Bonds among options for financing Berbice bridge
By Gitanjali Singh
September 25, 2000
Ballast Nedam International (BNI) wants to issue tax-free bonds on the local market to part-finance the construction of the bridge across the Berbice River.
The company proposes to raise US$12 million on the local market and to seek a loan for US$19 million from international agencies, including the Caribbean Development Bank and the European Investment Bank.
A source close to the Privatisation Unit said BNI proposes to bring in US$10 million in equity financing for the project which is expected to cost a total of US$41 million (construction US$37 million, up front capital US$1 million and interest costs US$3 million).
Stabroek News understands also that the government will be expected to contribute US$2.5 million annually to the stream of benefits accruing to BNI through the special purpose company to be set up to manage the bridge once in operation.
Acting convenor of the government's negotiating team, Winston Brassington, could not be contacted for a comment on this issue over the last few days.
The negotiating team has sought the legal advice of Luckhoo and Luckhoo on the draft memorandum of understanding MOU it has negotiated with BNI and which is supposed to be signed before the end of this month. The MOU sets out the commitments of the government and BNI which have to be pursued preparatory to a development agreement being signed by the two sides.
Among BNI's commitments will be a performance bond and financing to allow for a contract to be signed.
The government on the other hand, has to negotiate with the Inter-American Development Bank (IDB) for financing for the series of activities which it intends to commit to as part of the project. These include construction of the access roads to the bridge on both sides of the river and a river traffic study to determine the financial feasibility of the project as well as the government's contribution to the stream of benefits. The IDB has US$11 million available for the Berbice bridge project.
Stabroek News was told that to support BNI's stream of benefits, the government may choose to provide land on either side of the river to the special purpose company for commercial use to enhance its cash flow position.
While the MOU is expected to be signed between the government and BNI shortly, the development agreement and contract to set up a special purpose company still have to be worked on. This puts construction of the bridge out of range for this year. This newspaper also understands that securing financing for the project will be a complex issue for BNI as it has been to date.
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