…Min. Jordan criticises financing model of Berbice Bridge
…says gov’t willing to listen
MINISTER of Finance, Winston Jordan says the financing model used to build the Berbice River Bridge was faulty and the consequences of this is now showing as the company complains about going bankrupt, while clamouring for approval to raise tolls.
In an interview with the Department of Public Information (DPI) Jordan said that it was interesting that these comments were being made, “when I did my windup to this year’s National Budget debate, I indicated that some of these PPP models, taken by the previous administration, did more harm than good for the society. Yes, we wanted a bridge but under the model that resulted in the bridge I had shown that if all increases were granted, as requested in the model, where that bridge would have been. You have seen today, for example, a car would have to pay $8,000 dollars to cross.”
Minister Jordan explained that when he questioned one of the Opposition members about the figures provided, he was informed that under the model used, “several assumptions did come through.” This, he described, “as most ridiculous” since all models are built on assumptions, which should be tested under the stringiest of sensitivities. If these are tested, he added, and “fall through, then you don’t go through with the project. The model was faulty. Everybody knew the model was faulty and then the pressure would be left on the government.”
He recalled when the Coalition Government took office, an initial approach was made to the BBCI’s Board/Committee to lower tolls but this was rebuffed. The minister said, “they took the stance that the bridge was a private company and government should take their hands off so I don’t know what is the big rush for the government to get involved now? I don’t know why the stance has suddenly changed?”
The government, the minister stated, is always willing to listen and “we will give them our feedback. They made a suggestion. It came to Cabinet and Cabinet rejected it. So, it is up to them if they want to put up more (financial) models. We had put some models to them too!”
Reacting to the call made by the Opposition Leader, Bharrat Jagdeo for government to buy out the shares in the company, Minister Jordan said this move was taken by a shareholder who sold his to the government, in 2017. He said other shareholders may see this as a reasonable option. The BBCI Committee being private, could resort to seeking loans from banks or sell more shares on the stock exchange. He also said that he did not necessarily believe some of the utterances made with regards the BBCI’s finances by the Chairman Dr. Surendra Persaud. The BBCI had written Minister of Public Infrastructure David Patterson requesting that the tolls be increased, as determined by the Toll Adjustment Formula which is prescribed in the Concession Agreement of June 12, 2006.
The proposed increases include the car toll moving from $2,200 to $8,040; pickups from $4,000 to $14,600; 4WD from $4,000 to $14,600; minibuses from $2,200 to $8,040; small trucks from $4,000 to $14,600; medium trucks from $7,600 to $27,720; large trucks from $13,600 to $46,900; articulated trucks from $32,000 to $116,680; freight from $460 to $1,680 and the toll for boats moving from $110,000 to $401,040. “The toll adjustment is an essential requirement to ensure that the bridge company can continue to execute its mandate, including meeting its obligations to its financers. The sad reality is that the bridge company has applied for this adjustment on three separate occasions,” said Dr Persaud during a press conference at the National Communications Network (NCN) on Tuesday.
Persaud said the failure by government to approve toll adjustments, in accordance with the concession agreement, has compounded the required toll adjustment in years 2014-2018. “The total charges are significantly below the charges which are provided for in the toll adjustment policy had they been applied,” he said.
The government in its statement however contended that the bridge agreement places obligations on all parties, which include scheduled maintenance and associated upgrades. According to the statement, any request for toll increases must take into consideration a wide array of factors and cannot solely be on the basis of recouping operational costs and profits on dividend. Government believes that the bridge provides a critical service to the public and tolls must remain reasonable and cannot be arbitrarily hiked to oppressive and onerous levels. The MoPI on behalf of the government has promised to continue to take practical decisions in the interest of the people of Guyana and the provision of quality services.