Gov’t in talks to buy DDL shares in Berbice Bridge

The government is currently negotiating a price for the 40 million shares held by a Demerara Distillers Limited (DDL) subsidiary in the Berbice Bridge Company Inc (BBCI).

The shares held by Demerara Contactors and Engineering Limited (DCEL), a wholly owned subsidiary of DDL, represents about 10 percent of the BBCI. The APNU+ AFC government has been trying to get the BBCI to lower the bridge toll as the coalition had promised during their elections campaign that this would be done. However, the company has said that its shareholders have to be consulted but there has been no word on the matter since.

Prime Minister Moses Nagamootoo, at a post cabinet press briefing yesterday, said that government and DCEL are currently negotiating a price for the shares. A $45M price tag has been offered. The PM said that government hopes that when it comes to a final purchase price, the company will see the larger picture that government is trying to provide a reasonable service for a reasonable price.

“As you know, this government is determined to reduce the toll attached to the Berbice River Bridge and we have taken measures including the provision of (river) taxis to ease the pressures and burden on people who use the bridge, but we have come to a position that while we are negotiating with the bridge company to effect the reduction in the toll, we are also thinking of how this government can place itself in a better negotiating position by attracting shares so that it could have a stronger voice in the (governing) body of this company,” Nagamootoo declared.

He said that government is prepared to go even further but stopped short of saying whether a full government buyout of the bridge is on the horizon or being seriously discussed. He did say that other shareholders have been approached.

The National Insurance Scheme (NIS) owns 76% of the total shareholding of the BBCI but government has little say at the level of the BBCI board because control is skewed in favour of two private investors who own 15% of the total shareholding. NIS has $950 million in preferred shares in the Berbice Bridge and an additional $80 million in ordinary shares.

The total investment in the bridge by the NIS is well over $1 billion. Earlier this year, the BBCI wrote to the NIS stating that it was unable to pay dividends for 2014 as the company did not make a profit.

In September, Minister of Public Infrastructure David Patterson denied a government buyout saying that it was not economically feasible and the administration’s proposed $35M annual subsidy is the best option to reduce tolls for travellers.

“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 had said when asked about a possible government takeover.

He had agreed that the issue was far more complex than just a purchase of the bridge. He also pointed out that shareholders would expect their dividend pay-outs, among a host of other contractual obligations. He said that as a result, the final pay-out would be significantly greater than it appears now.

Chairman of the NIS Dr Surendra Persaud and Chief Executive Officer of BBCI Omadat Samaroo confirmed to Stabroek News that the bridge management had met with the NIS.

Persaud told Stabroek News last week that the NIS board is yet to meet officially since coming into being in July and, as such, he would not be commenting on the ongoing deliberations between the BBCI and the government on the lowering of the tolls. He would only state that a meeting did occur.

Amid the APNU+AFC government’s call on BBCI to lower the bridge tolls, the company had written to the NIS and other shareholders seeking their positions on the proposal.

In a letter dated September 14, received by NIS General Manager Doreen Nelson on September 17, Samaroo stated that should there be no response from the NIS before or by September 22, 2015 the company will assume that the NIS has abstained from the process.

In his budget speech on August 10, Finance Minister Winston Jordan had announced that from September 1, 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 would be reduced by 10 per cent. The tolls have not been reduced because of the stalled talks.