There is a danger in state purchase of DDL Berbice Bridge shares

Oct 26, 2015 Letters

Dear Editor,
The Berbice River Bridge provides a public good service. The pricing of a public good service should be under Government’s regulatory control, with the public’s interest served first. Sensible regulation implies that Government should always be strategically positioned to deliver a low cost economy to consumers on both sides of the Bridge in order for the private sector to prosper.
The announcement of a sale of the Demerara Distillers Limited (DDL) shares to Government should be reviewed in totality, in terms of the degree of profit-making that Government will tolerate under the Bridge Board of Directors’ management of shareholders’ interests. Government can join hands with the private sector and seek to satisfy the private shareholders’ required rate of profit return or seek to redefine the Bridge’s capital that will be rewarded from bridge tolls through regulations that aim for a low cost service to the public.
Joining hands with the private sector for making profits after all costs are satisfied on a monopoly type of public good has its inherent flaws of limiting the quantity and quality of service and very strong incentives to raise Bridge tolls.
Monopoly public good pricing is not in the interest of the general private sector, except the monopoly owners. Government’s policy to keep costs low will be undermined further, if Government acquires another layer of financial interest in the Berbice River Bridge, beyond the Pension funds. Government will be under direct pressure to raise tolls in order to maintain monopoly profits and satisfy the existing private sector owners alongside those expectations of poor pensioners.
Government decision makers should reflect on the consequences of their actions before buying up private shares. Not only would the compromised joint ownership by the pension fund plus the central government and the private investors complicate the pricing of a public good, it would exploit all Bridge crossers on a daily basis in order to maintain a stated rate of return on investment, that includes imputed interests well above Guyana’s long term interest rates.
If the Bridge were to face a calamity, insurance protection would fall at the doorsteps of all taxpayers. I doubt if the Bridge is insured with any local carrier.
The peoples’ pension funds (PPPF) used to build the bridge have already gone through much forbearance on the safe return of its capital. Those funds deserve at least the Central Government’s long term interest rate in relatively safe Government bills and bonds.
DDL management should be sensitive to the responsibilities of Government and not make requests that would compromise Government’s development policies, including its attempt to grant subsidies to Bridge crossers.
Further, the DDL shares should be sold at arm’s length to the private sector to develop the country’s capital market over there. Transactions in Guyana’s capital market would reflect the capitalization of low cost PPPF in the selling price of the DDL shares.
Or is it true that DDL believes that the Guyanese taxpayers are ready for another round of bailout transfer to the private sector?
Alternatively, DDL could act responsibly and transfer the sales proceeds to the PPPF for a dollar or to the ailing sugar industry, its progenitor.
The holy books we believe in or read, the Bible in particular have ideas on self-interest and public service. We are reminded that ‘we cannot (should not, mine) serve two masters, God and mammon (money).
Ganga Persad Ramdas

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There is a danger in state purchase of DDL Berbice Bridge shares

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