BBCI delay in lowering tolls unfortunate, disappointing- former AG

Dec 06, 2015 News

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-financial restructuring of company needed
Former Auditor General Anand Goolsarran is decrying the Berbice Bridge Company Inc.’s (BBCI) latest delay in lowering the bridge tolls, as the December 1 commitment the company initially made has come and gone.

Citing the fact that Government has already committed to compensating the company for the loss in revenue and that a resolution had been passed in the National Assembly, Goolsarran noted that the company’s excuse of “seeking legal advice” is a disappointment.
“I would say that it is rather disappointing, indeed unfortunate, that BBCI is taking so long to agree on the reduction in tolls,” Goolsarran said, in an invited comment on Friday. “Considering that, the Government has given a commitment to compensate the company for the loss in revenue and has set aside funds in the 2015 National Budget for this purpose,”
“The National Assembly had (also) passed a resolution on May 15, 2014 calling for a reduction in the toll,” he added. “(And) what is more of a disappointment is that the National Insurance Scheme (NIS) is essentially a State institution but appeared to have little say at the level of the Board.”
Goolsarran said that NIS owns $1.030 billion of the $1.350 billion equity of the company or 76 percent. He described it as unprecedented for any individual or entity to have such a massive stake in shares, but not have a major say in the decision-making of the company.
“Like the aborted Amaila Falls Hydro Project and the Marriott Hotel, the company is highly geared with 83 percent debt versus 13 percent equity,” the analyst observed. “Interest charges have to be met, whether a profit is made or not. And then, the bonds have to be repaid.”
“This is not so in the case of equity since dividends can only be paid out of profits and shareholders do not have to be repaid the money they have invested in the company.”

He said that the fact that the Bridge Company is having financial difficulties is public knowledge. This, he said, stems from the fact that the financial structure of BBCI has been poorly thought out.
However, Goolsarran observed that the Government still holds 76 percent of the shares and should Government use its shares to influence the company to reverse its debt to equity ratio, the BBCI could resolve its problems. The debt to equity ratio was incurred from direct construction.
“There should be more equity than debt, perhaps a reversal of the current debt to equity ratio,” he said. “The Government should therefore use its 76 per cent shareholding by influencing the company to go this direction and provide whatever financial assistance it can to assist in the effort.”
After Government announced that it was buying out shares in the BBCI late in October, the BBCI had agreed to lower the tolls by December 1st and take the $40M subsidy.
The December 1 date, however, passed, with the company saying that the matter is in their lawyers’ hands. That announcement thus prolonged the stalemate.
The Ministry of Public Infrastructure had revealed on that very day, that an agreement sent to the BBCI is still being brokered.
The Ministry, in announcing the delay, explained that it had sent the draft agreement to BBCI for review. The agreement says that the Government of Guyana will provide a $40M subvention to the bridge, in return for the reduction of tolls.
In return, the bridge has to provide figures of vehicles traversing the structure.
The Ministry disclosed that another copy of the proposed agreement was sent to BBCI on December 30th.
It is understood that this agreement is being perused by BBCI lawyers. The Ministry is reportedly awaiting a response from the BBCI, before the subventions are made available.
The toll will also be implemented once the agreement is signed.
The agreement caters for the toll for passenger cars and buses to be reduced from $2,200 to $1,900, a 13.6 percent decline, while other types of vehicles will be reduced by 10 percent.
The toll reductions were an election campaign promise by the coalition and were outlined in Budget 2015. It had originally been projected for implementation by September first, 2015, but was not because of the imbroglio between the Government and BBCI.
BBCI instead asked the government for some extension so that it could discuss the implications of the proposals with their stakeholders.
In the interim, as the commuters awaited the reduced toll, the Government had implemented river taxis to ply the Rosignol to New Amsterdam route.
The bridge, which was first commissioned in 2008, has been a sore issue for the former opposition and Berbicians who have been complaining about the tolls.
Originally a public/private partnership, the company ending up in the hands of a few private individuals caused the administration to increase shares and move to reduce the tolls.
The bridge’s management was controlled by New GPC, a company owned by Dr. Ranjisinghi ‘Bobby’ Ramroop, a close friend of former President Bharrat Jagdeo.
Government recently announced that it has moved buy out the shares of Demerara Distillers Limited in the bridge company.

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