WASA facing bankruptcy

THE UNC’s “Water for All” campaign and the Point Lisas Desalination Plant may have bankrupted the Water and Sewerage Authority (WASA). This was the startling revelation at yesterday’s sitting of the Joint Select Committee (JSC) for Government ministries, statutory authorities and State enterprises II at the Red House, in which WASA was one of several public utilities in the line of fire. JSC chairperson Parvatee Amolsingh-Mahabir declared, “WASA is in a very sorry financial state. Your (WASA’s) historical operating performance chart revealed that from 1992 to 2003, WASA has been operating at a financial loss to the tune of over $3 billion. Under receivables,  your report reveals that up to March 29, 2004, WASA is owed $506.8 million by customers. “WASA wishes to write-off $300 million in bad and doubtful debts. From 1998 to 2001, the financial situation was so bad that WASA had to borrow  $1,830,000,000 to finance various projects. To crown it off, the current loan portfolio stands in excess of $3 billion and WASA will be required to repay this loan to the tune of $7.4 billion. From the financial statements here, we (JSC) can conclude that WASA is financially bankrupt, it is broke.”

Quoting from a February 15, 2002 Cabinet note, Anthony Bartholomew, Permanent Secretary in the Public Utilities Ministry, said WASA’s current predicament started under the UNC. “WASA’s deficit of $272 million in 1997 was expected to rise by a deficit of $426.7 million in 2002,” he stated.” UNC Senator Sadiq Baksh said this did not account for further escalations in WASA’s deficit since 2001. Bartholomew replied, “We have to factor in the operations and financing of Desalcott, which was not reflected and included at that point in time. As part of the financing arrangement for Desalcott, there is need to put in place a US$130 million facility to finance the expenditure related to the purchase of that water. That cost started in the following year and that cost has been put forward. “On the one hand, the ministry was besieged by requests, given the heightened expectation in the national community and the expectation they would have been provided with water for all by 2000, that the ministry, in responding to that request, had to continue expanding its capital programme to cater for that expectation in society.

“So it was not as if we could have stopped financing WASA, because there were legitimate expectations in the society. Therefore, in response to that request, there was a need to expand and continue the capital investment programme,” explained Bartholomew. WASA CEO Errol Grimes said, “The desal plant has placed a tremendous financial burden on WASA. When the proposal was being examined, costs were not the greatest criteria. The greatest criteria was timing of the project, to bring it on very quickly, and also to improve the reliability of the supply in the Point Lisas area.” He said since the plant came on stream in March 2002, its daily supply of 22 million gallons of water has only increased WASA’s overall supply by ten percent. Bartholomew and Grimes agreed with Junior National Security Minister Fitzgerald Hinds that “we  could live without desal or could have lived without it.” Bartholomew added that monies would have been better spent fixing leaking waterlines and de-silting WASA’s dams, rather than constructing the desalination plant.

Grimes also said a moratorium on several loans WASA took from 1994 to 1999 was lifted in 2001. These included a $450 million loan taken out while Severn Trent ran WASA, and loans of $660 million and $240 million for the North and South Water Projects respectively. Bartholomew said WASA had been underfunded over the years but Grimes dismissed UNC chairman Wade Mark’s contention that this pattern was continuing now under the Manning administration, and the National Social Development Programme was undermining WASA’s core responsibility. Of the $500 million owed to WASA by customers, Grimes said $271 million was owed by ordinary citizens (a large percentage involving standpipes) while Government owed $75 million to the Authority. He said WASA was working to improve the efficiency of its internal systems and deal with illegal water connections. “We do fire people. We do disconnect people,” Grimes said. Bartholomew said the silver lining in all of WASA’s troubles was the completion of a strategic plan to address the problems confronting the authority. Amolsingh-Mahabir asked whether all consumers would have to pay higher water rates for WASA to service its billion dollar loan, but got no answer from either Grimes or Bartholomew.