Dear Editor,
According to Head of NICIL, Mr Winston Brassington, the new bridge over the Demerara River is to be built by a Public-Private Partnership (PPP), on the Build Own Operate Transfer (BOOT) model. This news should alarm most Guyanese, especially those of us who frequently cross the Demerara River.
We recall that in December 2013, Guyana was warned by the IMF, to follow international best practices in Public-Private Partnerships (PPPs). The IMF stressed, that Guyana must seriously consider improving how Public Private Partnerships (PPPs) are structured. We can surmise that the IMF is not happy with how Guyana handles PPPs.
Public Private Partnerships (PPPs) became popular in the 1990s as governments around the world looked for new ways to finance projects, build infrastructure and deliver services. Under this PPP model, a government service is funded and operated through a partnership between a government and private sector companies.
Many governments were attracted to PPPs and started projects using this model. At that time, governments thought that PPPs would allow them to build infrastructure and deliver services without having to borrow money. Also, PPPs would allow experts in the private sector to be part of major projects, thereby lending their expertise to the benefit of the public. However, over time many problems were discovered. It was found that public debt under PPPs took a long time to repay, placing a heavy debt burden on future generations. It was revealed that the loss of public control, job losses and lack of oversight were strong arguments against using PPPs. In other words: buy now and pay later, became, buy now, lose control of the project, and pay exorbitant fees later!
Many countries found that PPPs were not value for money, including the UK, Russia, India, Australia, Hungary and Portugal. The UK, following the recent financial crisis, moved to review the policy. Hungary and Portugal suspended the practice entirely and are reviewing existing PPP projects.
According to the experts, PPPs have the potential to be vehicles for the transfer of public resources from the people to the pockets of the elite. This is in part because of the complexity of these deals. Additionally, in Guyana deals are shrouded in contractually enforced secrecy, disguised as confidentiality.
The World Bank warns that the major question to be asked before entering into a PPP is: Is it necessary?
Guyana’s ruling People’s Progressive Party administration used the Public-Private Partnership arrangement to build the Berbice bridge. So, was it necessary? If the bridge had been financed entirely by Guyanese taxpayers, maybe the tolls would have been affordable. Meanwhile, the travelling public must pay exorbitant tolls to use the Berbice bridge, the government has no control of the Board of Directors (despite having a majority interest) and the private interests are making the money.
In fact, NICIL is subsidising the Berbice Bridge Company to the tune of $110 million a year. (This money is the dividends waived by Winston Brassington and the government.)
No wonder the IMF is warning us about PPPs.
We need to pay attention to these things. We cannot allow a dubious practice, like PPPs, to be used by the elite to move resources from the treasury to private pockets.
And now, the bridge that is to be built over the Demerara River, is to be constructed and operated under another Public-Private Partnership. Again, NICIL and Winston Brassington are handling the deal. And just like the Skeldon factory, Amaila, the Cheddi Jagan International Airport expansion, the specialty hospital and the Enmore Packaging Plant, Chinese and Indian companies appear to be at the forefront of the bidding process.
Will the Demerara bridge be another way to funnel taxpayers’ money into private pockets? Will the people of West Demerara now have to pay back-breaking tolls, just like the people of Berbice? Most importantly, will Guyanese allow the PPP/C government to get away with it again, or will they stop them?
Yours faithfully,
Mark DaCosta
