(CNS Business): The government’s negotiations with China Harbour Engineering Company for the development of cruise berthing facilities have been confined to George Town and Spotts, sources close to the talks told CNS Business this week. Speculation that a deal has already been signed by the premier was dismissed Wednesday but sources stated that the talks could lead to a full agreement shortly that would not include the development of piers in either West Bay or Cayman Brac. In addition, sources state that the cost of the project is now estimated to be around $220 million, contrasting with recent estimates that it could exceed $300 million.

It is now more than 18 months since the premier terminated talks with GLF Construction for a $150 million proposal that included two finger piers and a smaller terminal development, turning instead to the Chinese firm.

CNS understands that while the West Bay and Cayman Brac projects are no longer part of the talks, the Spotts renovation will shortly be going out to tender for local contractors. Plans have been submitted to the planning department with a coastal works application before Cabinet. It is not clear, however, if an environmental impact assessment (EIA) is being planned for the Spotts jetty upgrade.

Although the firm has been at the centre of a number of controversies in the region and the Foreign and Commonwealth Office has said it is unlikely to approve any deals with CHEC that do not follow international procurement practice, the premier has stated that he intends to continue talks with the Beijing-based company. Alongside the UK’s concerns, the CHEC port proposal has also generated considerable local opposition, mostly centred on the choice of developer and the growing size and cost of the proposals.

Following months of silence on the subject, while Bush was still in China at a financial service conference this week, the regional representatives for CHEC released on official statement on Wednesday saying that an announcement will soon be made to update the Cayman Islands public on the current status of the project.

Describing the talks between the firm and the CIG as successfully making progress, officials from CHEC said that once the port was complete Cayman would retain its position as “a cruise ship destination of choice”. Zhongdong Tang, CHEC Regional Director for the Caribbean and Latin America, said his company brings with it “considerable expertise in its field, as CHEC has been recognised globally as a major contractor, with more than USD10 billion worth of projects currently on the go in more than 70 countries.”

However, the firm also brings with it a number of more controversial issues as its parent company remains on the list of firms banned by the World Bank as a result of accusations of fraud and corruption. The firm is also embroiled in controversies in the region, in particular in Jamaica where politicians have been accused of corruption in relation to the various development projects undertaken by CHEC and sub-contractors.

The Cayman government has stated on several occasions that CHEC would be required to engage local labour and local subcontractors. The firm said Thursday that it would be bringing highly technically-skilled and efficient professionals to the project.

“We also intend to use our skills to train the local workforce to ensure that as many local residents benefit from the job creation the new project will produce,” Tang said, adding that CHEC would work with and train local companies in as many aspects of the project as possible “in order to spread the economic benefits a project of such magnitude will bring to the Islands.”

Although Bush has made it clear that he believes CHEC is the best company for the job, the FCO has also made it clear that it will not offer its approval for any major project involving government finances where a competitive tender and best procurement practice is not in evidence.

Under the CHEC proposal, the Chinese firm would finance, as well as design and develop the cruise berthing facility, which would include two finger piers and a massive upland development. However, it would be taking money from passenger taxes that currently go to government coffers in order to recoup its investment. As a result, the project is subject to the Framework for Fiscal Responsibility agreement with the UK that Bush has already signed and which the Foreign and Commonwealth Office is expecting the Cayman government to enshrine in local legislation during next month’s Legislative Assembly meeting.