The 160 million Euro (€) loan agreement that was signed last week for the building of the New Demerara Harbour Bridge (DHB) formed part of the financing model proposed by the Chinese contractor, Senior Minister in the Office of the President with Responsibility for Finance, Dr Ashni Singh says.
“The $260 million signed last year was for the EPC (Engineering, Procurement and Construction) contract. The loan agreement that was signed last week is now the financing agreement, pursuant to the proposal made by the EPC contractor in their bid to mobilise bank financing through the Bank of China for the project,” Dr Singh told Stabroek News yesterday when contacted.
The project to build the connector bridge between Region Three and Region Four was awarded to the second responsive bidder in the joint venture of China Railway Construction Corporation (International) Limited, China Railway Construction (Caribbean) Co Ltd, and China Railway Construction Bridge Engineering Bureau Group Co Ltd, after months of technical and financial negotiations with the most responsive bidder – China State Construction Engineering Corporation (CSCEC) – fell through.
Sources had explained to this newspaper that CSCEC’s proposed rate of interest, on their US$256,638,289 bid, was not agreed to as the company’s negotiators were adamant that it would not accept a fixed rate and had wanted to set the conditions for changes “that would have been solely determined by them.” That agreement would have seen the company utilising a debt financing model.
While the construction of the bridge will utilise a Design-Build-Finance (DBF) model, bidders submitted various financing options.
Former Minister of Public Infrastructure, David Patterson, has questioned why government opted to go for a loan when it has over US$1 billion in this country’s Natural Resource Fund that could have gone towards building the bridge in its entirety.
“The PPP administration has now taken another loan of US$172 million from the China Exim Bank for this project, despite boasting that over US$1 billion will be deposited in the Natural Resource Fund for 2022, no explanation has been offered on the rationale of adding this loan to our National Debt, monies which will have to be repaid by future generations, when interest free funds are readily available,” Patterson wrote in a letter to Stabroek News.
“No information is available on the tolls that the end users will be forced to pay, especially when based on prior experience, tolls of the level of the Berbice Bridge (G$2,200 per car) are possible. There has been no public comment on the fact that the PPP administration, invited bids under a Design-Build-Finance procurement model, however they have now awarded a contract which will be fully funded by the taxpayers, without even allowing other prospective bidders to submit proposals under this new financing arrangement,” he added.
But persons close to the process told this newspaper that “low interest rates on a loan works out far better long-term that using a huge chunk of your finances for capital projects.”
“The money in the NRF can go towards other important projects…,” the source added while positing that Patterson should understand that this country’s coffers are not yet at “surplus stage”.
It is estimated that construction for the DHB project will last for two years. The bridge will be 2.65 kilometres long with a driving surface width of 23.6 metres to accommodate four lanes. The high-span fixed bridge will fall in the vicinity of the current location and terminate at Nandy Park on the East Bank of Demerara. “The new design of the Demerara Harbour Bridge will not require opening or retraction to allow for maritime traffic and will be built with a life span of at least 50 years,” the bidding document states.
Last week, through a press release, the Ministry of Finance announced that government had completed the electronic signing of a loan agreement with the Bank of China for €160.8 million (US$172 million) for the building of the New Demerara River Bridge. It did not give an explanation on the financing model, although it was the first time this aspect of the agreement was made public.
The release noted that the hybrid-designed bridge will feature a modern four-lane structure (two carriageways), cycle lane, with a 2.65-kilometre length, driving surface of about 23.6 metres or 77.8 feet, and will have a lifespan of some 100 years.
It added that the new bridge will offer easy connectivity to both the existing East Bank Demerara road as well as the new Diamond to Eccles bypass, the existing West Bank Demerara road, and the new Parika to Schoonord road. Further, the new high span, four-lane bridge will facilitate the smooth flow of traffic without congestion and delays.
