Contrary to the position taken by his Ministry, the Minister of Public Infrastructure on Thursday at Parliament said that he will raising with Cabinet the request by the Berbice Bridge Company Inc (BBCI) for an increase in tolls.
“I am actually going to be approaching Cabinet next week Tuesday for directions on the Berbice Bridge” Patterson said.
His comments comes on the heels of a request by the BBCI for Patterson to come to the table and negotiate after his Infrastructure Ministry had stated publicly that it was not inclined to have the tolls reduced.
The BBCI had also outlined that the move to shut down the request would equate to Government ignoring its contractual obligations under the Concession Agreement entered into with the Berbice Bridge Company.
A position which the Company’s Chairman Dr Dr Surendra Persaud had said would likely to affect the willingness of the Private Sector to partner with the Government in future infrastructure projects.
Persaud, had among other things posited that the company applied for a toll adjustment on three occasions; twice in 2015 and once in 2016, to no avail. They have since made another such application, dated July 9. In that application, the company had requested that the toll increases take effect by August 1.
“The current tolls to the commuters are subsidised in two parts, one: internally by the company as it has not charged the toll as per the agreement and two: by the Government of Guyana, having subsidised the old toll prior to the adjustment, in accordance with the agreement of June 12, 2006.”
The internal subsidy by BBCI was implemented after Government had rejected the company’s previous toll adjustment application, while the Government subsidy is a basic reduction of $300 in the tolls.
The company, according to Dr Persaud, has now accumulated a loss of $2.8 billion and faces the distinct possibility of going bankrupt. Besides the losses having prevented the company from paying out dividends, it has impacted the ability to service the 39 pontoons under the bridge.
Meanwhile, based on the announcement made by the Company with regard to the proposed increase in tolls, Opposition Leader Dr 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.
