The 9.5 per cent increase in the price of cement announced Tuesday by Trinidad Cement Ltd will not affect the $7.5 billion budget for the Sir Solomon Hochoy Highway extension to Point Fortin.
This according to Dr Carson Charles, president of the National Infrastructure Development Company of Trinidad and Tobago (Nidco).
Charles said yesterday that although the increase in cement prices would mean more money being paid to the contractor, the sum would be covered in the budget's escalation cap.
The escalation cap is a sum of money that is allowed for increase in prices over the contract period.
"The contract states that when cement prices go up there is a formula which describes how the increased price will be passed. In other words, we will have to pay more money. But remember the key thing is the $7.5 billion budget for the project, includes a provision for escalation due to these price increases. There is an escalation cap," he said.
Charles said expenses exceeding the budget will be incurred by the contractor OAS Construtora.
"The increase in cement prices will mean we have to pay more money to the contractor but will not cause an increase in the $7.5 billion budget," he said.
Charles said the escalation cap provides for an increase in the prices of cement, asphalt, steel and aggregate.
TCL announced an increase in the price of Premium Plus Cement which became effective yesterday.
A 42.5kg bag of Premium Plus Cement will now be sold between $54 and $59, up from $50 to $54.
In a statement the company reminded that it had announced last July that a review of prices would be conducted during the last quarter of 2012. TCL stated that it was no longer able to absorb the escalating prices in spite of improved operational efficiencies.