– Contractual agreements allow providers of 5% of capital to control the bridge and receive 23% annual return
By Kiana Wilburg
The saga of the Berbice River Bridge Company Inc. continues to reveal even more interesting details as Kaieteur News understands from experts very close to the Bridge that the current contractual arrangements allow for two entities to control 50 percent of the company: The NEW GPC and Hand In Hand Trust Corporation.
New GPC, a company owned by Dr. Ranjisinghi ‘Bobby’ Ramroop has close relations to former President Bharrat Jagdeo and, according to an article on chrisram.net some time ago, that company has two Directors on the Board.
The structure of the company allows equity shareholders whose investment is less than five percent ($400 million) of the total funds of the company to exercise controlling interest over the company. Of the $400 million, the Ramroop Group owns 40 percent and the Hand-in-Hand Group owns 10 percent.
The contract also provides for the equity shareholders to receive 23 percent on their investments. The coalition government, in the lead up to the May 11, 2015 elections, had accused the previous administration of hijacking the Berbice Bridge Company Inc. (BBCI), deliberately structuring operations in a manner that allowed investors and their close friends with disproportionately small investment to control the company.
To ease the burden on users of the bridge, Finance Minister, Winston Jordan, pursued the reduction of the tolls in a phased manner. The first phase sees the toll reduction for cars, from $2,200 to $1,900. This was announced during the budget presentation. It was set for implementation on Tuesday, (September 1). Jordan had also indicated a 10 percent reduction on other categories of vehicles.
But the Finance Minister at a recent post Cabinet press briefing revealed that the implementation of the reduction seems to be in limbo at the moment. He disclosed that the prescribed toll reduction was in limbo because BBCI’s Directors decided to take that matter to its shareholders.
Jordan believed that the Bridge Company was deliberately delaying the implementation of the toll reduction.
The reduction is estimated to see the Company collect annually about $120M-$140M less from commuters but with Government compensating them with an equivalent amount. For the remaining months of the year, the Government has allocated $36M.
In a full page advertisement published in yesterday’s edition of Kaieteur News, the company is denying that it is deliberately delaying the reductions. “This is not so. The BBCI is as anxious as all other Guyanese to provide the best service to the Berbice Bridge commuters at an affordable price.”
BBCI pointed out that just as the government was forced to defer several of its campaign promises based on the need to comply with existing laws, so too are the Directors of the BCCI constrained by the Berbice Bridge Act and Regulations.
The Bridge Company said that it signed a legally binding contract with the PPP/C Government called a “Concession Agreement”.
The statement noted that at an initial August 12 meeting between the government and the Company, the Government proposed a schedule of subsidies to commuters based on the existing toll structure.
BBCI said that it stressed during the meeting with Government that it would like further discussions to take place on the proposal and an extension in the concession period from 21 years to 40 years: or for the Government to give consideration to an application for an increase in toll made to the PPP/C Government on March 15, 2015. The government said that no agreement was reached with BBCI.
“We cannot therefore understand why the Minister would suggest that ‘delaying tactics’ are being employed. Other discussions also took place concerning the timing of subsidy payments but the BBCI team made it clear that nothing could be agreed until the matter is discussed by its full board and stakeholders.
The company said that Government proceeded as if it was a done deal, simply to fulfill a campaign promise on the BBCI tolls. This was made without any consultations.
BBCI also claimed that it lost $1.2B because it has not been granted an increase in tolls. It could face insolvency if the process is not done right, BCCI added.
“Directors of BBCI have a fiduciary duty to act in the best interest of the company. Any agreement to a subsidy without honouring the toll adjustment formula set out in the Concession Agreement will result in the BBCI defaulting on its obligation to repay debt in 2015 and possible insolvency.”
This year, over $500M in debt repayment to investors is required. Directors cannot change the agreements reached with the investors in the bridge as represented by the trustee for the debt and the shareholders for the equity. Such decision must involve an agreement with the trustee and the shareholders.”
Any change in the Concession Agreement and the Toll Order which is made by the Government –the last one was made in 2009 by the Minister of Public Works–requires the approval of the Trustee and the Shareholders, BBCI claimed.
The company said that it expects government to fully commit to honouring the legislation, concession agreement, and the rights enshrined in the various agreements related to the Berbice Bridge. “A subsidy divorced from honoring the BBCI Concession Agreement could very well result in bankruptcy for the BBCI.”
The current Directors of the Company are said to be Keith Evelyn, Ravi Ramcharitar, Avalon Jagnandan, Gillian Burton, Egbert Carter, Paul Cheong, Cecil Kennard, and Maurice Solomon. Jagnandan and Ramcharitar are both Directors in New GPC.
Government’s lead negotiator in the toll increase is Attorney-at-Law, Chris Ram, while for the BBCI, Ravi Dev, is representing New GPC on the Board.
Ram, earlier this year, wrote that Government, inclusive of the NIS, owns 76 percent of the issued shares of the company. NICIL, Ram said, owns what is called a Special Share in the company and according to the Articles of Amendment of the company “no action can be taken by the Bridge Company, without the affirmative vote” of NICIL.
The NIS has $950M in Preference Shares and is entitled to fixed dividends. The equity shareholders are Secure International Finance Company ($80 million); Demerara Contractors Limited ($40M); Hand in Hand Motor & Life Insurance Company ($40M), the Ramroop Group ($160 M) and the NIS ($80 M).
Ram, who has written extensively on the Bridge, has lamented the fact that despite having some 70 percent of the issued shares as well as a Special Share, control of the company is exercised by less than a handful of entities.
The lawyer has also written on various occasions noting the losses being made by the company due to its contractual arrangements.
Finance Minister Jordan had lamented on subsequent investments into the bridge by NIS. In the National Assembly on Friday, he described the investments as being “reckless” and “criminal”. He said that between 2009 to now, NIS has lost $1.8B and in spite of this, made another insane and suspect investment into the Berbice Bridge of nearly $1B to which they are still to collect income on.
Jordan said that NIS is at a point where it cannot give full benefits to its faithful contributors and believes that the Consolidated Fund at the end of the day may be asked to make good on this loss.
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