The Berbice Bridge Authority has already piled up US$15M in losses

Jul 20, 2018 Letters

DEAR EDITOR,
The tolls on the Berbice Bridge at 20-times the rate of the Demerara Harbour Bridge is an outrage. Users of the Berbice Bridge are being ransomed. Government should immediately take action to bring about a measure of equal treatment for Berbicians by cutting the Berbice Bridge tolls by half.
Is that going to exacerbate the financial problems of Bridge Authority? Of course, it will. The Berbice Bridge Authority is heading for bankruptcy anyway. It should file immediately for Chapter 11 bankruptcy and reorganization.
There is no way for such a small number of users to generate enough revenue to service financial obligations (dividends and interest payments) and cover operational costs. The only way to build infrastructure to service one region of the country is to subsidize or nationalize it.
Supporters of the current government should not use this Bridge fiasco to attack the Jagdeo government. There was a compelling need for this bridge. Berbicians suffered enormously before the bridge was built. The problem lies with the financial architecture used to build the bridge. Few investors and guaranteed returns – that means gouging and ransoming the users to pay unaffordable tolls.
Also, at the heart of the problem is the mismatch between relatively few users and high capital costs to build the bridge. Do you then force the users to pay through their noses to cover the costs – that’s ransoming.
The new oil-rich government has two choices:
(1) Pay the investors the money they put in, and cut them loose. Now govt. owns the bridge. And, govt. must subsidize the operational costs of the bridge out of general revenues just as they do with all other infrastructural projects – roads, ferry boats etc.
(2) Let bankruptcy court pay the investors 50 cents on the dollar (wipe away half their investment) – and allow the Bridge Authority to reorganize. The Authority will then have to attract new investors and will again have the onerous task of matching revenues with a lower equity/debt load.
This is not a failure of the BOOT (build, operate, own and transfer) concept; it is just that the user population is too small and could not generate enough revenues to service the US$45 million equity/debt capital that it cost to build the bridge.
To date, the Bridge Authority has announced losses of US$15 million; losses are mounting with no end in sight. The Authority has no choice but to file for Chapter 11 bankruptcy protection.
Mike Persaud

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