The New Demerara River Bridge

Budget 2017 had no provision for the proposed Bridge while Budget 2018 and Volume 3 – Project Description has a provision of $5 million. Surprisingly for the largest infrastructural investment of this Administration, the Minister devoted little of his 84-page Speech to the Bridge and it does seem that necessary as it is, there is no sense at this stage of where the money will come from.

It appears that the Government has accepted the recommendations of a Study, carried out by a Dutch firm, but released to the public without the all-important Appendices to support the findings, conclusions and recommendations. Requests by Ram & McRae to obtain a copy of these have been ignored while the invitation for bids require that certain documents must be “specifically requested by sending a formal written request”.

The Government, or more directly, the Ministry of Public Infrastructure, has also made a complete mockery of the tendering process and the selection of the consultant remains mired in mystery and speculation. The contents of the Study hardly reflect or do justice to a project of this size, breadth and complexity and its failure to include the Terms of Reference of the Study does not help. It recommends a fixed low bridge between Houston on the East Bank of the Demerara River and Versailles on the West Bank, with three lanes and no provision for pedestrians or cyclists, compared with two for the existing Bridge, at an estimated capital cost of US$170 M. This figure very well be greater, depending on the geotechnical studies and findings. Despite its cost, it appears that the planning horizon for this Bridge is a mere ten years as the Study contemplates another Bridge by 2030!

The Study contains some serious contradictions. It notes the Government’s desire for possible private involvement to reduce the claim on Government funding and liabilities, and that a “keen appetite has been found in the national and regional financial markets to fund the Project.” Yet, the Study immediately pronounces that the financial projections show that the business case of the Project is financially not viable…” It seems that whether the Government realised the contradiction or not, it would proceed with the project on the basis of a flawed Study.

The Study identifies a range of toll increases ranging from 100% to 300% for road tolls, and 750% for vessels. According to the Study, if existing tolls are increased by 100%, the anticipated Government contribution over the first 12 years is projected at US$140 M. It advises therefore that toll tariff rates be increased to 250 % of the present 2017 road toll rates, reducing the Government’s contribution to US$40 million. However the project is structured, and even without any price escalation, the capital cost of this Demerara Bridge will be more than 400% of the Berbice Bridge.

So far the Government has not engaged the public on any matter regarding the Bridge, let alone the prohibitive increases it may impose when confronted with budgetary challenges. It seems reasonable to conclude however, even at this late stage, that the Ministry of Public Infrastructure is unable to make up its mind on the details of the project it is proposing. Its invitation to bidders volunteers that the Government will “encourage BOOT (Built, Own, Operate and transfer) or DBFM (Design, Built, Finance and Maintain) or similar proposals as this may provide a more attractive proposition for the Employer.” With respect Minister, you and the Cabinet need to decide on the location, type, operations and management, and the financing of the project. The absurdity of the Government’s approach to the project is further demonstrated by its stated intention to pre-qualify three firms while anticipating two different project structures!

The issue of a Pre-Qualification documents for construction of a new Demerara Bridge, suggests a public project, within a Build Own, Operate and Transfer (BOOT)/Design, Build, Finance and Maintain (DBFM) structure. It must be obvious that a structure for a public project simpliciter, is vastly different from a BOOT project. This dual structure is again reflected in the pre-qualification document, dealing with the type of contract—one purely a Design Build (FIDIC Yellow Book), and one a BOOT/DBFM model (FIDIC Gold Book), each implying vastly different considerations.

The Procurement Commission should be calling in the officials of the Ministries of Public Infrastructure and Finance and the Demerara Harbour Bridge to guard the country against their folly.

Inevitably the Demerara Bridge brings forth a comparison with the US$40 M Berbice Bridge undertaken as a BOOT project, with ownership passing to the Government after twenty-one years. Unlike this current circus, no one could criticise the expansive and comprehensive technical studies including a Feasibility Study, a traffic study, a full Environment Impact Assessment (EIA) and geotechnical studies, all undertaken prior to the commencement of construction work on the Berbice River Bridge.

Apparently experience and technical competence do not count for much in the choice of a successful bidder. The Evaluation Weighting provides 40% of the evaluation points to “Costs, Funding, and Local involvement.” Only 25% is attributed to “Relevant Experience,” of which the sub-weighting of relevant bridges is only 10 %.

In the case of the Berbice Bridge, a separate Act was enacted, allowing for a Concession Agreement to a private company. A financing model was prepared based on no drawdown or guarantees from the Central Government. Of course, that does not mean that the Berbice Bridge was not without controversy, including its location, investment mix and governance, all of which formed the basis of a Motion by the APNU and the AFC, then separate and in the parliamentary Opposition, calling for a lowering of fares on the Berbice River. Mr. Moses Nagamootoo, now Prime Minister, in opposition had called for those tolls to be reduced to $1,000, a cut of more than 60%. As Prime Minister and Leader of the House, confronted with the reality of governing, he was happy voting for a more modest ten per cent cut!

The gap between opposition taunts and idle talk and the serious business of running a country exposes a grave lack of competence and experience with construction type projects, and a dangerous absence of capacity to engage in, plan and undertake BOOT projects. With a budget of US$170 M, the proposed Bridge will be the largest public sector led project undertaken thus far by this Administration. Even if there is no price escalation, the national debt will increase, crowding out other national investment priorities.

The Government has failed in significant ways in arriving at the most cost-effective solution, when taking into account economic, financial, environmental, technical, traffic, social and other considerations. It must consider the ramifications of constructing another Bridge less than ten years after construction, and after such a substantial outlay of funds. Also, there must be a definite determination of the type of bridge that would be most suitable all things considered – high, fixed with openings or even floating bridges, and their respective costs, advantages and disadvantages.

In conclusion, the planning and public engagement on this US$170 M project are seriously inadequate. The entire process by which the Bridge study was commissioned fails the transparency and accountability test and we must ensure that the next phase, which will involve more substantial sums of money, is not equally shrouded in mystery. With key mistakes appearing so early in the process, one must wonder whether those entrusted with responsibility for this project possess the qualification, experience and competence to take it forward.