It is time to na­tion­al­ize the Ber­bice Bridge per­ma­nently and pay off the in­vestors

Stabroek News - - STARBROEK NEWS -

Read­ing the Stabroek News ar­ti­cle of Novem­ber 7, 2018, cap­tioned `Ber­bice Bridge Com­pany to com­ply with ‘un­law­ful’ takeover’ was an un­for­tu­nate oc­cur­rence. This state­ment from the Com­pany was point­less. If it was an un­law­ful takeover then take the Govern­ment to court; why com­ply?

Some may want to say this is a po­lit­i­cal act, but I beg to dif­fer. What other choice does the Min­is­ter have but to use the rule of law and the terms of the con­ces­sion to en­sure that the trav­el­ing pub­lic ben­e­fits from an en­vi­ron­ment that sup­ports con­sis­tent tolls (sub­ject to in­fla­tion)? For the pub­lic in­for­ma­tion, the Ber­bice Bridge cost four times as much for a car to cross com­pared to the De­mer­ara Bridge. If this is the price for pri­vate own­er­ship, then it make sense to na­tion­al­ize if these Ber­bice tolls are to in­crease fur­ther.

When con­sid­er­ing this is­sue we must frame the en­tire mat­ter at a strate­gic level and al­low­ing for three per­ti­nent mat­ters:

1. The toll rates and the pub­lic in­ter­est;

2. The rule of the law/ terms of the con­ces­sion agree­ment;

3. The fi­nanc­ing model/re­turns to the in­vestors.

In that re­gard, if the Min­is­ter did not act in light of the un­yield­ing po­si­tion of the Com­pany to in­crease the rates start­ing at 360% and more, then he could have been ac­cused of dere­lic­tion of duty. It is stan­dard prac­tice glob­ally that reg­u­la­tors must pro­tect pub­lic health, wel­fare, and safety while re­spect­ing the profit op­por­tu­ni­ties of the in­vestors when it comes to the op­er­a­tions of pub­lic in­fra­struc­ture. This Ber­bice Bridge is a pub­lic in­fra­struc­ture. Un­der no cir­cum­stance were the rec­om­mended in­creases of the tolls, as sug­gested by the Board, in the pub­lic’s best in­ter­est, rea­son­able and fair. Af­ter all, whether pri­vately or pub­licly owned, the Ber­bice Bridge is for the pub­lic good and must be treated ac­cord­ingly.

Se­condly, the rule of law/con­ces­sion­ary agree­ment is framed from the Ber­bice River Bridge Act, Act No. 3 of 2006. In that Act, the Min­is­ter is tasked with mon­i­tor­ing “the Con­ces­sion­aire’s obli­ga­tions un­der the Con­ces­sion Agree­ment”. If by way of that mon­i­tor­ing process the Min­is­ter so deems the tolls as out of or­der, the law pro­vides him with the power to “spec­ify the max­i­mum of tolls that shall be charged dur­ing the Con­ces­sion pe­riod in re­spect of any class of ve­hi­cles”. It is in the law and thus to see the Com­pany cry­ing “un­law­ful” is ab­so­lutely coun­ter­in­tu­itive. If a com­pany manag­ing a pub­lic in­fra­struc­ture be­haves in a man­ner that is not in the best in­ter­est of the trav­el­ing pub­lic, then it is the duty of the Govern­ment of Guyana to swiftly take ac­tion to pre­serve law and or­der. For this prin­ci­pled rea­son, I sup­port the de­ci­sion of Min­is­ter David Pat­ter­son on this spe­cific trans­ac­tion to tem­po­rar­ily take over the op­er­a­tions of the Ber­bice Bridge.

Now with all that said, the na­tion owes a debt of grat­i­tude to the in­vestors for in­vest­ing in a project that many had said was un-doable in 2008. When that in­vest­ment was made, the eco­nomic fun­da­men­tals were much more favourable. Since then, those eco­nomic fun­da­men­tals have de­te­ri­o­rated markedly be­cause of the pol­icy paral­y­sis in the APNU+AFC Govern­ment. The av­er­age GDP growth rate dur­ing that pe­riod (2009-2015) was just un­der 5%; to­day it is av­er­ag­ing around 2%. There was a sense of eco­nomic buoy­ancy in the Ber­bice area un­der the PPP/C, which is very ab­sent to­day un­der the APNU+AFC. Un­der the PPP/C, there was a short­age of sugar work­ers; to­day some 7,000 of them are on the bread­line mostly from the Ber­bice area. There is such a fun­da­men­tal de­te­ri­o­ra­tion in the eco­nomic con­di­tions in Ber­bice to­day com­pared to those PPP days, only the un­aware will not un­der­stand that there is a di­rect cor­re­la­tion be­tween the eco­nomic malaise in Ber­bice and the num­ber of ve­hi­cles us­ing the bridge in 2018. A very dif­fer­ent eco­nomic en­vi­ron­ment was present in 2009.

Un­for­tu­nately, the fi­nan­cial model built for 2009 was a mas­sive suc­cess in those PPP/C times but

be­cause of the poor eco­nomic con­di­tions cur­rently un­der the APNU+AFC Govern­ment, it has vir­tu­ally col­lapsed to­day. But in spite of this fail­ure, the bridge must not be al­lowed to fail be­cause it serves a na­tional need. There­fore it is time to na­tion­al­ize the bridge per­ma­nently and pay off the in­vestor what is due to them.

The fact re­mains that the State has suc­cess­fully man­aged the De­mer­ara Har­bour Bridge and that model can be eas­ily adopted on the Ber­bice River Bridge. Be­cause of space, I shall get into the how in an­other let­ter out­lin­ing in de­tail some rec­om­mended mod­els and op­tions. The Min­is­ter has only one op­tion to­day – na­tion­al­ize the bridge per­ma­nently and pay off the in­vestors.

Yours faith­fully, Sase­nar­ine Singh, M.Sc.- Fi­nance, ACCA

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