Following the position stated by government that it is not inclined to support an increase in the tolls being requested by the Berbice Bridge Company Inc. (BBCI), an increase which the company had stated was enshrined in the Public Private Partnership (PPP) agreement when the company was formed, BCCI today said that government is ignoring its contractual obligations.
Articulating its position via statement, the BCCI said that “We have noted that the government in its response to the Berbice Bridge Company Inc. (BBCI) has, unfortunately, chosen to ignore its contractual obligations under the Concession Agreement entered into with the Berbice Bridge Company.”
During a press briefing on Tuesday BCCI Chairman Dr Surendra Persaud, had among other things posited that the company applied for a toll adjustment on three occasions; twice in 2015 and once in 2016, to no avail. They have since made another such application, dated July 9. In that application, the company had requested that the toll increases take effect by August 1.
“We are in a situation where the contractual obligations of a public private partnership have not been met on the Government’s part and if not corrected, is likely to affect the willingness of the Private Sector to partner with the Government in future infrastructure projects,” Persaud also said.
Moreover, Persaud noted that “There is a contract, an established formula within the contract and there are obligations to be met. The tolls ought to be adjusted in accordance with the agreement, in good faith, to allow the company to properly maintain and operate this critical infrastructure.”
“The current tolls to the commuters are subsidised in two parts, one: internally by the company as it has not charged the toll as per the agreement and two: by the Government of Guyana, having subsidised the old toll prior to the adjustment, in accordance with the agreement of June 12, 2006.”
The internal subsidy by BBCI was implemented after Government had rejected the company’s previous toll adjustment application, while the Government subsidy is a basic reduction of $300 in the tolls.
The company, according to Dr Persaud, has now accumulated a loss of $2.8 billion and faces the distinct possibility of going bankrupt. Besides the losses having prevented the company from paying out dividends, it has impacted the ability to service the 39 pontoons under the bridge.
The Public Infrastructure Ministry in responding to an increase in tolls said that it stands by its decision to have the tolls reduced and that “the Bridge Agreement places obligations on all parties, which include scheduled maintenance and associated upgrades. Any request for toll increases must take into consideration a wide array of factors and cannot solely be on the basis of recouping operational costs and profits on dividend.”
The BBCI on Wednesday pointed out that the government “has made it impossible for the Company to meet its contractual obligations to operate and maintain the bridge by the government refusing to honour the Concession Agreement under which the Company is provided with the necessary revenue to operate and maintain the bridge.”
However, the Board, according to the BBCI, still believes that the situation is fixable.
“There is a contract, there is an established formula within that contact and there are obligations to be met.The Company trusts, therefore, that the Minister of Public Infrastructure, instead of ignoring its application, will come to the table as required by the Concession Agreement.”
The ownership structure of BBCI is made up of ordinary share capital of $500 million owned by private investors and preference shares of $950 million owned by National Insurance Scheme (NIS).
The bridge has a wide cross-section of investors including various pension schemes, insurance schemes, local banks as well as private companies and NIS.