOLT, that con­cept is put in a draw­er and locked away.”

He ex­plained that the struc­ture of a BOLT is one in which the pro­po­nent, which in this case would be NH, quotes the client, the whol­ly state-owned Ur­ban De­vel­op­ment Cor­po­ra­tion of T&T (UDe­COTT), a quar­ter­ly lease rental, which is fixed.

That means NH guar­an­teed to the fi­nancier of the project, Re­pub­lic Bank Ltd, that it would com­plete the con­struc­tion and out­fit­ting of the build­ing at the es­tab­lished cost of $280 mil­lion “or the con­trac­tor would eat the dif­fer­ence.

“All the Gov­ern­ment does when it gets the build­ing is pay a quar­ter­ly lease rental. So, there is no such thing as a cost over­run in a BOLT.”

Elias said the cost of the de­sign, con­struc­tion, and com­plete out­fit­ting of the build­ing was $250 mil­lion. The trans­ac­tion costs and bridg­ing in­ter­est took the cost of the build­ing and the as­so­ci­at­ed car park up to $280 mil­lion.

He said in the com­pet­i­tive ten­der process for the build­ing, NH In­ter­na­tion­al quot­ed a lease rental cost of $7.83 mil­lion a quar­ter or $31.32 mil­lion a year, based on the all-in cost of the build­ing of $280 mil­lion.

Over the 15-year life of the BOLT arrange­ment, that works out to be $471.3 mil­lion, which is the amount of mon­ey the Gov­ern­ment, through UDe­COTT, would pay over 15 years be­fore the ti­tle to the prop­er­ty is hand­ed over to the Gov­ern­ment.

Speak­ing at the rib­bon-cut­ting cer­e­mo­ny for the build­ing on Au­gust 7, Min­is­ter of Health, Ter­rence Deyals­ingh, said the Min­istry cur­rent­ly pays $1,045,978.93 a month in rent to oc­cu­py sev­en leased lo­ca­tions. That works out to be $12,551,747.10 a year.

“We have been pay­ing rent for decades with noth­ing to show for it. Ab­solute­ly noth­ing. So the tax­pay­er has got noth­ing tan­gi­ble,” said Deyals­ingh.

If there were no es­ca­la­tion in the rental cost over 15 years, the to­tal cost to oc­cu­py those sev­en lo­ca­tions would be $188,276,207.40.

“With this BOLT arrange­ment, the to­tal sum ap­proved by Cab­i­net was $471,307,920. That’s the val­ue. The pay­back or lease per month is go­ing to be $2,618,377 VAT ex­clu­sive. But at the end of 15 years, the tax­pay­er will own this build­ing. It will be yours,” said Deyals­ingh.

“It will re­dound to the ben­e­fit of the coun­try at large be­cause you will have some­thing tan­gi­ble at the end of 15 years,” the Min­is­ter added.

The $2,618,377 VAT-ex­clu­sive lease rental un­der the BOLT arrange­ment for the new Min­istry of Health head­quar­ters comes up to $31,420,524 a year. That com­pares to the $12,551,747.10 the Min­istry of Health cur­rent­ly pays to rent the sev­en lo­ca­tions.

Ques­tioned about the fact that the BOLT arrange­ment en­vis­ages the Gov­ern­ment pay­ing $31.42 mil­lion a year for the new Min­istry of Health head­quar­ters com­pared to its cur­rent rental pay­ments of $12.55 mil­lion a year, Elias said: “The lease rental pay­ment for the new build­ing is to­wards own­er­ship of that build­ing in 15 years. The cur­rent rental pay­ments go up in smoke; the Gov­ern­ment gets noth­ing for it.”

The con­trac­tor em­pha­sised that while the re­cur­rent cost un­der the BOLT arrange­ment is high­er, “a sub­stan­tial pro­por­tion of that re­cur­rent cost is to­wards the cap­i­tal pur­chase of the build­ing. The Gov­ern­ment saves a great deal of rent and they have vast­ly su­pe­ri­or fa­cil­i­ties for the staff com­pared to what they are pay­ing now.”

At the end of the 15-year lease pe­ri­od, the build­ing is trans­ferred to the Gov­ern­ment for the nom­i­nal sum of $1.

Elias said the new Min­istry of Health head­quar­ters build­ing is a per­fect ex­am­ple of his be­lief that every project is an op­por­tu­ni­ty for na­tion­al de­vel­op­ment.

“I want to em­pha­sise that the con­trac­tor is 100 per cent lo­cal; all the de­sign­ers, ar­chi­tects and en­gi­neers are lo­cal; we mo­bilised lo­cal fi­nanc­ing and all the work­ers are lo­cal,” he said.

“The peo­ple of T&T should be very proud when they dri­ve or walk past the build­ing to know that it is a 100 per cent na­tion­al­ly built,” as op­posed to be­ing de­signed, con­struct­ed and fi­nanced by a for­eign gov­ern­ment and built with for­eign labour.

21st-cen­tu­ry fa­cil­i­ties

Elias said the fa­cil­i­ties man­age­ment is al­so the re­spon­si­bil­i­ty of NH In­ter­na­tion­al for the 15-year term of the lease.

“NH has the re­spon­si­bil­i­ty un­der the BOLT agree­ment to main­tain the fa­cil­i­ty. We have a fa­cil­i­ties man­age­ment di­vi­sion with­in NH do­ing that, with a fa­cil­i­ties man­ag­er ap­point­ed,” said the ex­ec­u­tive chair­man of NH In­ter­na­tion­al.

“The main­te­nance of the build­ing is not part of the lease in­stal­ment,” which means the fa­cil­i­ties man­age­ment fee is not in­clud­ed in the an­nu­al $31,420,524 cost of the lease arrange­ment.

Elias told the Busi­ness Guardian that the new build­ing on Queen’s Park East is 160,000 square feet. With the cost of de­sign, con­struc­tion and fi­nanc­ing to­talling $280 mil­lion, the cost per square foot is $1,750.

“That is a give-away price. Isn’t it shock­ing? That is an amaz­ing­ly-com­pet­i­tive price. That $1,750 is the ba­sis on which the in­stal­ment was cal­cu­lat­ed,” he said.

The $1,750 per square foot all-in cost of the build­ing in­cludes all of the risks of the cost of the project be­cause the BOLT arrange­ment does not al­low an es­ca­la­tion in prices (cost over­runs), said Elias.

The cost per square foot al­so in­cludes the com­plete out­fit­ting of the build­ing up to 21st-cen­tu­ry stan­dards, which in­clude build­ing man­age­ment sys­tems and tech­nol­o­gy.

“I is­sue a chal­lenge to any­body in the en­tire Caribbean to match that per­for­mance and price,” Elias said.

Asked to com­pare the per-square-foot cost of the Min­istry of Health head­quar­ters with the cost of the new Cen­tral Block of the Port-of-Spain Gen­er­al Hos­pi­tal (Block 5), the vet­er­an con­trac­tor said: “When that con­trac­tor de­mand­ed an ex­tra $90 mil­lion to cov­er the un­ex­pect­ed in­fla­tion that took place over the last two years with COVID-19, sup­ply chain is­sues and vast in­creas­es in freight, and this was re­fused (by the Gov­ern­ment), the Chi­nese con­trac­tor walked off the job.

“We suf­fered from the same is­sues—in­fla­tion and COVID with the en­tire con­struc­tion site be­ing shut down on 30 to 40 oc­ca­sions be­cause some­one de­vel­oped COVID symp­toms—but we did not walk off the job.”

Asked whether his com­pa­ny made a prof­it on the BOLT arrange­ment, Elias said: “No be­cause we had to ab­sorb a great deal of in­fla­tion costs and COVID-19 re­lat­ed costs.”