Op-Ed: Berbice Bridge Financial Troubles created by APNU

The People’s Progressive Party rejects the APNU/AFC’s attempt to blame it for a proposed 150% toll increase as called for by the Berbice Bridge Company Inc (BBCI) Chairman. It is a fact that in May 2014, the APNU/AFC used its Parliamentary majority to pass a motion to reduce the tolls on the bridge. In May 2015, on taking control of the Government, the APNU/AFC reduced the bridge tolls without making provision to fund capital repayment scheduled to commence in 2014—a fundamental breach of the Concession Contract. Today, almost 4 years since passing the APNU/AFC Parliamentary motion and the deteriorating state of the economy , the Berbice Bridge is virtually bankrupt.

In accordance with the Berbice Bridge Act passed in Parliament in 2006, the Government entered into a Concession Agreement with the privately owned Berbice Bridge Company Inc, with one important section being the Toll Formula to calculate tolls. No changes in tolls were projected until 2014, the year the bridge company was scheduled to start repaying the principal on its debt; up to end 2013, only interest was being paid on its debt financing. The PPP is willing to make public its 2006 Financial Model, which had toll increases in two years– 6.4% in 2014 and 17.3% in 2017(compared to the 150% that is now proposed), with these increases coming almost 8 years after construction of the bridge started. Thereafter tolls were projected to fall. In fact, in the last 5 years of the concession, tolls were projected to be less than half the toll levels existing at start-up.

There is no shortage of project documentation for the Berbice Bridge BOOT (Build Own Operate Transfer) model. Under this model, a 21-year concession was issued to the BBCI, whose ownership and financing involved most of the local private banks, insurance companies, pension funds, the NIS, and corporate investors of Guyana. Over G$8B (app US$40 M) was raised in the form of bonds, subordinate debt, preferred shares, and common shares (common dividends have never been paid). Government, with funding from the IDB, built the access roads. The project did not receive any Government guarantee. Comprehensive project documents were shared with all investors including an Information Memorandum, Financial Model, a Design-Build Contract (based on a public tender), legal agreements, and technical studies including the Pre-Feasibility Study, the Feasibility Study, soil investigations, environmental impact studies, and traffic studies. Documents were also shared and discussed in Parliament before various Parliamentary Committees.

The PPP calls on the APNU/AFC Government to take responsibility for its actions. It should stop blaming the PPP for its numerous acts of incompetence. They have decimated the local economy in Region Six. Thousands of workers were put on the breadline and therefore any toll increase will be an unconscionable burden on the backs of the users of the bridge. The Government can address this issue and maintain the viability of the bridge by doing either one of two things; provide a subsidy for the financing shortfall in the bridge cash flows, and/or buy out the investors in the bridge

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