Tolls stalemate… Berbice River taxis to start operations from Monday

Sep 19, 2015 News

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Government is set to introduce two water taxis from Monday, as a standoff continues with the Berbice Bridge Company Inc. (BBCI).

Government has been communicating with officials of the bridge but no decision has yet been taken on the reduction of tolls, Minister of State, Joseph Harmon, told media operatives yesterday.

The two river taxis will provide a cheaper, alternative means for especially students and senior citizens.

Government is hopeful that “good sense” will prevail with BBCI deciding to do the right thing, Harmon said.

The Berbice Bridge stalemate was sparked after Government announced in its national budget early August, that it has approved a $300 drop in tolls for cars crossing the facility– this was from $2,200. For all other categories of vehicles, the reduction was 10 percent.

However, BBCI’s Board of Directors refused to implement the reduction, claiming that it has to take the matter first to its shareholders.

Government then announced that it was introducing passenger speedboats to help lessen the burden of high tolls on the travelling public from Berbice.

Already, businesses in Berbice have backed the introduction of the vessels.

There have been calls from critics for Government to pay off the investors of the bridge and take over the operations of the facilities.

With revelations in recent times that the previous People’s Progressive Party/Civic (PPP/C) government agreed to allow investors returns of up to 23 percent, the questions have been coming why such lucrative terms were even contemplated in the first place. The returns have been blamed on why the tolls are so high.

BBCI is reporting accumulated losses of $1.5B at December 31, 2014.
Since its opening in late 2008, the bridge failed to attract the number of vehicles that were in the projections, BBCI claimed.
As a matter of fact, the company earlier this year, applied to the previous Government for an increase in tolls.
Facing the May 11 General Elections, the PPP/C administration did not consider the application.
Guyana learnt that as part of the sweetheart deal, the Bharrat Jagdeo administration granted New GPC and other private investors sweeping tax exemptions on their returns.

BBCI is claiming imminent insolvency unless its tolls are increased or it is allowed to run the structure for 50 years, instead of the 21 years.
The 15 per cent and 23 percent return rates would contrast starkly against average rates of about 11 per cent, 12 percent that normal investors earn from projects.
The Berbice River Bridge Act, assented to by Jagdeo in January 2006, appeared to have been tailored specifically to ensure that profits were realized for a few investors.
It allowed all income earned by the concessionaire to be exempted from Corporation Tax, Income Tax and Withholding Tax for 21 years. The act also allowed for all dividends payable to shareholders to be exempted from Corporation Taxes, Income Taxes and Withholding Tax.
While tax holidays have become a norm for investors, the guaranteed rate of return of 15 -23 percent would shed light on why a number of companies including New GPC and Queens Atlantic Investments Inc. (QAII) and Hand-in-Hand Insurance, were so eager to jump on board.
New GPC and QAII are owned by Dr. Ranjisinghi ‘Bobby’ Ramroop, a close friend of Jagdeo.
The high returns are now being blamed on the current financial problems of the Berbice Bridge Company Inc. (BBCI).
The bridge company has been warned time and again that its high repayments to shareholders and debtors were highly unsustainable and could lead to problems.
The auditors, TSD Lal and Co., in its 2014 annual report, noting that the shareholders’ deficit was $1.1B, warned that the company would continue to make losses.

The financial structure of the company, according to critics and Government appeared to have been deliberately done in a manner to allow the equity shareholders whose investment is less than five percent ($400 million), of the total funds of the company to exercise controlling interest over the company.
Of the $400 million, New GPC and Ramroop Group own 40 percent and the Hand-in-Hand Group 10 percent.
In effect, the bridge barely made enough monies to pay a few favoured investors, who stood first in line to receive their returns.
NIS has invested $950M in shares but had little say in the affairs despite the 76 percent stake.
The other equity shareholders are Secure International Finance Company ($80 million); Demerara Contractors Limited ($40M); Hand in Hand Motor & Life Insurance Company ($40M) and NIS ($80 M).
Critics were against the appointment of Directors of Ramroop and Hand-in-Hand who took control of the Board of Directors.
The bridge has been providing a critical link between the city and East Berbice, where thousands of rice farmers and sugar workers live.

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