Guyana: Berbice Bridge shareholders hike toll by 365% …… Government says don’t pay

Berbice Bridge shareholders hike toll by 365% 

Berbice Bridge. Guyana

Minister David Patterson

Dr. Surendra Persaud

Yesterday morning, during a press conference at the studios of the state-owned National Communication Network (NCN), BBCI Chairman, Dr. Surendra Persaud, insisted that the bridge company has rights under the current agreement with Government and will exercise those rights by increasing the tolls.

The company claims that it is up to $6B in debts, including dividends to shareholders.
The chairman said that the Board of Directors met with Minister of Public Infrastructure (MPI), David Patterson, on Thursday, October 11, 2018, to follow up on the Berbice River Bridge toll adjustments request, in accordance with the Berbice Bridge Act of 2006.

During the meeting, the Minister made it clear that Government was not going to facilitate any increases that are covered under the “Public Private Partnership between the Government and the private investors in the bridge under the Concession Agreement.”

The bridge was commissioned in December 2008, using almost 70 percent of financing from the National Insurance Scheme (NIS) and the rest from financial institutions, like the New Building Society, and companies including the Demerara Distillers Limited and Hand-in-Hand.
Patterson, instead, proposed that Government undertake the responsibility, only, for servicing the bridge pontoons and offered to arrange a meeting with the Minister of Finance, Winston Jordan, for further consultation.

However, according to Dr. Persaud, the options are outside of the contractual arrangements that exist within the Concession Agreement and are in breach of agreement.
The bridge has maintained that it is a private company. Since being commissioned, there have been burning questions over how a few companies which invested less than NIS had managed to take control of the board and company.

What the Berbice Bridge wants to implement

The previous administration, the People’s Progressive Party/Civic, had refused to release details of the financial deal. What is known is that the rate of returns was very attractive between nine and 12 percent.

On entering office in May 2015, the Coalition Government decreased tolls in an arrangement which saw an annual subsidy of over $150M being paid to the bridge, based on audited traffic figures.

Dr. Persaud maintained that the actual cost, in fact, of maintaining the bridge pontoons is a small part of the overall operational cost of the Bridge and would do nothing to improve the revenues.

He said, “Let me take this opportunity to refresh everyone’s memory that the construction of this bridge would not have been possible without a partnership with the private sector in which private sector financing contributed G$5.1B (US$25M).”
The bridge and its approach roads cost about US$40M.

Persaud said that the company wrote the Minister since July 9, 2018, requesting that he implement a toll adjustment to the current toll charges for the bridge, in accordance with a prescribed toll formula.
“We have now been formally informed that the GoG will not accommodate this request.”
Noting the transformation impact of the bridge for Berbice and Guyana, the Chairman, recalled the horrors of using the ferry service, between Rosignol and New Amsterdam in the past.

Losses of $2.8B
With regards to losses, the chairman said that these were accumulatively in excess of $2.8B.
No dividends have been paid to ordinary shareholders the company is now in default of obligations to its numerous stakeholders, including the NIS.
Dr. Persaud is also the chairman of the NIS.

“It is important that we understand that the NIS investment in the bridge represents an investment of all contributors to the scheme, without exception, past, present and future. These investments by the private companies have now been flagged by their respective auditors and regulators as impaired.”
He denied the belief that the required adjustment in tolls will benefit the shareholders.

“Since no adjustment was ever made, no surpluses have been earned, resulting in the required adjustments to the toll being compounded. Ladies and Gentlemen, There is a contract, there is an established formula within that contract and there are obligations to be met,” Persaud said.

With regards to statements by Government that the bridge has not maintained its almost 40 pontoons since the 2008 commissioning, the chairman stressed that the company has not neglected its obligations to maintain. In fact, it commissioned a $167M facility for this express purpose.

“Today continuing on this path and following the legal advice in relation to the rights and responsibilities of the Berbice Bridge Company Inc. and the Ministry of Public Infrastructure in relation to an adjustment in tolls we are now taking the next step in this process,” the official said.

Legal Grounds
The BBCI is convinced it is standing on legal grounds.
“On the basis of this legal advice that the Berbice Bridge Company Inc. has received, it now wishes to inform you and the public, that, consistent with those rights and responsibilities effective November 12, 2018 at 12:01am, the revised tolls will be implemented. Ladies and Gentlemen, as a company we are limited to the authorities granted to the company as stipulated in the Agreement that exists between the BBCI and the Government of Guyana.”

Persaud said that the Government has the option, similar to other services, to subsidize the cost of the toll thereby reducing the impact on the consumer.
Minister Patterson, in his Kingston office, hours after, was firm that Government’s position on the tolls increase remains the same—the government is not budging.
In fact, the matter will be handed over to the Attorney General Chambers for advice on the authority of the ministry and whether there is legroom.

He assured that Government will not sanction any increases for Berbicians and will not tolerate any bullying of the users of the bridge.
In fact, for next year’s budget, some $238M has been allocated for the maintenance of the structure.
Patterson said that it is not lost that the date of the increase is the same day of Local Government Elections. It appears that there are political machinations at work, he added.

He called on Berbicians to raise their voices.
He called on the Opposition Leader, Bharrat Jagdeo, under whose government the bridge came about, to engage.

Patterson also noted that Berbice private sector had appealed for the tolls not to be increased.
The ministry noted that the Coalition Government had delivered on lowering the tolls, among the highest in the world.
While the negotiations on the bridge had been ongoing, river taxis for the Berbice River were introduced to take nurses, senior citizens and school children, free of cost across the river.

He said that as part of the talks with the BBCI, the ministry proposed the taking over of the bridge maintenance for the next nine years– the remaining life of the concession.

What would be instructive to note, Patterson said, is that the bridge never applied to the previous government for an increase in tolls.
Government had commissioned a team from the Demerara Harbour Bridge to make an assessment of the Berbice Bridge and found that no maintenance was done to the pontoons since 2008, despite that these be conducted every three to five years.

According to Patterson, during the meeting with the board earlier this month, he asked that the bridge consider the investors reducing the rate of returns on their investments, among other information.
However, the bridge has failed to provide the information.

Questioned about the stance of Dr. Persaud, Patterson said that the official is his close ally.
The minister said he understands the position that Dr. Persaud faces in attempting for NIS to recover returns on its investments in the bridge.

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Comments

  • The Last Brahmin  On October 20, 2018 at 11:38 am

    THAT’S A LOT OF HOGWASH FROM PERSAUD, I WONDER WHAT IS HIS SALARY? THE PEOPLE SHOULD JUST BOYCOTT THE F***ING BRIDGE! HOW ON EARTH THEY EXPECT THE PEOPLE TO PAY SUCH EXORBITANT INCREASE?. FOLLOW THE MONEY, YOU WILL GET THE ANSWER.

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