Friday, October 16, 2020
• Supply critical to COVID-19 hygiene
• Utility's plight means 'tough decisions'
• SOEs warned: 'Cake is only so large'
By NEIL HARTNELL
Tribune Business Editor
A Cabinet minister yesterday pledged that the Water & Sewerage Corporation will not be allowed to restart delinquent residential customer disconnections, saying: "That ain't going to happen."
Desmond Bannister, minister of works, told Tribune Business that while Adrian Gibson, the Water & Sewerage Corporation's executive chairman, "means well" the economic and health challenges produced by the COVID-19 pandemic make it critical that Bahamians continue to receive a home water supply.
Responding after Mr Gibson told this newspaper he would write to Cabinet ministers yesterday urging that disconnections resume because of the Corporation's "dire financial straits", Mr Bannister admitted the situation calls for "tough decisions" from the Government.
He added that the two choices were to either allow Mr Gibson "to do what he needs to do" to ensure the Water & Sewerage Corporation covers its operating costs, particularly vendor payments and payroll, or for the Government to provide increased taxpayer subsidies to cover any shortfall.
Acknowledging that "the cake is only so big, and you can only cut it so many ways" when it came to the increased subsidy demands of state-owned enterprises (SOEs) due to COVID-19, Mr Bannister promised that The Bahamas will "not be in the position" St Lucia and others find themselves in where their governments have exhausted their ability to provide society with financial support.
"The Water & Sewerage Corporation is very challenged, but having said that this is something he [Mr Gibson] has addressed to the Cabinet, and there's some decisions that Cabinet is going to have to make," the minister told this newspaper in response to the request to resume disconnections.
"Obviously the tariffs [prices] for water have been in place for quite some time, over 20 years, and he is challenged to be able to bring funding in which is sufficient to be able to keep the Corporation running.
"There's one of two things: He's going to have the opportunity to do what he needs to do, or the Government has to pump more money into the Corporation. It has to be one of those two things, and that'll be a decision for Cabinet."
However Mr Bannister, who has ministerial responsibility for the Water & Sewerage Corporation, and is effectively Mr Gibson's immediate superior, firmly ruled out any resumption of residential customer disconnections in an economic climate where mass unemployment estimated at between 40-50 percent has resulted in thousands of persons losing jobs and/or incomes.
Acknowledging that water supply was vital to good hygiene, especially during a pandemic such as COVID-19, he added: "The Government has always been mindful of the situation the Bahamian people find themselves in with respect to COVID-19, and it would be hard-pressed right now to make any decision in relation to disconnections.
"That ain't going to happen, not as it relates to residential customers. We're in the middle of a pandemic. I know the executive chairman means well, but the reality is when you look at residential consumers and you look at the pandemic, that cannot happen. It's a critical decision, and we're going to make the right decision."
Mr Gibson said the decision to request permission to restart disconnections, which were suspended in mid-March with COVID-19's arrival, came as talks with the Ministry of Finance over the latter reimbursing the Water & Sewerage Corporation for the $9m in total arrears built-up due to the 'no cut-off' policy drag on.
He also disclosed that other government agencies, ministries and departments owed a collective $7.9m for water they had received, with the last payment on this debt owed to the Water & Sewerage Corporation occurring in March 2020. And the Corporation's subsidy had also been cut to $20m in the 2020-2021 budget as opposed to $25m in the previous fiscal year.
While some would argue that any disconnection resumption will be akin to 'getting blood from a stone', or 'squeezing a dry carcass', given that many furloughed or terminated Water & Sewerage Corporation customers will simply lack the means to pay, Mr Bannister conceded that a balance needed to be struck that allows the state-owned water utility to cover its expenses.
In particular, he said the Government "is going to have to ensure" that customers of Water & Sewerage Corporation and other state-owned enterprises who can pay, but are instead exploiting COVID-19 to duck their bills, bring their accounts current.
Referring specifically to the Water & Sewerage Corporation and Mr Gibson, Mr Bannister added: "By the same token this is a state-owned enterprise that has to be run efficiently, and he [Mr Gibson] has to have the resources to operate that enterprise efficiently.
"There are people who are willing to pay their bills but can't, but there are people who can pay their bills and are not paying. These are some tough decisions the Government is going to have to make. We have any number of these agencies that are challenged.
"The situation at Bahamasair has been in the news quite a bit. There are a number of them. The cake is only so big, and you can only cut it so many ways."
Mr Bannister was adamant that the Minnis administration will not fall into the same plight as St Lucia, whose prime minister earlier this week said it was "no secret" that the island's government had exhausted its social security system and all other means of providing jobless persons with income support and propping up the economy as a result of COVID-19's challenges.
"We cannot be in that position as a country, and we are not going to be," the minister told this newspaper. "We are not going to be in that position as a country. We've spent hundreds of millions of dollars in the social security net, and have kept lots of people going.
"It's good for the Bahamian people that a caring administration is in power. We are going to make sure the people who are hurting have support, and those taking advantage of the system are going to have to pay up."
Mr Gibson's position on restarting disconnections comes with the Water & Sewerage Corporation facing a $30.8m "backlog" on payments due to vendors at end-August 2020, a sum that continues to grow, and a $15m-plus year-over-year decline in revenue for the year to-date to September.
However, Philip Davis, the Opposition leader, in a statement yesterday warned that any move to restart disconnections would be "duplicitous and hypocritical" when the Water & Sewerage Corporation had failed to first collect what was owed by other public sector agencies.
"The country is in the middle of the worst phase of the COVID-19 pandemic to-date where infections are on the increase, and water disconnections at this critical juncture would make it more difficult for thousands of Bahamians to sanitise their hands, bodies and surfaces, potentially worsening the community spread of the virus," Mr Davis argued.
"Additionally, a Cabinet approval would contradict the initial policy intent of the Government that the Competent Authority said was driven by science and send a wrong and confusing message to the general public.
"Further, how could the Government justify disconnecting delinquent Water & Sewerage customers who owe some $9m when the corporation's single largest customer, the Bahamas government, owes WSC almost $8m in unpaid water bills?" the Opposition leader added.
"A Cabinet approval would appear duplicitous and hypocritical on the face of it. The cash shortfalls the corporation's chairman is complaining about are common in many households under these very challenging economic conditions.
"I hope that with all of the crowing from the rafters by this government over their oversubscribed $600m international bond placement, the Government should lead by example and seek to immediately settle this enormous debt with Water & Sewerage."