New Demerara Bridge is sugar’s death knell

…as analyst exposes millions in hidden costs to be borne by taxpayers

Economic Advisor to the Opposition Leader, Dr Peter Ramsaroop believes the new Demerara River crossing is nothing more than the President looking to leave in place a legacy – in the face of his acceptance of his fate as a one-term Head of State – and it will be the final nail in the coffin of the sugar industry of Guyana.
This was posited this past week during an interview with Guyana Times by

Public Infrastructure Minister David Patterson

Ramsaroop, who contends that Public Infrastructure Minister David Patterson – in his defence of what will be undoubtedly Guyana’s single largest project – “has either all but exposed this fallacy or is himself clueless as to what is really going on around him”.
The financial analyst told this publication this could be gleaned when taking even a cursory look at the feasibility report for the construction of a new Demerara River crossing which was done by the coalition Government – a report that cost in excess of $150 million.
According to Ramsaroop, the report outlines three possible toll increases from year one of operation, ranging between 100 per cent and 300 per cent.
“This increase alone on an already struggling population is nothing short of unconscionable,” he said.

Hidden costs
Ramsaroop has since surmised, however, “the problems do not end with mere toll

Economic Advisor Peter Ramsaroop

increases, since, in all of the financial models that have been presented to this administration by their consultants, it repeatedly dismisses them as not viable given the US$170 million price tag for the bridge alone…Each of the models proposed require an untold amount of Government support.”
The financial analyst said, “These people are smart in a way, because the report speaks to a construction cost of US$150 million with additional financing such as interest during construction and in all of the designs there are mass expanses of road networks that are not optional.”
He is of the firm belief that the true costs of this project have not even been laid out in the report, since there is no reference to the actual cost of the accompanying elevated road network and ancillary structures.
Only recently, the Administration inked a contract for the upgrades of the East Coast and West Coast Demerara Public Roads.
Ramsaroop reminded that each of those projects was for in excess of US$40 million.
“This means that already the bridge project exceeds either the expansion of the Cheddi Jagan Airport or the Skeldon Sugar Factory…together those projects cost US$280 million.”
He surmised, “Already by just including the cost of the road, we can see that this new bridge is going to cost almost the same as Guyana’s two largest projects combined….”
According to Ramsaroop, those speaking in defence of the project are not saying that none of the financial models are viable and that the tolls increased by 300 per cent for vehicular traffic and 700 per cent for river traffic…..the tolls are not even enough to cover the operations of the bridge.”
The financial analyst noted that in the report, in each of the models chosen by the consultants, they have stressed the need for Government input either in the form of guarantees on debt payments, equity investments, zero per cent interest loans and regular subsidies as a means of support.
He pointed to the report where in one proposal Government was asked for as much as US$140 million in subsidy in the first decade of the bridge’s operation.
According to Ramsaroop, “this act has to be some sort of political heresy since taxpayers are being asked to essentially foot the bill for a project that can’t even pay for itself…Not only will it become a burden on the downtrodden man, even those dependent on a minibus for their daily commute, but with the State having to pour billions into the construction, maintenance, debt servicing and all that comes with it, there is little left for other sectors.”
One such sector for which the new Demerara River crossing will spell certain death is the sugar industry.
Ramsaroop drew reference to the fact Cabinet met on Tuesday last while President David Granger was out of the country at the United Nations General Assembly.

Prime Minister Moses Nagamootoo, “the man that had championed himself as a defender of sugar workers no doubt would have had to support the key item on the agenda, a multi-billion subsidy for the Guyana Sugar Corporation in order to meet employment cost.”
“In other words, pay people their salaries,” Ramsaroop stressed.
“How on earth is this country going to be able to afford to pour money into Granger’s legacy project and at the same time be able to make the investments and cash transfers necessary in order to save the jobs of thousands of Guyanese?”
According to Ramsaroop, “there is nobody that does not see the need and importance for a new bridge, but at what cost…can we really afford to give over to the State more than US$300 million over the next 10 years just to say we built a bridge, a bridge that cannot even make enough money to carry out its own operations?”

Red flags
He told this publication the new crossing over the Demerara River is undoubtedly needed, but “if Burnham could have bridged that river decades ago at a cheaper cost, his protégé certainly can find not only a cheaper way to get it done, but a way that saves the sugar industry and the thousands of jobs that depend on that industry”.
The red flags are there, he said, and used as an example the projected increase in tolls from US$5.4 million in the first year of operation to more than $8.4 million a decade later.
This projection is based on a five per cent increase projected for road traffic. According to Ramsaroop, what the report seems to have forgotten is that the majority of physical land space that is the most accelerated in terms of development lies on the eastern bank of the Demerara River.
“This, together with the planned East Bank bypass road, would mean even if the projected increase in vehicles were to be realised, they are not going to be using the bridge…besides people will avoid that bridge like a plague because of the high tolls.”
According to Ramsaroop, “Patto (David Patterson) must be sailing if he still believes that this project is not dangerous to the country when that very report says revenues from toll make up for the operation expenditures but cannot support the debt service.”
Dr Ramsaroop said it was clear the Alliance For Change (AFC) had lost any bit of clout it ever held in Granger’s coalition as was evident in Patterson’s ill-informed outbursts.
“The report itself says the toll rates can be increased, but there is a limit to that since a too-large increase would make the toll unaffordable for many of the people who have to use the bridge….How can you defend such a project knowing fully well that the Government support the consultants are asking for is in fact the assistance currently going to thousands and thousands of Guyanese in poor rural communities, poor Guyanese that depend on the continued survival of the Guyana Sugar Corporation.”