The Berbice Bridge Company Inc (BBCI) has written to the National Insurance Scheme requesting that the NIS give its views on whether to accept the recent Government of Guyana proposal to reduce the bridge toll without further negotiations by Tuesday.
In the letter, dated September 14, received by NIS General Manger Doreen Nelson on September 17, BBCI Chief Executive Officer Omadat Samaroo apologizes for the short notice citing the extreme pressure the company was under as a consequence of the Guyana government’s announcement of lowering the toll without undertaking prior consultation with the company.
The letter, viewed by Stabroek News, requests that NIS indicate yes or no to whether the BBCI should go ahead and accept the government’s proposal in the absence of a position on the Toll Formula and/or Concession Period or whether the BBCI should refuse and continue with negotiations. The letter also requests that the NIS signal whether there should be a general meeting of shareholders and financiers to determine a collective positon or if the BBCI directors should make this decision as the NIS’s appointed representatives on the Board.
Samaroo states in the letter that should there be no response from the NIS before or by September 22, 2015 the company will assume that NIS has abstained from the process.
BBCI indicated that given the current structure of the Toll Formula without the much needed adjustment to the financial model the cash shortfall this year is estimated at $600M. The 2015 budget allocated $36M for a bridge subsidy from September to the end of the year.
The company highlighted that it was approaching its debt financiers to propose a lowering of the interest rates, NIS being one of the largest financiers of the bridge, to mitigate the imminent cash flow crisis. One week prior to the letter being sent the BBCI met with representatives of the NIS to discuss the terms and conditions of the interest rates and the terms of principal repayments.
NIS has $950M in preferred shares in the Berbice Bridge and an additional $80M in regular shares. The total investment in the bridge by the NIS is well over $1B. Early this year the company had to write the NIS stating that it was unable to pay dividends for 2014 as the company did not make a profit.
The government indicated to the the BBCI that it was not averse to this consideration, but according to the company the government made it clear that irrespective of the Concession Agreement provisions no increase in the toll structure would be tolerated.
Additionally the company stated that it offered an alternative to the government to extend the Concession Period which would ensure BBCI’s solvency and offer time to restructure its debts improving the financial projections and making the company more bankable. This proposal was submitted to the PPP/C government in June, 2014.
In the letter the BBCI indicates that this same proposal has been made to the APNU+AFC government and until followed up on the company has reached out to the NIS for its take on whether to accept the current offer by the government, to reject it, or to continue with negotiations.
Samaroo also said to the NIS General Secretary in the letter that so far the BBCI has not taken a stance on the government’s proposal. He said that the BBCI was given roughly two weeks from the date of consultation with the government, August 12, 2015, until the subsidy was to be implemented on September 1, 2015 and tolls lowered.
He said that a resolution was impossible to achieve during this short time period as the company would have had to meet with the Board, obtain legal advice, and meet with key financiers, among other tasks.
The BBCI refuted media claims of a stand-off instead playing up the short time frame that was afforded for such a drastic measure to be undertaken without proper consultation with shareholders.
The government has proposed a reduction for each category of vehicle that will utilise the Berbice Bridge. A car currently pays $2,200 of which the government proposes that a subsidy of $300 be given and the adjusted rate be set at $1,900 per car crossing. The company had contested that the proposed government subsidy was inadequate to offset the debts and had countered with a proposal for either a 55% increase in tolls or an extension of the concession period from 21 to 50 years.
Up to the end of last year, the BBCI says it racked up accumulated losses of $1.5 billion and is under threat of insolvency unless it can restructure its financing.
