Stalemate continues over New GPC, Hand-in-Hand controlled Berbice Bridge…Give us 20 years extension or increase the tolls

Aug 30, 2015 News

– private investors tell new Govt.

The current standoff between Government and the company that controls the US$40M Berbice River Bridge has taken a twist with the latter asking for its agreement to be extended another 20 years or for the administration to consider hiking the tolls.
The toll reduction for cars, from $2,200 to $1,900, announced during the budget presentation by Finance Minister, Winston Jordan, was set for implementation on Tuesday, (September 1). It seems to be in limbo at the moment.
Jordan had also indicated a 10 percent reduction on other categories of vehicles, in what he said was the first of a series of interventions.
Toll charged by the Berbice Bridge Company Inc. (BBCI) has been a sore point for consecutive administrations of the People’s Progressive Party/Civic (PPP/C).
The coalition Government, in the lead up to the May 11, 2015 elections, had accused the previous administration of hijacking the Berbice Bridge Company Inc., deliberately structuring operations in a manner that allowed investors and their close friends with the least investment to take control.
New GPC, a company with close relations to former President Bharrat Jagdeo, has been allowed to nominate the directors, thus taking control of the company, although Government and the state-owned National Insurance Scheme (NIS) are the biggest investors.
On Friday, Finance Minister Jordan disclosed that the prescribed toll reduction was in limbo because BBCI’s directors decided to take that matter to its shareholders.
Jordan believed that the Bridge company was deliberately delaying the implementation of the toll reduction.
The reduction is estimated to see the bridge lose about $120M-$140M annually with Government promising to provide a subsidy to meet the shortfall. For this year, Government has allocated $36M.
In a full page advertisement published in today’s edition of Kaieteur News, the company is denying that it is deliberately delaying the reductions.
“This is not so. The BBCI is as anxious as all other Guyanese to provide the best service to the Berbice Bridge commuters at an affordable price.”
BBCI, pointed out that just as the government was forced to defer several of its campaign promises based on the need to comply with existing laws, so too are the Directors of the BCCI constrained by the Berbice Bridge Act and Regulations.
The bridge company said that it signed a legally binding contract with the PPP/C called the “Concession Agreement”.
The statement noted that at the initial August 12 meeting, Government proposed a schedule of subsidies to commuters based on the existing toll structure.
BBCI said that it stressed during the meeting with Government that it would like further discussions to take place on the proposal and an extension in the concession period from 21 years to 40 years: or for the Government to give consideration to an application for an increase in toll made to the PPP/C Government on March 15, 2015.
The company said that no agreement was reached with BBCI.
“We cannot therefore understand why the Minister would suggest that “delaying tactics” are being employed. Other discussions also took place concerning the timing of subsidy payments but the BBCI team made it clear that nothing could be agreed until the matter is discussed by its full board and stakeholders.
The company said that Government proceeded as if it was a done deal, simply to fulfill a campaign promise on the BBCI tolls. This was made without any consultations.
BBCI also claimed that it lost $1.2B because it has not been granted an increase in tolls.
The company said it could face insolvency if the process is not done right.

The Berbice Bridge

“Directors of BBCI, have a fiduciary duty to act in the best interest of the company. Any agreement to a subsidy without honouring the toll adjustment formula set out in the Concession Agreement will result in the BBCI defaulting on its obligation to repay debt in 2015 and possible insolvency.”
This year, over $500M in debt repayment to investors is required. ”Directors cannot change the agreements reached with the investors in the bridge as represented by the trustee for the debt and the shareholders for the equity. Such decision must involve an agreement with the trustee and the shareholders.”
Any change in the Concession Agreement and the Toll Order which is made by the Government –the last one was made in 2009 by the Minister of Public Works–requires the approval of the Trustee and the Shareholders, BBCI claimed.
The company said that it expects government to fully commit to honouring the legislation, concession agreement, and the rights enshrined in the various agreements related to the Berbice Bridge. “A subsidy divorced from honoring the BBCI Concession Agreement could very well result in bankruptcy for the BBCI.”
The current directors of the company are said to be Keith Evelyn, Ravi Ramcharitar, Avalon Jagnandan, Gillian Burton, Egbert Carter, Paul Cheong, Cecil Kennard, and Maurice Solomon.
Jagnandan and Ramcharitar are both directors in New GPC.
Government’s lead negotiator in the toll increase is attorney-at-law, Chris Ram, while for the BBCI, Ravi Dev, is representing New GPC on the board.
Ram, earlier this year, wrote that Government, inclusive of the NIS, owns 76 percent of the issued shares of the company.
NICIL, Ram said, owns what is called a Special Share in the company and according to the Articles of Amendment of the company “no action can be taken by the Bridge Company, without the affirmative vote” of NICIL.
While NIS has $950M in shares, Secure International Finance Company reportedly has $80M; Demerara Contractors $40M; Hand in Hand Motor & Life Insurance Company $40M and Colonial Life Insurance Company with $80M shares.
Oddly, the shares that were held by CLICO (Guyana) remain in the name despite the fact that CLICO is in the process of liquidation.
Government reportedly was supposed to collect $104M annually in dividends from the Berbice Bridge but waived it after BBCI said it could not afford to pay because business was bad.
In 2010 the company took in $1.1B in revenue.
The Berbice River Bridge was designed by a European consortium, Bosch Rexroth B.V. and Mabey and Johnson.