“It would be of interest to the public to know that BBCI asked the Private Sector Commission to use its good offices to arrange an urgent meeting with the Minister of Finance in the matter of the toll adjustment and that the Minister of Finance has refused to entertain the request.”
That was a quote taken from a statement that was issued by the Berbice Bridge Company Inc.’s (BBCI) Vice Chairman (VC) of the Board of Directors, Paul Cheong who highlighted concerns with what he said were lies being peddled in a section of media with regards to the reason why the company was forced to increase its tolls.
According to Cheong, “the BBCI is bound by its Concession Agreement under the Berbice River Bridge Act in implementing the tolls charged at the Bridge. The Company has no alternative but to honour the Toll Adjustment Formula prescribed in the Agreement. The Company has no discretion in calculating the amount of the toll. The Company is bound by the Toll Adjustment Policy dictating the Formula.”
He noted that the current level of toll adjustment is entirely the fault of the government, not the Company.
“Prior to and since taking office, this government has refused to meet with the BBCI in
spite of three (3) requests to do so. The power and the privilege to review or amend the
Concession Agreement rest entirely with the government” the Vice Chair explained.
The increases were announced by BBCI Chairman Dr Surendra Persaud during a press conference recently.
Cars and minibuses will now be charged $8,040; pickups, small trucks and four wheel drive vehicles, $14,600; medium trucks, $27,720; large trucks, $49,600; Art trucks, $116,680; freight, $1,680; and boats passing through the bridge will be charged $401,040.
The proposed increases are scheduled to take effect on November 12.
Chartered Accountant and Attorney-at-Law Christopher Ram had expressed the view that the incumbent Administration could easily rectify the situation but noted that they may be ‘playing politics’ with the issue.
Moreover, Ram is warning that in the event of Government buying out private shares, a fair offer must be made to investors.
In a recent interview with this media group, Ram noted the implications that come from the whole situation. He said that Government could risk undermining the confidence of the private sector in future Public/Private Partnerships (PPP).
At present, projects such as the new Demerara River Bridge and the Linden/Lethem road link are being premised on this PPP model.
“Government is not behaving like it’s a public-private partnership. That’s what it’s supposed to be. This is a joint effort by the state and the private sector to provide a public asset, financed by the private sector in which the government makes a contribution,” Ram said.
“There are concessions to the private sector, including tax holidays for a defined period, after which the asset goes to the Government… I believe the increase cannot go through without a toll order. The company cannot enforce the increase without a toll order.”
Ram noted that consideration must be given to the toll increase potentially affecting demand for the service, resulting in reduced revenue from the bridge. He acknowledged that the agreement provides for the tolls to be reduced as the debt is paid off.
“As the debts are paid off, the tolls will go down,” Ram noted of the project document. “Tolls will go down. Remember, you have to pay your loans. Then you have the preference dividends. All you have to do is pay the loans. And that’s how this project is conceived.”
One way of resolving the issue, Ram noted, was for the life of the concession period to be extended and guarantees be given to the creditors.
When it comes to suggestions being made for a buyout, he posited that careful planning is needed.
“All they have to do is say, ‘Look, when the bonds mature, they’ll reinvest the bond in new bonds at Treasury bill rates, because you wouldn’t get that anywhere else… The solution is staring them in the face, but they’re playing politics.
“If the Government wants to (buy out shares) it has to be fair. Government paid DDL (Demerara Distillers Limited) a premium for ordinary shares. Then surely it’s got to do the same thing.”
Government bought DDL’s shares for approximately $40 million in 2016. At the time, Finance Minister Winston Jordan had indicated that he was open to offers from shareholders “for the right price.”
It is an option several have posited could avert fare increases, as Government would be able to determine the tolls directly.
In fact, overseas-based economic Professor Tarron Khemraj feels that Government should buy over the Berbice bridge in its entirety.
He told this media group on Sunday that the bridge is now financially unsustainable, as compared to when the proposal for its construction was implemented.
At this stage, Khemraj said, it is clear the bridge has a dimension of higher public good than the private aspect. Therefore, he recommended, Government should buy out all of the shares.
“That’s a solution, albeit it can’t be the sole policy action; it will have to be followed by other actions. When you have a public good, the Government has to provide a subsidy. Otherwise, the private sector does not have the incentive to do so,” he explained.
Government has outrightly rejected the proposed toll increases, but has simultaneously stated its non-support for a buyout.
As the time draws closer to the date set for the imposition of fare increases at the Berbice River Bridge, there continues to be great worry over whether this could in fact take effect, or whether the Government would step in and reverse the decision.