More shocking revelations on the Berbice Bridge… Private investors get tax-free ride on profits

New GPC boss, Dr. Ranjisinghi ‘Bobby’ Ramroop

New GPC’s rep on board, Ravie Ramcharitar

As more details emerge over the questionable financial structure of the Berbice River Bridge, there are disclosures that as part of the sweetheart deal, the Bharrat Jagdeo administration granted New GPC and other private investors sweeping tax exemptions on their returns.

The bridge is now claiming imminent insolvency unless its tolls are increased or it is allowed to run the structure for 50 years, instead of the 21 years.

Investors were guaranteed lucrative rates of returns on their investments between 15 per cent and 23 percent. Those rates would stand out starkly against average rates of about 11 per cent 12 percent that normal investors earn from projects.

The Berbice River Bridge Act, assented to by Jagdeo in January 2006, was tailored specifically to ensure that profits were realized.

Section 20 of the act states: “All income earned by the concessionaire shall be exempt from Corporation Tax, Income Tax and Withholding Tax for the duration of the Concession Agreement or for the extended periods that the Minister responsible for finance may deem necessary, on being satisfied that the terms and conditions of the Concession Agreement may be amended or varied.”

The Act also allowed for all dividends payable to shareholders be exempted from Corporation Taxes, Income Taxes and Withholding Tax.

While tax holidays have become a norm for investors, the guaranteed rate of return of 15 -23 percent would shed light on why a number of companies including New GPC and Queens Atlantic Investments Inc. (QAII) and Hand-in-Hand Insurance were so eager to jump on board.

New GPC and QAII are owned by Dr. Ranjisinghi ‘Bobby’ Ramroop, a close friend of Jagdeo.

The high returns are now being blamed on the current financial problems that the Berbice Bridge Company Inc. (BBCI).

According to the BBCI annual report of 2014, the entity saw revenues increasing by $78M to $1.34B. The losses were $239M, compared to 2013 when it was $289M.

Accumulated losses at December 31, 2014, was $1.5B with $571M paid to investors as interest on their returns.

The bridge company has been warned time and again that its high repayments to shareholders and debtors were highly unsustainable and could lead to problems.

The auditors, TSD Lal and Co., in 2014 annual report, noting that the shareholders’ deficit was $1.1B, warned that company continued to make losses. “Continuation of the company as a going concern is dependent of the ability of the company to make substantial profits in the future and to generate a steady cash flow to meet liabilities as they fall due.”

Former president Bharrat Jagdeo

Hand-in-Hand’s head and BBCI’s Chairman, Keith Evelyn

The auditors went further. “We have considered management’s representation and have concluded that there is a material uncertainty that cast significant doubt on the entity’s ability to continue as a going concern and, therefore, that it may be unable to realize its assets and discharge its liabilities in the normal course of business.”

BBCI has written to the state-owned National Insurance Scheme, asking for the 2014 dividends to be waived.

The Government of Guyana has been waiving its returns too after BBCI claimed it cannot pay.

BBCI is under the microscope now in a stalemate row with Government over reduction in tolls.

The David Granger administration had promised on the campaign trail to introduce measures to reduce costs for the travelling public of Berbice.

In his August 10 speech to the National Assembly on 2015 national budget, Finance Minister, Winston Jordan, announced a reduction of $300 from $2,200 for cars. All other categories were reduced by 10 percent.

However, BBCI is insisting that it wants to take the matter of the tolls reduction to its shareholders.

The new administration has been complaining that the financial structure of BBCI was deliberately done to place control and profits in the hands of a few companies that are predominantly owned by friends of the previous administration.

The US$40M bridge was commissioned in December 2008, built largely under a private/public partnership from an overseas loan.

The financial structure of the company was deliberately done in a manner to allow the equity shareholders whose investment is less than five percent ($400 million) of the total funds of the company to exercise controlling interest over the company.

Of the $400 million, New GPC and Ramroop Group own 40 percent and the Hand-in-Hand Group 10 percent.

NIS has invested $950M in shares but had little say in the affairs despite the 76 percent interest.

The other equity shareholders are Secure International Finance Company ($80 million); Demerara Contractors Limited ($40M); Hand in Hand Motor & Life Insurance Company ($40M), and NIS ($80 M).

The bridge has been providing a critical link between the city and East Berbice, where thousands and rice farmers and sugar workers live.

Government, in face of the stalemate, has announced that it will be introducing river taxis to reduce costs for students and senior citizens.

Govt. will not enrich Berbice Bridge associates, says Patterson

…as option of nationalizing bridge ruled out

As the stalemate between the government and the Berbice Bridge Company continues over the reduction of tolls, Minister of Public Infrastructure, David Patterson, yesterday dismissed the notion of nationalising the entity. The government is unprepared to enrich persons associated with the company, he said.

The price tag that will be attached to taking over controlling interest of the bridge would be far above that which Government can currently afford, explained Patterson as he addressed media operatives during a conference at his Wight’s Lane, Kingston office yesterday.

Patterson said that the government will be honouring the contract entered in with the company but the reduction in the toll, however, remains high priority for the government.

The relatively new Government, while it was in Opposition, tabled a motion seeking to have the tolls reduced but it had not materialized despite their majority in the tenth Parliament. Later, on the campaign trail, in the lead-up to the May 11 General and Regional Elections, which it won, it had vowed to reduce the tolls.

On August 10, Jordan announced in the National Budget that tolls for cars will be reduced from $2,200 to $1,900. For other categories of vehicles, the decrease will be 10 percent, by way of government subsidy.

But the company did not budge. As the September 1 (the date for implementation) approached, Directors of the US$40M bridge said that the government had not consulted with them and it wanted its shareholders to have the final say.

It then insisted on a toll increase or an extension from the 21 years it had to manage the facility, to 40 years. The company was insisting that it racked up accumulated losses of $1.5B up to the end of last year and could face insolvency unless it can restructure its financing.

The government was arguing, however, that with the subsidy the bridge would still receive its money,nand the people who traverse the bridge will be relieved.

As the row continued, the Public Infrastructure Minister submitted a proposal for the passengers speedboats to the Cabinet and it was approved. The water taxis will be used to transport mainly students and senior citizens.

Yesterday, posed with the question of nationalizing the bridge Patterson said “We are not into enriching any of the existing persons there with the limited resources we have.” He dispelled arguments that the sums that would be invested in subsidy over the years could be more beneficial than a one-time investment in paying off investors.

The Minister said there is a guarantee of 23 per cent rate of return annually in the bridge contract. “Anybody you go to buy from will invoke that saying they have 21 years…that’s how they entered into the deal so that would be tagged on as well,” said Patterson.

“The end figure will be much greater than what was invested.”

Patterson said that the proposal laid in Parliament during the Budget Debates was made for 2015. The Minister of Finance has made clear that it will be a progressive reduction, with users seeing a greater reduction in the years to come.

The government’s intent, according to Patterson, is to have the toll at an amount “fair and accommodating to the general public.” He said it is the first phase that has run into a speed bump.

Patterson emphasised the government’s commitment to alleviating the burden from the Berbice people, but “(the bridge company) would like all its issues to be discussed and dissolved in its favour, prior to accepting the $300.”

The government has said that it does not see any reason to delay the implementation.

“They are speaking about extending the concessionary period and these are all things which can be discussed, but in the interim we have a commitment we made to the people. We appropriated sums for it and we are saying simply while this is going on, let us see. Unfortunately, the bridge company does not see it that way,” Patterson noted.

At present, the Maritime Administration Department (MARAD) as well as the Transport and Harbours Department (T&HD) are currently spearheading the operation.

Patterson revealed “They are examining both the crossings at Rosignol as well as Blairmont.”According to the Public Infrastructure Minister MARAD will be looking at the safety of the vessels as well as the standard for the boats that they are hoping to reintroduce.

On the other hand, T&HD will be looking at the safety and conditions of the stelling and the crossings. “They would have done the examination of the boat as well at the New Amsterdam Stelling and whatever emergency works, if needed, will be executed,” Patterson added.

Additionally, a proposal has been made for heavily subsidizing the crossing for school children and the elderly on the river taxi service. The extent of the subsidy will be finalized after discussions with the Ministries of Education and Social Protection, said Patterson.

Patterson explained that the wharf taxis could have been implemented since Cabinet approved the motion. He said that although he was met with proposals to use the MARAD fleet of river vessels, the government is seeking to solicit vessels owned by the residents of Region Five and Six to provide the service.

“It is not only looked at as transportation, it is looked at as the revitalization of a community,” he said. The Minister mulled over starting off with the MARAD fleet, and letting the residents groove into offering the service.

The Minister, along with Minister within the Ministry, Annette Ferguson, was scheduled to meet the Berbice Chamber of Commerce, of both Regions Five and Six to explain the way they intend to introduce the river taxi service.

The Junior Minister revealed that they will also be meeting with the minibus and taxi associations and other stakeholders to ensure that the taxis are reintroduced and “savings being passed on to the vulnerable groups.”

How many posts are we going to open on this topic. 

'Cut and paste' expert Mitwah, do tell me.

Go and sober up yourself then get back to me..

Are you one of the big players in the gold smuggling bizness?

Business sweet for Bobby

Mits, Two deals, the Skeldon Factory and the Amelia Access Road are enough to disqualify Brazzy and Jagdeo from High Offices. These two deals show lack of care and respect for the Guyanese People.

The Sanata Complex is under investigation... more to follow.

Maybe! maybe not.  Criminals left Guyana on small planes with raw gold and landed in Barbados.  You should ask Caribj  about that.

HUH?  Like Nehru Drunk?