The Opposition People’s Progressive Party (PPP) has called on the Government to stop blaming it for the troubles the Berbice Bridge Company Inc (BBCI) finds itself in, indicating that the current Administration is in a position to save the company from bankruptcy.
The BBCI recently proposed a 150 per cent increase in its tolls in order to meet its expenses. The Company said the increases were necessary, so it could make enough money to operate, conduct maintenance works, and pay dividends to shareholders.
The new tolls proposed by the BBCI would see cars and minibuses paying $8040 to cross the bridge; pickups, small trucks and four-wheel drive vehicles $14,600; medium trucks $27,720; large trucks $49,600; articulated trucks $116,800 and boats $401,040.
In a statement on Friday, the PPP called on the Government to take responsibility for its actions accusing it of decimating the local economy in Region Six (East Berbice-Corentyne).
“Thousands of workers were put on the breadline and, therefore, any toll increase will be an unconscionable burden on the backs of the users of the Bridge. The Government can address this issue and maintain the viability of the Bridge by doing either one of two things: provide a subsidy for the financing shortfall in the Bridge cash flows, and/or buy out the investors in the Bridge,” the PPP said.
Additionally, the PPP reminded that in 2014 the A Partnership for National Unity/Alliance For Change (APNU/AFC) used its one-seat parliamentary majority to pass a motion to reduce the tolls on the bridge. One year later when the APNU/AFC came into Government, it further reduced the bridge tolls “without making provision to fund capital repayment scheduled to commence in 2014 – a fundamental breach of the Concession Contract.”
In accordance with the Berbice Bridge Act passed in Parliament in 2006, the Government entered into a Concession Agreement with the privately-owned BBCI with one important section being the Toll Formula to calculate tolls. No changes in tolls were projected until 2014, the year the Bridge Company was scheduled to start repaying the principal on its debt; up to the end of 2013, only interest was being paid on its debt financing.
The PPP said it was willing to make public its 2006 financial model, which had toll increases in two years – 6.4 per cent in 2014 and 17.3 per cent in 2017 (compared to the 150 per cent that is now proposed), with these increases coming almost eight years after construction of the Bridge started.
“There is no shortage of project documentation for the Berbice Bridge BOOT (Build Own Operate Transfer) model. Under this model, a 21-year concession was issued to the BBCI, whose ownership and financing involved most of the local private banks, insurance companies, pension funds, the NIS, and corporate investors of Guyana,” the PPP said.
More than $8 billion was raised in the form of bonds, subordinate debt, preferred shares, and common shares (common dividends have never been paid). Government, with funding from the Inter-American Development Bank (IDB), built the access roads. The project did not receive any Government guarantee.
Just Thursday, Public Infrastructure Minister David Patterson said he would be bringing Cabinet’s attention to the toll increases proposed by the BBCI. The Minister made the statement on the heels of the Public Infrastructure Ministry saying it rejected the proposed increases while alluding to the APNU/AFC’s campaign promise of reducing the tolls.
The ownership structure of the BBCI is made up of ordinary share capital of $500 million owned by private investors and preference shares of $950 million owned by the 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.
Opposition Leader Dr Bharrat Jagdeo had said recently that while he was against a increase in the bridge tools, he would encourage Government to buy more equity in the Company.
Jagdeo reasoned that Berbicians could not afford the steep increases that the Company has proposed at this time. He said this was mainly so because the company is contractually obligated to maintain the Bridge. Instead, he is recommending that Government buy out other shareholders, so the Bridge becomes publicly owned.
“Secondly, subsidise the increase that should take place in the toll so they give an injection into the Company so the rate remains flat.” This formula, according to Jagdeo, would entail taking over the debt of the Bridge and securing greater equity in return.