Instead of its bullying tactics, the government should have sat down and worked with the Berbice Bridge Company Inc. as to how best tolls could have been kept low and traffic increased so as to keep the bridge viable.
The APNU+AFC did the opposite. It took the fight to the company by offering free travel across the river using the Transport and Harbour vessels along with a few private launches which were hired. The same monies could have been put into subsidizing the bridge so as to reduce tolls.
The government instead of protecting the interests of the National Insurance Scheme ended up hurting that company investments by the action it took in trying to pressure the company to lower tariffs.
NIS got a good deal on the bridge but its returns are contingent on the bridge making money. The government was not helping the BBCI to make money when it began to offer free travel across the Berbice River.
The BBCI is not making the money it ought to be making because it does not have the traffic flow. The economic crisis in Berbice is not helping. What was needed was a plan to increase the traffic instead of the government offering free boat rides.
The government, because it has a majority interest in the bridge, has the primary responsibility to solve the financial woes of the company, otherwise not only will the bridge have to be sold but the NIS will lose out again.
There are two options which face the government. The first option is to buy out the other shareholders. This should not be a problem because the government already has majority interest in the bridge.
The only way the government can fulfill its promise to its supporters to reduce the bridge tolls significantly is if it turns the bridge into a fully Government-owned enterprise. Private people invest to make money. They are not going to want their investment to yield nothing.
Oil money is coming. The first tranche is US$300M. That would be more than enough to pay for the bridge and still have a great deal left over. The money is there to buy the bridge.
The government however may be thinking: why buy the bridge when we can get it for free? After all, if the company continues to lose money and cannot pay its debt, then the company will declare bankruptcy, then they may be forced to hand the bridge over to the government for free.
The second option would be for the government to support the bridge company by waiving the dividends of NICIL’s shares in the BBCI so as to allow the company to improve its cash flow. The government should not have any problem with this because it found the money to secure a bond to help prepare the sugar corporation to look dandy for investors and that bond is thirty billion dollars. It is paying a fat interest on this sum even though Guysuco says it has only gotten $2 billion so far.
The government obviously has money to burn so therefore it should have no problem waiving the dividends of NICIL.
The President likes to launch inquiries. He should bring in some experts who should examine the finances of the company, the concession agreement and the financial model and determine the best way forward, with the support of the government.
If the government continues on this ill-advised path, it will find itself in serious problems because it is dealing with a public private partnership and the international financial institutions will be looking very closely at how the government treats with this matter.
The manner in which the government addresses this problem has serious implications for future public private partnerships. The public private partnership model is the preferred model for financing large scale investment projects.
Should the government be seen as exerting pressure on BBCI or is engaged in political gimmicks, then there is no international financial institution, oil or no oil, which is going to lend Guyana any money for any infrastructural project.
The government can then kiss goodbye to any public private partnership for a new bridge to link the east and west banks of Demerara. The Minister of Public Infrastructure announced three days ago that the bridge will be built using a public private partnership.
But which investor is going to want to come and invest if they believe, whether rightly or wrongly, that the government is pressurizing a company established under that very model?
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