Berbice Bridge Company sustains Gy$1.5B in accumulated losses at 2014

Despite suffering accumulated losses of Gy$1.5 billion in 2014, the Berbice Bridge Company Inc (BBCI) has neither accepted nor rejected the subsidy proposed by the A Partnership for National Unity/Alliance For Change (APNU/AFC) Government to cover the loss to the company from lower tolls.

According to a release from the BBCI, it is under threat of insolvency unless it can restructure its financing and to date, it has never declared or paid any dividends to any of its ordinary shareholders. Guyana Times International was told that the company must either reduce its cost or increase its income to remain feasible. Presently, the income is its bridge tolls and its main cost is interest on debts.

Government and the BBCI recently began clashing about prices for the bridge tolls, with the Administration trying to fulfil its campaign promise of ensuring there are lower tolls for commuters utilising the Berbice River Bridge and the BBCI trying to ‘stay alive’.

To date, no agreement has been made between the two and although the Government had announced publicly that from September 1 lower tolls would take effect, this is yet to be realised.

In the subsidy proposition by the APNU+AFC coalition to cover the loss the company would incur if it were to lower bridge tolls, the BBCI is contending that its financial dilemma requires a long-term arrangement that would enable a refinancing of its debt with creditors.

“BBCI cannot restructure its financing unless it can present to its creditors and investors, a stable and profitable projection of the company’s financial position over many years to come… We have always recognised that an increase of tolls would be burdensome on the bridge commuters and therefore proposed an alternative to the Guyana Government in May 2014, and made a supporting presentation to Cabinet in June 2014. The alternative proposed by the BBCI was to increase the concession period from 21 years to 50 years thus smoothing out cash flows over a longer period,” the Bridge Company stated.

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. Such a move would result in the BBCI having the opportunity to restructure its financing and lower its costs thus restoring viability.

It was further explained that the lower costs would result in lower tolls without Government subvention.

However, the country went to polls before this matter was resolved and when this initiative to extend the Concession Period failed, the BBCI, in order to maintain its viability had no other option but to apply for increased tolls as per the toll formula and Concession Agreement.

“BBCI did so reluctantly in March 2015, some 10 months after it notified the Government of Guyana of the issues facing the Company (May 2014). Under the Concession Agreement, the Guyana Government has no authority to lower the tolls without the consent of the BBCI…”

The company’s release went on to say that it penned a letter to President David Granger on May 18, 2015, stating that it had taken note of his party’s campaign promises to lower the tolls and that the BBCI was availing itself to have discussions with the Administration.

Public Infrastructure Minister David Patterson, on June 11 wrote the Company stating that his Government had retained the services of Ram and McRae, Chartered Accountants to examine the financial position of the BBCI and to propose modalities and mechanisms provided in the law and various agreements to reduce its tolls.

According to the BBCI, it responded affirming that it was willing to work with the Administration to achieve any goal which may be of benefit to Guyanese.

Subsequently, the BBCI furnished Ram and McRae with all of the information he requested, which it could legally provide.

Guyana Times International understands that the Bridge Company did not hear from the Government until August when it was invited to a meeting with Finance Minister Winston Jordan. The meeting was to be held on August 12.

“By then, the Government had already made several public pronouncements and had unilaterally announced new tolls, inclusive of an implementation date of September 1, 2015. BBCI had prior to this meeting, only heard and read of these new tolls and their implementation date via the media. It was never officially informed of the proposed new tolls prior to the meeting with the Honourable Minister of Finance,” the BBCI release explained.

At the meeting between the BBCI and the Administration, Finance Minister Jordan then apprised the Company of the Government’s already announced public position.

This newspaper was told that the Company then reminded Minister Jordan of its financial predicament, the toll formula provisions of the Concession Agreement, the application for increased tolls as a result of the aforementioned circumstances, and of the proposed alternative of increasing the Concession Period.

However, on August 13, Ram and McRae wrote BBCI proposing a simple subsidy applied to the existing tolls but this subsidy did not address, postpone or solve the problem of the threatening insolvency of the company.

“In the letter, the Government’s representative acknowledged BBCI’s request for discussions to take place on the proposed extension of the Concession Period… The proposal did not address the fact that the toll formula dictated an increase in the toll, to ensure the solvency of the bridge company… BBCI therefore counter-proposed to Government its earlier position that instead of paying subventions at taxpayers’ expense the concession period could be extended from 21 to 50 years,” the Berbice Bridge Company noted.

It was also pointed out to government that the unfortunate alternative would be to have the tolls raised at a minimum as per the Concession Agreement for the company to remain viable irrespective of the simple subsidy proposed by the APNU/AFC Administration.

NEW GPC INC/QAII’s Board Directors resign

Meanwhile, NEW GPC INC and QAII announced on Friday that they have withdrawn the representation of their two Directors on the Board of the Berbice Bridge Company Inc which was tendered earlier this week.

The two Directors represented the equity investment by the two companies as common stock shareholders, on which they have never received any dividends over the past eight years.

“The virulent attacks against the two companies that sought to personalise and politicise what is ultimately a discussion on the adherence to the terms of a binding contract and agreement between the Government of Guyana (GoG) and BBCI cannot go unnoticed”, the Company explained.