Berbice Bridge project stalls
Construction estimates reach US$46M
By Gitanjali Singh
Stabroek News
January 12, 2003
The Berbice River Bridge Project (BRBP) appears stalled as development agreements reached with the South African-led consortium in July remain unsigned.
The government is reported to be looking for alternative sources of financing for the project given that the proposed cost under the Berbice River Bridge Consortium (BRBC) which includes Group 5 of South Africa has risen by 21 per cent.
When BRBC submitted its bid in February 2000, it had estimated project costs at US$37.8M. But the firm now predicts it will cost US$45.9M.
The government negotiating team headed by Winston Brassington, and the BRBC led by Managing Partner John Lotz had in July 2002 agreed on a draft development agreement defining the way forward for the project. The signing of that agreement was subject to its ratification by Cabinet, which Stabroek News understands, has not been done to date.
That draft agreement sets out the three developmental phases of the project, the first of which was to confirm the bridge’s financial viability, determine a firm price as well as secure commitments for financing. Phase two would have finalised the technical viability of the project; and the final phase was to see the negotiation and execution of all the agreements necessary for the project as well as financial closure.
The government was expected to fund US$1.044M of the US$1.305M development phase but Stabroek News understands it is now not in favour of doing so. But sources close to the consortium argue that the findings of the development phase would only benefit the government, because if a contract was not signed to build the bridge with BRBC, the information from the technical and other studies would not benefit the consortium.
Conversely, the local partner in BRBC, Matthews Associates, is reported to be in a position to secure full financing for the entire project if the government is unwilling to fund any part of it.
The BRBC has not been notified of the government’s current thinking on the issue, but sources within the government indicate that the level of liquidity within the local economy could allow for the project to be financed for less than the sum proposed by BRBC. A number of local institutions had indicated a willingness to invest because of a lack of long-term investment opportunities. Almost G$53B is currently invested in treasury bills earning between three and five per cent. And the National Insurance Scheme holds close to G$15B in liquidity, some of which needs long-term investment outlets.
On the other hand, the government is expected to provide some US$2.5M annually as part of a benefit stream for the project, to make up for the revenue shortfall in the start-up period. Meanwhile, traffic in the last several months over the Berbice river has dropped by a third, government officials say. This has been attributed to the crime wave and the attacks on the East Coast. However, the government considers the bridge essential to spur economic activities in Regions Five and Six. The government is expected to make a definite pronouncement on the issue in the coming months with administration sources confident that construction of the bridge would start in 2004 and take some 18 months.
However, the format of the project may be altered significantly as it is not known if BRBC would be willing to act as a contractor for the project alone, deviating from the build, own, operate and transfer concept it had based its bid on. If it is unwilling to do so, the project may very well have to go back to tender, only for a contractor this time.
Construction of the bridge across the Berbice river was first expected to start in November 2000 by Ballast Nedam International (BNI), the first-ranked bidder in the tender process. But protracted negotiations failed to secure a contract as BNI walked away from the project in 2002 citing financial difficulties in its international operations. Negotiations then commenced with BRBC, the second-ranked bidder.
