Subsidise Berbice Bridge or buy shares
-Jagdeo advises gov’t
By Staff Writer On In Guyana News |
https://www.stabroeknews.com/2...ridge-or-buy-shares/
Even as he stressed that the PPP does not support a Berbice Bridge toll increase, Opposition Leader Bharrat Jagdeo yesterday said that the government should pay the differential on the proposed higher tariffs or buy more shares in the beleaguered Berbice Bridge Company (BBCI).
“People in Berbice cannot pay that large increase so the government has two options,” Jagdeo told a press conference. He made that statement despite the fact that the agreement to permit phased increases in tariffs for bridge users was crafted under his administration.
“Buy out the other shareholders, buy out people so that more of the bridge becomes publicly owned or subsidise the increase that should take place in the toll. So they give an injection into the company so that the rate remains flat. They should do this and it would not cost them much. They waste money on a daily basis than if they were to do that,” he added.
Announcing that it has an accumulated $2.8B in losses, BBCI on Tuesday proposed hefty increases saying that these were in keeping with its contract with the government. The company warned that the current APNU+AFC administration’s continued denial of the hikes could lead it to bankruptcy.
“So the contractual obligations of the government as it relates to these adjustments have not been met. Please note that the failure to implement these adjustments is inconsistent with the concession Agreement and the provisions of the Act,” Chairman of BBCI Dr. Surendra Persaud told a press conference the company called on Tuesday.
“What is the result of this? The result of the government’s failure to implement the contractual agreement has led to the bridge company now accumulating a loss of $2.8B and the company now faces bankruptcy,” he added.
Persaud, who is also the Chairman of the NIS, said that while government had sent it no formal denial of the increases, Minister of Public Infrastructure David Patterson told him that Cabinet did not approve the company’s proposal and that it must exhaust all avenues to make the fees feasible for commuters.
According to the contract signed with the then People’s Progressive Party/Civic (PPP/C) government in 2006, the implementation of the increases agreed would see cars and minibuses paying $8,040 this year, while pickups, four-wheel drive vehicles and small trucks would pay $14,800.
Rhetoric
Jagdeo said that when the agreement was devised for the construction of the bridge in 2006, under his presidency, a proposed rate increase was included in the contract. If that proposed formula was adhered to, he believes, the increases would not have been felt now.
“It would have gone up about 6% in 2014 about 17% in 2015 and then after that there would have been a steep decline from 2018 onwards up to when the bridge would be handed over to the government. We don’t know what has happened since,” he said.
Jagdeo maintains that government should step in and institute measures to ensure that that BBCI turns a profit since he believes that the problems created were made by the APNU+AFC, when it refused the increases. A proposed increase was also refused under the PPP/C government.
“When we left office the revenue was doing better because traffic was higher. The model had two increases…they are in a dilemma now because they are caught by their own rhetoric. There was a parliamentary motion (by the opposition) to reduce it and we didn’t have the majority,” he said.
“They are who proposed that the rates would come down. What they do now (that they are in government) with the financial model will determine who participates later, whether they can trust the government in another public-private partnership,” he added.
It is to this end, that he called on government to either buy out shares or pay a subsidy to stop the bridge from going into liquidation.
“I believe the government should not increase but should buy out more equity and bonds. They have done it for Marriott why can’t they do it for this? They didn’t need a guarantee from the treasury. They can buy out from NIS and they can do anything,” he added.
The NIS owns 76% of the total shareholding of the BBCI. During the Jagdeo administration, decisions were made to have the Scheme invest heavily in the bridge. This investment had been questioned over the years. The NIS has not earned dividends from the investment.
Demerara Distillers Limited sold its 10% of shares in the bridge company in 2016 to the government for just over $40m. Queens Atlantic Investment Inc. and Secure International Finance Company Limited are among other investors.
Come to the table
The government on Tuesday said that it is not contemplating any increases and stands by its decision.
“The Ministry of Public Infrastructure notes comments by the Berbice Bridge Company officials at a press conference today, Tuesday, July 10, and wishes to assure all Berbicians and users of the Berbice Bridge that government is not contemplating any increases to the Berbice Bridge toll,” a statement from the Ministry of Public Infrastructure said on Tuesday.
“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,” it added.
BBCI yesterday said it noted the government’s stance but continues to call the Minister of Public Infrastructure to come to negotiations so that the matter could be resolved.
“The Company wishes to point out that the 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 contract and there are obligations to be met,” the statement said.
“The Company trusts, therefore, that the Minister of Public Infrastructure, instead of ignoring its application, will come to the table as required by the Concession Agreement,” it added.