Reiterating that it will not accept government interference in the management of private companies like the Berbice Bridge Company, the Private Sector Commission (PSC) yesterday said it remains of the view that the government has no direct investment in the bridge company.
The statement was a follow-up to one which had criticized an APNU motion lodged in the National Assembly attempting to have the government direct its representative on the board to seek a lowering of bridge tolls.
The A Partnership for National Unity (APNU) motion which is to be debated at an upcoming session of Parliament, seeks to have the present toll for motor cars and minibuses slashed from $2,200 to $1,000. It also wants the toll for a 50-seater bus cut from $12,800 to $9,000 and for a 30-seater bus from $7,200 to $6,000 among other adjustments.
Arguing for these changes the motion says that the Berbice Bridge was built with significant investment by the Government of Guyana which through the National Industrial & Commercial Investments Ltd (NICIL) is a preferential shareholder and a member of the Board of Directors of the Berbice Bridge Company Inc.
On December 10, the PSC slammed the motion without naming APNU.
It said “The Private Sector Commission of Guyana notes with deep concern a recent call by some members of Parliament that the Government interfere in the management of the Berbice Bridge Company, a Private Sector Company and concessionaires for the Berbice Bridge, and force Tariff reductions.
“The PSC will vigorously oppose any form of non-regulatory interference in the management of Private Sector companies, which in this instance if allowed to proceed will negate against attracting private investment in similar infrastructural projects.
“The Berbice Bridge Company is owned 80% by Guyanese Private Sector interests, including pension funds and 20% by an institutional investor, the National Insurance Scheme (NIS), that also holds non-voting preference stock in the Company and provides one of the few opportunities for a good investment return on Guyanese workers’ NIS contributions and may also be considered critical to the future life of the Scheme. As far as we are aware, the Government directly or indirectly has no investment in, or liability relating to, the bridge at this time.”
This statement by the PSC was then attacked by commentator Christopher Ram. In a letter to Stabroek News, he said the PSC was completely misguided on the matter. He referred to the PSC contention that “As far as we are aware, the Government directly or indirectly has no investment in, or liability relating to, the [Berbice River] bridge at this time.” Ram described this as “mindboggling ignorance given all the public revelations and exchanges over the Bridge Company’s ownership and performance.”
Ram argued that “The ownership structure of the company is made up of ordinary share capital of $400 million and preference shares of $950 million. The holders of the ordinary shares are NIS, New GPC, Queens Atlantic and Secure International Finance Company each having $80 million each, and Hand-in-Hand and Demerara Contractors each holding $40 million.
“What this means is that the Government, inclusive of the NIS, owns 76% of the issued shares of the company. Apparently, the PSC’s awareness, or lack thereof, also does not extend to knowing that NICIL, a government agency, owns what is called a Special Share in the company. The Articles of Amendment of the company expressly provide that in respect of specified matters, `no action can be taken by the [Bridge] Company, without the affirmative vote of the holder of the Special Share.’ And because the PSC claims not to know that the Government has this $950 million investment in the Bridge Company, it does not need to address the illegality of NICIL granting the Bridge Company an annual subsidy of around $110 million of dividends forgone”.
Yesterday, the PSC struck back. It said it stood by its statement as the government through NICIL no longer owned the 950 preference shares. These were purchased by the NIS.
“Mr. Ram is dead wrong to use the NIS ownership of the preference shares as synonymous with Government ownership and control. These preference shares are non-voting shares which carry no vote at the Shareholders’ Meeting.
“The NIS is an institutional investor with a mandate to provide social security benefits to the workforce in Guyana; health benefits, retirement benefits, etc. It is not an investment tool of the state which generates income for the consolidated funds. Long term liabilities (LTL), other than the preference shares, representing more than 80% of LTL are financed from private sources, Commercial Banks, companies etc.
In relation to the NICIL Special Share which Ram adduced as evidence of government ownership, the PSC said this is a common safeguard provision embedded into the Articles of Amendment to protect the interests of the people when assets are privatised.
Said the PSC: “This Special Share is usually referred to as a `golden share’ and has no financial interest in the Company. It merely allows its holder to prevent the company from acting outside of its mandate and would come into play if, for instance, the Company sought to utilise the bridge as collateral for a debt for a project unrelated to managing and operating the bridge.
“The ownership structure outlined above clearly establishes that the Government has no direct investment in the Berbice Bridge Company. The ‘mind-boggling ignorance to which’ as Mr. Ram refers is more appropriately applied to his contention that the legislature can dictate the pricing strategy of a private limited liability company in which it has no direct shareholding and consequently no control. Would Mr. Ram, with his expertise in Company Law, specify precisely how his position is supported?”
The PSC statement did not address dividends to the state that had been forgone to ensure the required return to the private investors. In between its two statements, questions had been raised about whether the PSC had consulted all of its constituents on the Berbice bridge issue.
