Toll hike for Berbice Bridge as Govt talks hit roadblock

– increases to go into effect from November 12
…shareholders call for Govt buyout
…as NIS seeks to protect investment

By Jarryl Bryan

New tolls will be implemented for the usage of the Berbice River Bridge, after the Berbice Bridge Company Incorporated (BBCI) hit a roadblock in its talks with the Government for increases in keeping with its agreement.
This was announced by BBCI Chairman, Dr Surendra Persaud, during a press conference on Tuesday. According to Persaud, the company was formally informed by Public Infrastructure Minister David Patterson that Government would not agree to requests for an increase.
“The Minister instead proposed that the Government undertake the responsibility only for servicing the bridge pontoons and offered to arrange a meeting with the Minister of Finance for further consultations on the matter,” Persaud, who is also the Chairman of the National Insurance Scheme (NIS), said.
“Please note, however, that these options are outside the contractual agreement

that exist within the contractual agreement and thus would be a breach… The construction of the Berbice Bridge would not have been possible without a partnership between the Government and Private Sector. In that partnership, the Private Sector invested approximately $9 billion.”
Persaud revealed that maintaining the pontoons is only a small part of the operational cost. He added that the Minister’s offer would be of “little” help. As a consequence, and following legal advice being tendered, increases will be applied to all classes of vehicles.
Cars and minibuses will now be charged $8040; pickups, small trucks and four-wheel drive vehicles, $14,600; medium trucks, $27,720; large trucks, $49,600; Art trucks, $116,680; freight, $1680 and boats passing through the river will be charged $401,040.
These increases go into effect from November 12, a date Persaud stressed was advised by their legal team from Cameron and Shepherd. The BBCI Chairman also made it clear that the increases were compounded by the inaction on the issue.
“There appears to be a fallacy that the required adjustment would benefit the shareholder. This is not the case. Any excess revenue, as detailed in the tolling policy, is applied to an adjustment in the following year.”
“Since no adjustments were ever made, no surplus has been earned, resulting in the adjustments to the toll being compounded. There is a contract. There is an established formula within the contract.”
Persaud also noted that Government can subsidise the costs of the increases. He pointed out that this is implemented around the world and that Government has a track record of such decisions.

NIS investment
The majority voting rights on the BBCI board of directors is controlled by the National Insurance Scheme (NIS). A source close to the entity on Tuesday told this publication that the NIS through its chairman, Dr Surendra Persaud, was forced to push for the increase in tolls in order to protect its investment. The source noted that rightly so, Dr Persaud duly complied.

Shareholders non-support
for increases
Meanwhile, this publication reached out to other shareholders with ordinary shareholders several of whom stated that they did not support the magnitude of the increase being proposed, adding that such increases will cause severe economic hardship to commuters.
One of the shareholders told Guyana Times that the it however recognises that the Berbice Bridge is in serious financial jeopardy given that debts have reached maturity and few options are available to stave off bankruptcy.
“The Government should to sit down with the bridge company and work out the appropriate subsidy with due reference to the financial model and or the Concession Agreement. This is necessary as a result of Government’s refusal to allow incremental increases, or in other words, refusing to honour its contractual obligations as per the Concession Agreement,” the shareholder said.
Another noted that if an agreement cannot be reached, them it is recommended that the Government buy back the bridge and compensate investors in keeping with the financial model and other investment documents.
“Once the Government executes a buyback it will be able to lower tolls. If this is approached properly Government might still be able to preserve public private partnerships in Guyana,” the shareholder stated.
It added that the investors assumed significant risk to build the bridge. While the Bridge has been de-risked for several years, following its successful opening, the ordinary shareholders are yet to receive a single cent in dividends.
“We recognise the efforts of the directors of the bridge company who has a fiduciary duty to preserve the financial integrity of the company in the context of the dire circumstances the company must be facing at this time. We also empathises with commuters who are caught in the middle,” a representative of a shareholder told Guyana Times.

Policy
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.”
The policy states that, “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 company’s contractual and non-contractual cash flow requirements are taken into account. These include cash requirements for servicing of debts, routine operations and maintenance, periodic servicing, trustees fees and dividends to shareholders.”
“Any excess cash generated by the provincial tolls applied during the year, is used to reduce the cash flow requirement for the next year and therefore the final toll level required,” the policy adds.
The ownership structure of BBCI is made up of ordinary share capital of $400 million owned by private investors and preference shares of $950 million owned by NIS.
The bridge, which was built under the previous Government at a cost of approximately US$40 million, was supposed to generate enough revenue to cover operational and maintenance costs while providing a return on the Public/Private Partnership investments.