Cabinet has given approval for a taxi service across the Berbice River as a means of bringing financial relief to students and the elderly.
The decision comes in the face of the refusal thus far of the Berbice Bridge Company Inc (BBCI) to accept the APNU+AFC government’s proposal for the lowering of the crossing toll.
“Cabinet gave its green light to the establishment of a river taxi service, primarily to allow for the students and the elderly, who are affected in large measure by the refusal of the Berbice Bridge Company Inc. to accept the government’s proposal for a lowering of the toll,” Minister of State Joseph Harmon told reporters at a post-Cabinet press briefing yesterday.
While the service will cater for the travel of students and the elderly, no provision can be made to provide crossing for vehicles since the terms of the previous government’s contract with BBCI prohibits the use of vessels for the crossing of vehicles.
The river taxi service will first be introduced through a pilot project utilising two covered launches. Harmon explained that government will not be providing the vessels; rather, its involvement will be limited to the provision of necessary infrastructure and a regulatory framework.
To this end, a committee comprising representatives from the ministries of Public Infrastructure, Edu-cation, Social Protection and Public Security will travel to Berbice this weekend to put in place the necessary arrangements for the passengers.
The pilot project for this service will be implemented even as the Minister of Finance Winston Jordan continues to engage BBCI on the proposed reduction.
While the government has proposed a subsidy to cover the loss to the company from lower tolls, BBCI is arguing that its financial plight requires a longer-term agreement which would enable a refinancing of its debt with creditors.
The government maintains that it is not its intention to cause the company a financial loss. Harmon maintained yesterday that the government is willing to make subsidies available to the company to cover monies lost due to the toll reduction.
“We don’t want to send a message to investors that once you invest your money that the government will step in and take over… so, we will continue our engagements with the bridge and hope that they accept the government’s offer,” Harmon said. “We are of the firm belief that very soon the Bridge Company, who indicated that they had referred the matter to the shareholders of the company… will see the light and agree to have the toll reduced,” he added.
In his budget speech on August 10th, the Finance Minister 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 would be reduced by 10 percent.
While $36 million has been allocated in the 2015 budget as a subsidy for the bridge company, Jordan had said that between $120M and $140M annually would be required to allow for a phased reduction of tolls.
The reduction has not yet materialised as BBCI is now requesting 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.
While it was in opposition, the Alliance For Change (AFC), which is a major component of the government, had lobbied for a ferry service across the Berbice River to allow an option to what has been described as the steep cost to cross the bridge. APNU+AFC Minister of Public Infrastructure David Patterson, also General Secretary of the AFC, told Stabroek News recently that the party would be pressing the government for the introduction of a ferry service across the river.
Cannot restructure
Meanwhile, 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.
In a whole-page advertisement in yesterday’s Stabroek News, the latest salvo in an escalating battle of wills with the APNU+AFC administration, the BBCI sought to dispel what it said was misinformation. BBCI noted that it had never increased tolls over the six years that the bridge has been in operation and that it had never declared or paid any dividends to any of its ordinary shareholders.
The ordinary shareholders comprise Secure International Finance Company Limited, the National Insurance Scheme, New GPC Inc, Queens Atlantic Investment Incorporated, Hand-in-Hand Mutual Fire Insurance Co. Ltd and Demerara Contractors and Engineering Limited.
BBCI argued that it cannot restructure its financing unless it can present to creditors and investors “a stable and profitable projection of the company’s financial position over many years to come.”
It said that recognising that increased tolls would be burdensome on commuters, in May of 2014 it made an alternative proposal to the then PPP/C government and followed this up with a presentation to Cabinet in June, 2014. The advertisement said that the alternative put forward by BBCI was for the concession period to be increased from 21 years to 50 years.
“This would allow creditors and investors alike to benefit from the added security in BBCI’s projected profitability and improved cash flow position, under the extended period, which would allow BBCI to restructure its financing and lower its costs, thus restoring viability,” the ad said.
This BBCI proposal had not been publicised by the company or the government. The PPP/C government did not act on the proposal and with general elections approaching, BBCI said it had no other option than to apply in March, 2015 for increased tolls as per the toll formula in the concession agreement. This, too, was also not disclosed by either the company or the PPP/C government.
Earlier this week, Jordan said that a 55% hike in bridge tolls had been sought in the proposal.
The ad listed the sequence of events that followed the advent of the new APNU+AFC government and said that BBCI has not rejected or accepted the currently proposed government subsidy. It added that the BBCI Board has determined that the correct approach would be to raise the matter with all its stakeholders, including its creditors.
