Jagdeo flays bridge takeover

-op­posed to 19-year con­tract ex­ten­sion

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Even as he con­demned the takeover of the Ber­bice Bridge by govern­ment, Op­po­si­tion Leader Bhar­rat Jagdeo yes­ter­day said that he will also op­pose a 19-year con­tract ex­ten­sion for the Ber­bice Bridge Com­pany Inc (BBCI).

“The 19 years ex­ten­sion, can that be jus­ti­fied? No,” Jagdeo yes­ter­day told a press con­fer­ence he held at his Church Street of­fice.

“I don’t be­lieve nine­teen years is even prac­ti­cal. That is dou­bling the life of the ex­ten­sion. That bridge is sup­posed to come back to us (govern­ment) free of cost in twenty years. To give it back to the share­hold­ers for an­other twenty years, it’s un­be­liev­able and I don’t be­lieve that you need to do that for an­other nine­teen years,” he fur­ther stated.

The Op­po­si­tion Leader said that the bridge com­pany must be held ac­count­able for not at­tain­ing its pro­jected fig­ures and should now jus­tify why they need “al­most an­other con­tract”. He opined that if any ex­ten­sion was to be granted, it should be for no more than two to three years and the com­pany would still have to hon­our its low­er­ing of the tolls as per the first con­tract, after the two or three-year pe­riod ex­pired. “Maybe in two years or three years so that you don’t have any in­crease,” he said.

And lac­ing into govern­ment for the takeover which he be­lieves is “noth­ing but po­lit­i­cal”, Jagdeo said that the “safety con­cerns” rea­son that was cited for the takeover is un­war­ranted. “They are us­ing this as a po­lit­i­cal tool; an elec­tion gim­mick…the bridge is not col­laps­ing,” Jagdeo said.

The Ber­bice Bridge deal was signed dur­ing Jagdeo’s ten­ure and was se­verely crit­i­cised as a deal made to en­rich cer­tain busi­ness­peo­ple. It also re­sulted in much higher tolls which Ber­bi­cians strug­gled to cope with amid the de­cline in the sugar and other sec­tors.

On Oc­to­ber 16th 2018, the BBCI an­nounced that it was in­sti­tut­ing an ap­prox­i­mate 265% across- -the-board in­crease for tolls, ef­fec­tive Novem­ber 12th 2018. Govern­ment fired back the same day say­ing that it would fight the in­creases it termed “dra­co­nian” and as­sured cit­i­zens that they would not be pay­ing the pro­posed in­creases.

Last week, BBCI pro­posed that if it was given 19 more years on its orig­i­nal con­tract, sched­uled to ex­pire in 2026, it would not in­crease the fares. The com­pany asked for a meet­ing with govern­ment on Novem­ber 5th 2018, to dis­cuss the pro­pos­als and Min­is­ter of Pub­lic In­fra­struc­ture David Pat­ter­son said he would first have to speak with Cabi­net yes­ter­day be­fore he could agree to the meet­ing.

But on Mon­day, Pat­ter­son is­sued an or­der declar­ing that the func­tions of the BBCI “to main­tain and op­er­ate the bridge shall be ex­er­cised by the Govern­ment of Guyana as of Novem­ber 5th 2018 un­til the date the Min­is­ter spec­i­fies by no­tice on the ces­sa­tion of the threat to pub­lic safety.”

In an­nounc­ing that govern­ment was as­sum­ing the re­spon­si­bil­ity for main­tain­ing and op­er­at­ing the bridge, the Min­istry of Pub­lic In­fra­struc­ture said the de­ci­sion was in ac­cor­dance with pow­ers con­ferred upon the min­is­ter by sec­tions 4 (1) and 11 of the Ber­bice River Bridge Act.

Daily op­er­a­tions

Re­spond­ing to ques­tions yes­ter­day posed by this news­pa­per on what the takeover would mean in terms of daily op­er­a­tions un­der govern­ment, Pat­ter­son said, “All tolls and mon­eys col­lected or owed is be­ing done as pre­vi­ous ar­range­ments.”

Fur­ther, he added, “No funds are paid to the Govern­ment of Guyana. All funds re­main BBCI. All staff are be­ing paid as [in the] pre­vi­ous ar­range­ment. The GoG col­lects nor spends any of the money col­lected.”

On Mon­day he had writ­ten to the Hu­man Re­sources Of­fi­cer of BBGI, Amar­nauth Singh, in hopes of as­suag­ing the con­cerns of staff that their jobs might be in jeop­ardy. He asked that the mail be cir­cu­lated to all staff so that they are aware first­hand of the se­cu­rity of their jobs. “Please be ad­vised that I wish to re­it­er­ate and as­sure that all em­ploy­ment with the Ber­bice Bridge Com­pany Inc. is and will re­main se­cure and sta­ble. Dur­ing this tran­si­tional pe­riod, please note that there will be no change in staff roles, re­spon­si­bil­i­ties, du­ties or po­si­tions. All staff mem­bers are there­fore as­sured of their con­ti­nu­ity of ser­vice of em­ploy­ment at BBCI.

But even as BBCI main­tained that the tem­po­rary takeover was un­law­ful, the com­pany is­sued a state­ment say­ing that it will com­ply with the de­ci­sion and will con­sider whether it will mount a le­gal chal­lenge based on a re­sponse from Pat­ter­son, to a re­quest for a jus­ti­fi­ca­tion of the move.

The com­pany said in a state­ment that based on le­gal ad­vice re­ceived, it con­sid­ers the Or­der through which govern­ment has as­sumed con­trol of the bridge to be “un­law­ful and ul­tra-vires” un­der Sec­tion 11 of the Ber­bice River Bridge Act on which it is based.

Jagdeo said that govern­ment’s cit­ing safety clauses in the Ber­bice River Bridge Act was “se­man­tics” for a move that could only be termed po­lit­i­cal. “You saw what law he is us­ing to take over the bridge. He uses a safe­guard there after na­tion­al­iz­ing the bridge for a few days. I sus­pect the takeover will last for the re­main­ing five days be­fore the elec­tions and im­me­di­ately after, we will re­turn to nor­mal busi­ness. The toll will not be ad­justed be­cause it can’t be jus­ti­fied,” he said.

While not nam­ing any­one, Jagdeo laid the blame for the in­crease on the head of BBCI and the Na­tional In­sur­ance Scheme, Dr. Suren­dra Per­saud, say­ing that he is a strong mem­ber of the Al­liance for Change.

“It didn’t start from the share­hold­ers mak­ing an an­nounce­ment that they wanted a 400% in­crease. It started from a govern­ment of­fi­cial…mak­ing this dec­la­ra­tion that they want this in­crease…,”he said.

In­vestor con­fi­dence

But he cau­tioned govern­ment that their tak­ing over of the bridge is likely to hin­der in­vestor con­fi­dence here, as sev­eral other fu­ture projects are pro­posed to be pat­terned after the pub­lic- pri­vate part­ner­ship model used in the bridge con­tract.

“This is­sue about na­tion­al­iza­tion and tak­ing over pri­vate prop­erty, we don’t agree with it, be­cause we are seek­ing sim­i­lar mod­els to con­struct other bridges and hy­dropower and ev­ery­thing else. Was the na­tion­al­iza­tion jus­ti­fied in this case? Could there be an­other rem­edy? Yes, the Min­is­ter al­ready had the Act where he did not have to sign the toll or­der. Any in­crease where the Min­is­ter did not sign the toll or­der ac­cord­ing to the act would have been un­law­ful. So he didn’t need to take over the op­er­a­tions of the bridge…all he had to say is ‘I am not sign­ing any toll or­der’”, Jagdeo stressed.

He said that the man­age­ment of the Bridge should ex­plain to the pub­lic why after so many years and with rev­enues more than pro­jected when the con­tract was signed, they still are not turn­ing a profit.

“They need to ex­plain, how in the face of in­creased rev­enue they can’t meet their obli­ga­tions. It is a man­age­ment is­sue. They have to demon­strate what hap­pened there. It should not be the other way around but we have in­com­pe­tent peo­ple.

The com­pany has said that it had made an at­tempt to have the in­creases in­sti­tuted, as per the con­tract, in 2014 un­der the Peo­ple’s Pro­gres­sive Party/Civic govern­ment. There are dif­fer­ing views over this.

For­mer Pres­i­dent Don­ald Ramo­tar, who was Pres­i­dent at the time, said that a for­mal re­quest was not made but that the com­pany met with his cabi­net and the mat­ter came up.

“They didn’t make a for­mal pro­posal. The whole cabi­net met with the Board and the mat­ter came up there and we spoke about the pos­si­bil­ity about re­struc­tur­ing the loan to run the bridge and keep the price sta­ble,” Ramo­tar re­called yes­ter­day.

Asked about the re­struc­tur­ing pro­posed then, he pointed to a let­ter he had re­cently writ­ten to this news­pa­per where he said that

the in­creases could have been avoided if govern­ment had fol­lowed his party’s fi­nan­cial model for the bridge.

“It was to do with a sort of lev­el­ling of the tolls. If you had debt in 2014, 2015, 2016 you take some of that and you re­fi­nance it for a longer pe­riod at a lower in­ter­est rate. Part of the rea­son was to pay the debt ma­tur­ing but you would still get the bridge back in 2026,” he said.

In his let­ter he ex­plained “In 2014, when I was Pres­i­dent, we met with the Ber­bice Bridge Board with the ob­jec­tive of find­ing ways to avoid a toll in­crease while at the same time en­sur­ing that the Ber­bice Bridge was able to hon­our its obli­ga­tions. We viewed the toll lev­els like the way GPL han­dled its tar­iffs to main­tain a con­stant level of tar­iffs, de­spite ris­ing and fall­ing oil prices. Our so­lu­tion was sim­ple—given that tolls were only go­ing up to se­cure cash to re­duce debt, Govern­ment would sup­port in­vestors, rein­vest­ing some monies at a lower in­ter­est rate, and have this re­paid in the last few years of the bridge con­ces­sion. Un­der this sce­nario, tolls would not go up, but it would also not go down as quickly as pro­jected. Other so­lu­tions in­cluded in­creas­ing the life of the con­ces­sion, but this was viewed as less prefer­able than so­lu­tions pos­si­ble over the re­main­ing life of the con­ces­sion.”

In 2006, ev­ery in­vestor re­ceived a fi­nan­cial model that con­tained a toll in­dex. I have no doubt that the PPP has no ob­jec­tion to this model be­ing made pub­lic. The fi­nan­cial model showed that tolls would re­main con­stant un­til 2014. In 2014, tolls were sched­uled to in­crease by 6.4 per cent and again in 2015 by 17.3 per cent. There­after, tolls would start drop­ping.

Ramo­tar said that by 2019, tolls were pro­jected to be lower than 2008, and by 2021, tolls were pro­jected to be sub­stan­tially below where it was in 2008, fall­ing over 40 per cent over 2020.

He, too, is adamant that govern­ment should not heed the re­quest for a 19-year in­crease since he said the bridge is ex­ceed­ing the pro­jec­tions of the con­tract as is.

“No I do not be­lieve they need 19 years. When it comes to these projects you look at cash flow, de­pre­ci­a­tion and amor­ti­za­tion. They can work the num­bers and have no in­crease and the bridge can still go back to govern­ment in 2026,” he said.

Bhar­rat Jagdeo

David Pat­ter­son

Don­ald Ramo­tar

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