Tolls for the Berbice Bridge could be reduced by more than 50%, according to chartered accountant Christopher Ram, who says government could vest the bridge at a nominal cost thereby ensuring a negligible depreciation charge.
His recommendation was made as part of a presentation at Chapel Hall, in New Amsterdam, at the invitation of the Alliance For Change (AFC) yesterday morning.
Ram proposed that the current rate being paid by motorists for cars and minibuses of $2,200 can be cut to $500, while pick-ups and sport utility vehicles (SUV) rates of $4,000 should be slashed to $2,000 and $3,000 respectively. He proposed too that the current rate of $7,600 being paid by goods vehicle owners be reduced to $5,000.
He said that if the government wishes to bring the cost down to the same as in the Demerara Harbour Bridge, it can do so by vesting the Bridge at a nominal cost in which case there is a negligible depreciation charge. The total costs could be reduced by more than 50% with additional positive impact on the tolls, he said.
He also suggested that government vest the bridge into a new company with depreciation at 3.33% per annum straight line (30 year life). Ram noted that despite the channelling of government subsidies into the operation of the bridge, the infrastructure continues to be uneconomical for all the investors and users of the bridge. Providing an analysis of the bridge’s operation, he said that in 2010 the Berbice Bridge Company Inc (BBCI) amassed an income of $1.139M, which was $406M shy of the $1.545M needed to meet its current and future obligations.
Ram told those gathered that even at or because of high tariffs, the BBCI will continue to operate at huge losses. In the medium to long term timeframe, he said that the company would only be able to repay loans by further borrowings and would be insolvent; that is being unable to pay its debts at the time of its contractual handover.
Ram said that the cost of the bridge to users, especially Berbicians is both economic and social. It may even affect access to education and health, he added.
With the bridge operating at a loss, Ram says the government should acquire all the interest and then move to liquidation. He recommended that the government negotiate with the shareholders and investors in the facility to acquire their interest in the company and then liquidate the company. He noted that ordinary shares would be priced at face value and loans and bonds at a premium over face value.
He also proposed the establishment of a Bridges Authority to own and operate all public bridges, thereby enjoying the benefits of shared expertise and management.
The bridge was opened to the public in December 2008 and since being commissioned there has been several concerns raised by users of the facility regarding the crossing rates.
BBCI’s common shareholders are the National Insurance Scheme, the Hand in Hand Fire Insurance Company, Secure International Finance, Demerara Engineers & Contractors Limited (a subsidiary of DDL), and New GPC.
Other investors in the project are Republic Bank Limited, Guyana Bank for Trade and Industry, Citizens Bank, Demerara Bank, Bauxite Company of Guyana Inc (BCGI), Hand in Hand Trust Corporation, the Guyana Geology and Mines Commission (GGMC) and the New Building Society (NBS).
The company will hand over the bridge to the government in 21 years. The bridge is said to be the sixth longest floating bridge in the world at 1,570.719 metres and while the Demerara Harbour Bridge is the fourth longest of its kind in the world.