As an­a­lyst finds mil­lions in hid­den costs to be borne by tax­pay­ers

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Eco­nomic

Ad­vi­sor to the Op­po­si­tion Leader, Dr Peter Ram­sa­roop be­lieves the new De­mer­ara Cross­ing is noth­ing more than the Pres­i­dent look­ing to leave in place a legacy with one of the PPP pro­posed projects, but lack the fi­nan­cial know-how on how to im­ple­ment - in face of his ac­cep­tance of his fate as a one term Head of State - and that this will in fact be the fi­nal nail in the cof­fin of the sugar in­dus­try of Guyana.

“This will con­sume all money ear­marked for the sugar in­dus­try, at projects not es­sen­tial at this mo­ment.

The money the PPP ad­min­is­tra­tion had set aside for the di­ver­si­fi­ca­tion of the sugar in­dus­try, they know are us­ing for the De­mer­ara Bridge.”

Granger would rather see a pro­duc­tive sec­tor be elim­i­nated and many thou­sands out of jobs just to see his legacy next to his men­tor, Pres­i­dent Burn­ham.

The no­tion was posited by Dr. Ram­sa­roop af­ter Op­po­si­tion Leader, Dr. Jagdeo, flayed the Gov­ern­ment for its bla­tant lies on this and many other projects.

Dr. Ram­sa­roop, who con­tends that the Min­is­ter of Public In­fra­struc­ture, David Pat­ter­son - in his de­fence of what will un­doubt­edly Guyana’s sin­gle largest project - “has ei­ther all but ex­posed this fal­lacy or is him­self clue­less as to what is re­ally go­ing on around him.”

The fi­nan­cial an­a­lyst said his as­ser­tions can be gleaned when tak­ing even a cur­sory look at the Fea­si­bil­ity Report for the con­struc­tion of a New De­mer­ara River Cross­ing which was done by the coali­tion Gov­ern­ment- a report that costs in ex­cess of $150M.

Ac­cord­ing to Dr Ramsa- roop, the report out­lines three pos­si­ble toll in­creases from its year one of op­er­a­tion, rang­ing be­tween 100% and 300%.

None of knows what will be the fi­nan­cial ex­po­sure on the trea­sury.

“This in­crease alone, on an al­ready strug­gling pop­u­la­tion is noth­ing short of un­con­scionable,” he said.

HID­DEN COSTS

Dr Ram­sa­roop has since sur­mised, how­ever, “the prob­lems do not end with mere toll in­creases since, in all of the fi­nan­cial models that have pre­sented to this ad­min­is­tra­tion by their con­sul­tants; it re­peat­edly dis­misses them as not vi­able given the US$170M price tag for the bridge alone...Each of the models pro­posed re­quires an un­told amount of gov­ern­ment sup­port.”

The busi­ness­man said, “these peo­ple are smart in a way, be­cause the report speaks to a con­struc­tion cost of US$150M with ad­di­tional fi­nanc­ing such as in­ter­est dur­ing con­struc­tion and in all of the de­signs there are mass ex­panses of road net­works that are not op­tional.”

Ram­sa­roop is of the firm believe that the true costs of this project have not even been laid out in the report, since there is no ref­er­ence to the ac­tual cost of the ac­com­pa­ny­ing el­e­vated road net­work and an­cil­lary struc­tures.

Only re­cently, the ad­min­is­tra­tion inked a con­tract for the up­grades of the East Coast and West Coast Public Roads.

Dr Ram­sa­roop re­minded that each of those were in ex­cess projects are in ex­cess of US$40M.

“This means that al­ready the bridge project ex­ceeds ei­ther the ex­pan­sion of the Cheddi Ja­gan Air­port or the Skel­don Sugar Fac­tory. To- gether those projects cost US$280M.”

He sur­mised, “al­ready by just in­clud­ing the cost of the road we can see that this new bridge is go­ing to cost al­most the same as Guyana’s two largest projects com­bined...a bridge.”

Ac­cord­ing to Dr Ram­sa­roop, those speak­ing in de­fence of the project are not say­ing is that none of the fi­nan­cial models are vi­able and that the tolls in­creased by 300% for ve­hic­u­lar traf­fic and 700% for river traf­fic, the tolls are not even enough to cover the op­er­a­tions of the bridge.”

The fi­nan­cial an­a­lyst noted that in the report, in each of the models cho­sen by the con­sul­tants, they have stressed the need for gov­ern­ment in­put ei­ther in the form of Guar­an­tees on debt pay­ments, eq­uity in­vest­ments, zero per cent in­ter­est loans and reg­u­lar sub­si­dies as a means of sup­port.

Ram­sa­roop pointed to the report, which states that in one pro­posal, it asks gov­ern­ment for as much as US$140M in sub­sidy in the first decade of its op­er­a­tion.

“This is in or­der to ser­vice debts, debts that have been racked up in or­der to build the be­he­moth legacy to the great mil­i­tary dic­ta­tor of the 21st cen­tury.”

Ac­cord­ing to Ram­sa­roop, “this act has to be some sort of po­lit­i­cal heresy since tax pay­ers are be­ing asked to es­sen­tially foot the bill for a project that can’t even pay for it­self. Not only will it be­come a bur­den on the down­trod­den man, even those de­pen­dent on a mini-bus for their daily com­mute but with State hav­ing to pour bil­lions into the con­struc­tion, main­te­nance, debt ser­vic­ing and all that comes with it, there is lit­tle left for other sec­tors.”

One such sec­tor for which ‘DAG Cross­ing’ will spell cer­tain death, is the sugar in­dus­try.

Dr Ram­sa­roop drew ref­er­ence to the fact that Cab­i­net met on Tues­day last while the Pres­i­dent was out of the coun­try at the UN Gen­eral As­sem­bly.

Prime Min­is­ter Nag­amootoo, “the man that had cham­pi­oned him­self as a de­fender of sugar work­ers no doubt would have had to sup­port the key item on the agenda, a multi-bil­lion sub­sidy for the Guyana Sugar Cor­po­ra­tion in or­der to meet em­ploy­ment cost.

“In other words pay peo­ple their salaries,” Dr Ram­sa­roop stressed.

“How on earth is this coun­try go­ing to be able to af­ford to pour money into Granger’s legacy project and at the same time be able to make the in­vest­ments and cash trans­fers nec­es­sary in or­der to save the jobs of thou­sands of Guyanese?”

Ac­cord­ing to Dr Ram­sa­roop, “there is no­body that does not see the need and im­por­tance for a new bridge, but at what cost”...Can we re­ally af­ford to give over to the state, more than US$300M overt the next ten years just to say we built a bridge, a bridge that can­not even make enough money to carry out its own op­er­a­tions.”

Guyanese, he said, “must be more civic minded and try to get a copy of the report and read it and have a na­tional dis­cus­sion on whether the coun­try can in fact kill the sugar in­dus­try in or­der to build you legacy.

RED FLAGS

He told this pub­li­ca­tion the new cross­ing over the De­mer­ara River is un­doubt­edly needed but “If Burn­ham could have bridged that river decades ago at a cheaper cost, his pro­tégé cer­tainly can find not only a cheaper way to get it done but a way that saves the sugar in­dus­try and the thou­sands of jobs that de­pend on that in­dus­try.”

The red flags are there, he said, and used as ex­am­ple the pro­jected in­crease in tolls from US$5.4M in its first year of op­er­a­tion to more than $8.4M a decade later.

This pro­jec­tion is based on a five per cent in­crease pro­jected for road traf­fic. Ac­cord­ing to Ram­sa­roop, what the report seems to have for­got­ten is that the ma­jor­ity of phys­i­cal land space that is the most ac­cel­er­ated in terms of de­vel­op­ment lies on the Eastern Bank of the De­mer­ara River.

“This to­gether would the planned East Bank by­pass road would mean even if the pro­jected in­crease in ve­hi­cles were to be re­al­ized, they are not go­ing to be us­ing the bridge...be­sides peo­ple will avoid that bridge like a plague be­cause of the high tolls.”

Ac­cord­ing to Dr Ram­sa­roop, “Patto must be sail­ing if he still be­lieves that this project is not dan­ger­ous to the coun­try when that very report says rev­enues from toll make up for the op­er­a­tion ex­pen­di­tures but can­not sup­port the debt ser­vice.”

Dr Ram­sa­roop said it is clear the Al­liance for Change (AFC) has lost any bit of clout it has ever held un­der Granger’s Coali­tion as is ev­i­dent in Pat­ter­son’s ill-in­formed out­bursts.

“The report it­self says the toll rates can be in­creased, but there is a limit to that since too large in­crease would make the toll un­af­ford­able for many of the peo­ple who have to use the bridge. How can you de­fend such a project know­ing fully well that the gov­ern­ment sup­port the con­sul­tants are ask­ing for is in fact the as­sis­tance cur­rently go­ing to thou­sands and thou­sands of Guyanese in poor ru­ral com­mu­ni­ties, poor Guyanese that de­pend on the con­tin­ued sur­vival of the Guyana Sugar Cor­po­ra­tio?”

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