Minister of Public Infrastructure, David Patterson, has reached an agreement with the Berbice Bridge Company Incorporated (BBCI) over lowered tolls and will be signing a contract with the company in the coming week, a release from the Ministry of Public Infrastructure said today.
The agreement, which covers the provision of a Government subsidy to BBCI, will take effect from January 1, 2016. The agreement comes after months of wrangling between the company and the government. The APNU+AFC government had pledged to lower the bridge toll in its campaign manifesto and this led to a dispute with the company which wanted a reworking of the financials. With no agreement forthcoming the government reintroduced a ferry service on the Berbice crossing which upped the pressure on the company.
BBCI eventually decided to accept the proposal and talks then ensued on the mechanism. The government will be paying a subsidy to the company to the amount of the reduced tolls.
On August 10, Minister of Finance Winston Jordan had announced that from September 1st, the toll for passenger cars and buses crossing the Berbice River Bridge would be reduced by $300, from $2,200 to $1,900, while the toll for all other types of vehicles will be reduced by 10 percent. The reduction was intended to fulfil an elections campaign promise made by the APNU+AFC coalition.
While the government had proposed a subsidy to cover the loss to the company from lower tolls, BBCI argued that its financial plight requires a longer-term agreement which would enable a refinancing of its debt with creditors.
As a result, BBCI requested an extension in the concession period from 21 years to 50 years, or for the government to consider an application for a toll increase made to the PPP/C government on March 15th, 2015. The APNU+AFC government has refused to agree to either request.
Up to the end of last year, the BBCI says, it had racked up accumulated losses of $1.5 billion and is under threat of insolvency unless it can restructure its financing. $36 million has been allocated in the 2015 budget as a subsidy for the bridge company for the remainder of the year and Jordan had said that between $120M and $140M annually would be required to allow for a phased reduction of tolls.