BBCI wants Minister Patterson at negotiation table
…Opposition Leader recommends Govt buys shares
One day after announcing a proposed increase in tolls for the Berbice River Bridge, the Berbice Bridge Company Inc (BBCI) has said it would prefer that Public Infrastructure Minister David Patterson met with them at the table, instead of having their application for concessions completely ignored.
The company said Government has, unfortunately, chosen to ignore its contractual obligations under the Concession Agreement entered into with the Berbice Bridge Company.
It said in a statement on Wednesday that it wished to point out that by doing so, 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. As the Company has pointed out, its Board 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,” it stated.
During a press conference on Tuesday, the company’s Chairman, Dr Surendra Persaud revealed that it is now facing bankruptcy following Government’s decision to drop the toll and subsequent refusal to allow for an increase as per the initial agreement when the Company was formed.
Persaud is also Chairman of the National Insurance Scheme (NIS), which holds a significant number of shares in the company. According to him, they have had several engagements with Patterson. Following a previous engagement, Patterson had informed them that a maintenance proposal would be taken to Cabinet.
According to the Chairman, they were subsequently informed that it was not approved. In fact, the Company applied for a toll adjustment on three occasions: twice in 2015 and once in 2016, to no avail. It has since made another such application, dated July 9, 2018. In that application, the Company had requested that the toll increases take effect by August 1.
But following the press conference, the Public Infrastructure Ministry issued a statement in which it said Government was not contemplating any fare hikes.
According to the statement, “Government stands by its decision to reduce tolls in
fulfilling a campaign commitment and will continue to work with the Berbice Bridge Company in ensuring that the Bridge is sufficiently maintained and safe for vehicular and marine use.”
Further, Government said that the Bridge Agreement places obligations on all parties, which include scheduled maintenance and associated upgrades. It said 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.
Meanwhile, based on the announcement made by the Company with regard to the proposed increase in tolls, Opposition Leader Bharrat Jagdeo told a media conference on Wednesday that he was against it but more so 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.
Jagdeo reminded that there was a financial model in place under the past Government, but noted that he was unsure what had become of that under the
coalition Government. He strongly believes that the financial model may have been interfered with and this was something that had to be explained. “These people are screwing everything up. They are in a dilemma now because they are caught by their own rhetoric and what they did. They deferred all the problems in the three years, so now it’s catching up on them,” he said, explaining that the Government’s action could determine how future investors respond to invitations for Public-Private Partnerships.
The Company is seeking increases in tolls as per the adjustment formula set out by the agreement between the BBCI and with the Government of Guyana. It is understood that this tolling requirement was not applicable until 2014, after which they made their first request just prior to the former Government leaving office. According to the toll policy, the increase is calculated based on “the level of traffic on and under the bridge for the two previous financial years.”
According to the policy, “it takes consideration of the toll levels at the start of operations, any provisional toll level applied during the year and the toll level at start of operations adjusted for inflation.”
The policy goes on to note that the toll level is adjusted by the use of the consumer price index of the most recent period and two years prior to that. The second part of the formula, it added, computes a provisional toll level to be used until near the end of the financial year.
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 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.