Thursday, February 18, 2021
• Hints 3,000 free gallon days ending
• And price rises linked to use looming
• Utility must be dragged ‘into 21st century’
By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The deputy prime minister yesterday voiced optimism that Water & Sewerage customers are “prepared” for price increases as he hinted they will no longer receive their first 3,000 gallons for free.
Desmond Bannister, who as minister of works also has responsibility for the corporation, told Tribune Business that the government has little choice but to drag the water utility “into the 21st century” following the fiscal and economic blow-out inflicted by a combination of COVID-19 and Hurricane Dorian.
With no tariff increase for 22 years, he suggested it simply cannot continue to sell water to Bahamian businesses and households at a price below the cost incurred in purchasing it from Consolidated Water, the BISX-listed reverse osmosis plant operator, and then rely on annual $20m-plus taxpayer subsidies to cover the difference.
Besides ending the free provision of 3,000 gallons per customer every month, Mr Bannister said a price increase will also encourage water conservation and better use of a scarce essential resource. He added that consumers who used significant amounts of water will be required “to pay appropriately”.
While he would not be drawn on the timing and extent of any water price increases, the deputy prime minister indicated that more will be revealed about the reform and turnaround plans for the Water & Sewerage Corporation when the 2021-2022 Budget is unveiled in just over three months’ time in late May.
“It’s very kind of you to say it’s mixed,” he replied to Tribune Business, when questioned about the Corporation’s financial history that is stained with much ‘red ink’. “The Water & Sewerage Corporation has always lost money. It’s been a regular loser. It has never to my knowledge made any money, and has to be brought into the 21st century.”
With no tariff increase since 1999, or the 20th century, the Water & Sewerage Corporation’s prices have failed to keep up with inflation let alone rising water production costs. Asked whether consumers can handle a price increase amid the fall-out from COVID-19, Mr Bannister said: “I think we have the people to do it. I think we have the leadership to do it.
“I think the Bahamian people are prepared for it. I don’t see it being a huge increase. I think all of us, we have to appreciate that the Corporation has been essentially giving away 3,000 gallons of water for free at the start of every billing period.
“The new tariff structure is going to help them in conservation. We understand it’s [water] an important natural resource, and we need to conserve more and use it appropriately.” Mr Bannister said the free provision of 3,000 gallons, and government subsidy, had convinced many Bahamians they were getting it for nothing even though their taxes undergird the Corporation’s activities.
“We here in The Bahamas, we believe we’re getting something for free when we’re essentially paying for it out of the other pocket,” the deputy prime minister told Tribune Business. “What we are doing is going to ensure that users, especially heavy users, will pay for what you use rather than the use being subsidised by somebody else.
“I don’t see Bahamians having any challenge with it. The people who utilise a lot of water are going to pay appropriately for it.” Many observers will likely question the wisdom of imposing increased utility costs at this time on an economy, businesses and households that are still struggling to regain some stability as the COVID-19 pandemic drags on.
However, Mr Bannister indicated that the Water & Sewerage Corporation and the Government will seek to balance collecting what is due to the utility with a customer’s financial condition. “Water is a necessity, so it’s a service we have to provide and ensure everyone can get it,” he added.
Providing no details on the timing and amount of any water price increase, Mr Bannister said of the Corporation’s planned turnaround: “That’s a project for the upcoming Budget. We anticipate that in the next Budget we’ll be able to unveil any progress we have made with that.
“That process is ongoing. We know the kind of work we have to do. This is one of those issues where it’s important for us to to be able to make a difference in our country. It’s one of any number of major initiatives we have to bring to completion along with all the other matters going forward.”
The Water & Sewerage Corporation tariff increases are part of a bid by the Government “to accelerate long overdue reform of loss-making state-owned enterprises (SOEs) given the combined $408m drain they have imposed on Bahamian taxpayers this year in the form of subsidies - a figure that is expected to sharply increase due to COVID-19.
Senator Kwasi Thompson, the newly-appointed minister of state for finance, revealed before Christmas that this will likely involve price/tariff increases for Water & Sewerage Corporation consumers as the Government seeks to move them to a position where they can at least recover their costs.
Adrian Gibson, the Water & Sewerage Corporation’s executive chairman, last year said it was 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.
“Frankly, the Water & Sewerage Corporation is in dire straits,” he said. “Our operating cash flow cannot sustain monthly payments for vendors and payroll. “These challenges have resulted in a backlog of supplier payments that are steadily growing, and there’s concern about monthly payroll for the balance of 2020. Our vendor payments backlog as at August 27, 2020, was some $30.8m.”
Mr Gibson said this payable covered everything from monies owed to third-party contractors; vehicle and building insurance; and loans due to multilateral institutions such as the Inter-American Development Bank (IDB) and Caribbean Development Bank (CDB).
The Corporation’s subsidy was also cut to $20m in the 2020-2021 budget as opposed to $25m in the previous fiscal year.
Comments
tribanon says...
You have to laugh at the headline to this article because it's these grossly incompetent and corrupt politicians who have all along been having a free ride at the people's expense.
Posted 18 February 2021, 8:25 a.m. Suggest removal
observer2 says...
" [WSC] simply cannot continue to sell water to Bahamian businesses and households at a price below the cost incurred in purchasing it from Consolidated Water".
I have an idea. Why not let Consolidated Water sell directly to WSC customers so it operates like any other utility company in a developed country? Cut out the WSC middleman. Why do we always have to operate like a third world banana republic where the government pontificates every morning to its ppl.
Take WSC out of the middle and save the Bahamas hundreds of millions of dollars over decades of mismanagement.
In this way I don't have to wake up every morning and listen to how Bannister is going to save us and bring us into the 21st Century after having failed to do so for the last half a century.
Lol, give me a break.
Posted 18 February 2021, 8:45 a.m. Suggest removal
tribanon says...
I hear you but I'm certainly not in favour of ever letting an American corporation have an outright monopoly over essential things like our supply of water and electricity. Foreign competition, yes; foreign monopoly, no.
Posted 18 February 2021, 10:32 a.m. Suggest removal
observer2 says...
Agree with you tribanon.
Instead of a foreign water company let’s get a Bahamian company similar to the Cable Bahamas privatization - zero government onnership.
In fact while we are at it let’s get 2 private Bahamian companies to compete with each other on each island.
Now we have the worst of both world with foreigners selling water to the government who then on sells it to Bahamians at a loss.
I will be so happy when I wake up in the morning and don’t have to listen to Adrian’s bad news. Do they ever have anything positive to say?
Posted 18 February 2021, 12:49 p.m. Suggest removal
moncurcool says...
you do know that Consolidated Water has Bahamian investors right? Bahamians really own it and get regular dividends. That is real ownership. Not the nonsense people sprint about Bahamians owning WS&C and never received one dividend. But I guess they got 3,000 free gallons each month.
Hopefully, we can just make Consolidated Water the real operator, and New Providence just becomes like the people in Grand Bahama.
Posted 18 February 2021, 7:18 p.m. Suggest removal
DWW says...
does working with someones financial position include those who are not on government salary?
Posted 18 February 2021, 8:51 a.m. Suggest removal
observer2 says...
"...the Water & Sewerage Corporation is in dire straits." Adrian Gibson.
No its not. WSC has the Bahamas government guaranteeing all the jobs and an endless supply of money from high interest hard currency loans from European (Credit Suisse) and Supra National Banks (eg. IMF, World Bank, IBD etc).
Once the Bahamas is fully indebted the non transparent global banking system in partnership with the Bahamian government (FNM and PLP) the Bahamas will be fully crippled and dependent on them.
The fix will be in. They will be richer and we will be much much poorer.
To avoid hard currency depletion (hurricane season starts in 4 months) we should start rationing the US dollar reserves now.
Anyone doing any type of contingency planning can see this train wreck.
Posted 18 February 2021, 8:52 a.m. Suggest removal
Dawes says...
If the first 3,000 is free, why do i have a minimum charge of $36 for the first 3,000?. If people are using less then that then they will see a price reduction (if i am reading my bill correctly) as i assume they will be getting rid of this charge. In which case they will make less money. Or does he mean they want to charge it as well as the minimum charge?
Posted 18 February 2021, 9:06 a.m. Suggest removal
observer2 says...
Not sure Dawes. But I am sure Bannister as a qualified cost accountant with vast experience in running and regulating utility companies will get it correct. I have complete confidence in him.
Posted 18 February 2021, 9:15 a.m. Suggest removal
tribanon says...
LMAO
Posted 18 February 2021, 10:38 a.m. Suggest removal
OMG says...
Isn't it about time that all new builds were granted planning permission dependant upon the inclusion of a rain water cistern with a minimum capacity dependant on the type and size of building. Not difficult to do in the early stages of construction..
Posted 18 February 2021, 10:54 a.m. Suggest removal
moncurcool says...
Only us in The Bahamas like to depend on government for everything rather than be independent and self reliant.
Posted 18 February 2021, 7:22 p.m. Suggest removal
John says...
The NATIONAL STADIUM is not being maintained and is in urgent need of repairs. Persons complaining that they were standing in line to collect their NIB checks and large chunks of concrete fell from the building barely missing them. Strangely enough, the stadium is painted the same color of the, now demolished, post office building that had similar problems with large chunks of falling concrete.
Posted 18 February 2021, 11:05 a.m. Suggest removal
Sickened says...
Yup. The stadium will soon collapse in on itself; but hopefully not injure anyone.
Posted 18 February 2021, 11:20 a.m. Suggest removal
Dawes says...
They are in the process of getting bids to fix the stadium up. Great gift that one.
Posted 18 February 2021, 12:12 p.m. Suggest removal
ohdrap4 says...
The sewer lines at the stadium were built with 3/4 inch pipe.
Not for the pea soup eating patrons.
Posted 18 February 2021, 6:11 p.m. Suggest removal
bogart says...
Something just ain't fair... when the legislators losing hundreds of millions of taxpayers dollars ...like tens of millions in BahamasAir, buying the old Grocery store on Gladstone road, millions of dollars overruns on waste treatment plant, going past the new Baseball Stadium going on some $50 million, some $18 millions PMH computer challenges, graded down mountain in Palmetto etcetcetc.....and on the other hand have the ability .....to just recently have the Nurses to plea for their overtime pay in front of Legislatorrs offices. And now to have the ability in this the highest unemployment, poverty levels, for over a year now people lining up for food, and now the legislators ADDED ability to increase price of your drinkable water supply and cause it to get it shutoff along with many others already shut offwho cannot pay., Depriving people from water to live is downright reprehensible !!!!
No Corporation on this planet should have the powers in this Pandemic to make water life sustanance more unaffordable or to deprive people from potable water and ability to shut off connections to ppeople, children, babies, elderly, medically confined in homes etc. living in homes. What next, must people wheel people on medical beds, unemployed, those on wheelchairs, children, poor people to front of legislators offices on Rawson to protest ?????
Posted 18 February 2021, noon Suggest removal
BONEFISH says...
The FNM did not explain to you how they stopped the construction on the new baseball stadium for about 15 months.
That increase the cost to complete the stadium and the completion date.
Both parties have made a lot of dumb,non-sensical decisions
Posted 18 February 2021, 2:40 p.m. Suggest removal
bogart says...
@BONEFISH, fully agree. Both have made these errors but the irony is that both sides have been sitting in the SAME room while projects have been going on and together while hundreds of millions of taxpayers money wasted. Further irony is the new winning side previous Opposition after electionsthen pplays ignorant and does the ritual of stopping and checking the projects the other side did as though they were not in the same room.
Posted 18 February 2021, 4:39 p.m. Suggest removal
BONEFISH says...
Both major parties in this country have never understood the role of opposition in this system. They simply can not play that role.
The opposition role is simply not to oppose. They should act as a check on the government's power and provide alternative suggestions. Only people in this country do is wait for their time to govern so they can take care of their people.
The late Michael Manley describe this situation long ago in Jamaica. The same as in the Bahamas.
Posted 18 February 2021, 6:18 p.m. Suggest removal
DDK says...
Has anyone seen the two lines of electrical poles running along the highway in Abaco? I would REALLY like the minster to explain this phenomenon.......
Posted 18 February 2021, 12:31 p.m. Suggest removal
sheeprunner12 says...
Really look forward to the WSC report (savings from Gibson's new projects) at this New Budget debate in May ...... if there is no election campaign going on at that time.
Posted 18 February 2021, 4:45 p.m. Suggest removal
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