Minister of Public Infrastructure David Patterson has stated that a government buyout of the Berbice Bridge Company Inc (BBCI) is not economically feasible and the government’s proposed annual subsidy is the best option to reduce tolls for travellers.
At a press conference at the ministry’s boardroom yesterday, Patterson was asked if the government was contemplating a buyout of the bridge since the annual subsidies would add up to a large tax-based bailout.
“We have a restrictive financial budget, right? And we have a lot of things to do,” he, however, stated.
He said when asked about a possible government takeover that “no, that is not a consideration of the government. For the moment, we are committed and still intend to pursue a reduction of the tolls and I’d like to make this clear—the proposal that was laid in Parliament, in the budget, was for 2015 and the Minister of Finance made it clear that it is a progressive reduction we are looking at. So 2016, there will be another reduction until we get it to a level that we think is fair and accommodating to the general public. So this is just phase one. Obviously phase one ran into a slight speed bump.”
Patterson noted that the issue was far more complex than just a purchase of the bridge, while noting that shareholders would expect their dividend pay-outs, among a host of other contractual obligations. He said as a result the final pay-out would be significantly greater than it appears now.
He stated that the National Insurance Scheme, which owns $950M in preferred shares and $80M in ordinary shares of the BBCI, could not just outright purchase the bridge.
He noted that the government has not gone that route because of the ongoing multitude of issues plaguing the NIS currently. He emphasised that the NIS’ investments in the BBCI was just one of many issues and that any discussion or consideration as it relates to NIS had to be looked at holistically and no decision could be made with just one issue under consideration.
He said for now subsidies would work as the government had to complete a plethora of other projects, while simultaneously addressing the lowering of tolls, which is the basis of the ongoing negotiations with the BBCI. For 2015, the budget has allocated $36M for the subsidy for the remainder of the year from September 1st.
Patterson deflected questions posed about the government trying to distance itself from any form or nationalisation of the privately-owned company. He also downplayed the suggestion that the government was trying desperately to cling to a campaign promise for toll reductions through a government subsidy.
Patterson said the government has always held firm that it was prepared to subsidise $300 of the current $2,200 per car toll. The minister added that during the ongoing talks with BBCI other issues were raised but the government was not concerned with resolving those issues because the company is a private one and the government’s objective was the implementation of the toll reduction. He said BBCI was taking a position “whereby they would like everything to be, all their issues which we inherited, to be discussed and resolved in their favour prior to accepting the $300. The point is, irrespective of whatever the negotiations, the examinations, the viability and so forth, government is still committed to pay $300, whatever the toll is.”
BBCI has so far resisted the government’s offer of the subsidy on present tolls and instead wants either a 55% increase in tolls or an extension of the concession period from 21 to 50 years. Up to the end of last year, the BBCI says it racked up accumulated losses of $1.5 billion and is under threat of insolvency unless it can restructure its financing.
Former Auditor General Anand Goolsarran has said the shareholders agreement for the BBCI has to be scrapped and replaced by one which reflects proportionality in investment, since although NIS owns 76% of the total shareholding, the government has little say at the level of BBCI board because control is skewed in favour of two private investors that own a mere 15% of the total shareholding.
With no agreement by the company on the government’s proposal, State Minister Joseph Harmon announced on Friday that Cabinet has given approval for a taxi service across the Berbice River as a means of bringing financial relief to students and the elderly.
