Former President and Leader of the Opposition, Bharrat Jagdeo remains of the view that the Berbice Bridge which was constructed during his tenure is not only economically viable but is a good investment.
“I think it is a good investment,” Jagdeo told members of the media during a press briefing held at Freedom House on Tuesday. The former president said that “I am in favour of the government, of the tolls coming down everywhere, but I think you have to work with the public-private partnerships.”
He argued that the traffic over the bridge needed to be grown for the full potential of the bridge to be realised, pointing out that bridging the Berbice River was a goal since the 1960’s.
He lambasted the government for its contradictory messages in relation to the Berbice Bridge Com-pany Inc (BBCI), noting that in one breath the deal was being hailed as a “cash cow” for friends and family of the PPP and then in another breath the government was stating how broke the bridge was due to the inability to pay dividends.
Jagdeo said that since the commissioning of the bridge in December 2008 and under the PPP administration the BBCI had not paid any dividends. “They do have retained earnings to pay the dividends just that the board never paid out the dividends in spite of the fact they [government] said that we influenced them to give our friends and family. The Board under the PPP never paid dividends.”
“They have not received a single dollar return from their investment in the bridge which led [Finance Minister Winston] Jordan in parliament to say that it was a bad investment for NIS”, Jagdeo said of the shareholders inclusive of the National Insurance Scheme (NIS) as well as Queens Atlantic (QA) and the New Guyana Pharma-ceutical Corporation. NIS has $950M in preferred shares and another $80 million in common shares while QA and New GPC have roughly $160M invested in the bridge.
Despite Jagdeo saying that the project is viable, the investors in the enterprise are saying that BBCI has racked up a debt of $1.5b and faces insolvency unless tolls are hiked or the concession period is increased from 21 to 50 years.
They have made this argument in relation to the APNU+AFC government’s declaration that the company should lower its tolls and the government will make up the difference via a subsidy. This has left the government and the BBCI at a standoff.
Jagdeo on Tuesday stated that the government needed to come up with an idea but said that if government was to “change the project economics, the return earnings and everything else will quickly disappear…they will not be able to pay any dividends to their investors and the investors are arguing that they are entitled to their dividend but they argued that all along under PPP.”
The former President said he was not accepting of economists who run with macro analysis; writing that has little to no relevance in the Guyanese context. He did not respond to questions in relation to the criticisms of the bridge’s high debt financing and minimal equity.
Jagdeo recalled that the Inter-American Develop-ment Bank did not want to go along with the project and so a Private-Public Partnership was sought.
When asked by the Stabroek News why the World Bank’s suggestion that the ferry service be overhauled and synchronized for far less than the cost of the US$40M bridge wasn’t proceeded with, Jagdeo stated that as president he was not keen to let a technician of any financial entity outside of Guyana dictate how the country would develop its infrastructure or spend money internally for the betterment of the country.
In Tuesday’s Develop-ment Watch column in Stabroek News, economist Tarron Khemraj stated that the World Bank’s suggestion could still be implemented while the Berbice Bridge itself can be hauled off to the Demerara River utilising the $36M subsidy proposed by the government to facilitate the lowering of the Berbice tolls.
“The Berbice Bridge project shows how difficult it would be to implement infrastructure in a large country with a small dispersed population. It should be a lesson going forward. Politicians should rely more on microeconomics than Machiavelli for decisions making,” Khemraj stated.
