KINGSTOWN, St. Vincent – Opposition lawmaker Daniel Cummings was not too far off when he told Parliament last week that the government owes the Central Water and Sewerage Authority (CWSA) EC$3 million for water.
However, he was wrong in saying that the outstanding amount was the reason for the rate increases announced yesterday, according to information presented at a CSWA media briefing that day.
Prime Minister Dr. Ralph Gonsalves told Parliament on Friday that Cummings misled legislators and citizens when he said the government doesn’t pay its water bill.
Gonsalves said that the government gives the CWSA an EC$1.4 million block subvention but said the payment is sometimes short of up to EC$300,000.
Garth Saunders, chief executive officer of the CWSA said that the EC$3 million the government owes to the CWSA is one-third of the company’s receivables.
“The government’s outstanding amount … over one year, it is just about EC$2 million and for the last financial year, we only received a few payments so our overall indebtedness on the government side would be just under EC$3 million,” Saunders said in response to a question from Cummings, a former manager of the CWSA.
“…. We have been promised that our transfers from government would be a little more timely and we make our applications to government but that’s the reality of the situation,” he further stated.
But while government facilities use between EC$4 million and EC$5 million worth of water, the state will not be asked to increase its contribution to the CWSA even as consumer will next month begin paying more for water and waste disposal services.
“We have not applied for an increase and I believe that it is understandable why we have not applied for an increase. We really should be asking for that but in the present situation that is not on the cards. The CWSA would not be getting an increase from the government,” Saunders said without further elaboration.
“But, certainly, what the government pays us as a contribution to the supply of services is certainly not anywhere near the value of the actual amount supplied,” he further stated.
‘gov’t is always slow to pay’
Saunders said that the government has committed to give the Solid Waste Management Unit EC$1.4 million and EC$1.1 million for water, annually.
“These amounts have been promised, but, as you know, the government is always slow to pay the CWSA,” he said.
“In a way, you can understand that. They believe that the CWSA has deep pockets. Unfortunately for us, our pockets are not that deep and the CWSA would like certainly to have a more efficient and timely transfer of funds from the government.”
Saunders said that 9 per cent of the company’s water and 40 per cent of its solid waste revenue come from the government.
The remaining EC$6 million in receivable are from businesses and receivables inherent to the operation of the CWSA.
Saunders said that since 2007 – when the last increase was granted – there was an increase in receivables all around.
“That’s because the CWSA carries an inherent amount of receivables. We have receivables because it takes a month for us to bill for water that was supplied. It takes another three weeks to a month for us to read the meters and then it takes another three weeks to a month for us to take the bills out and for customers to pay.
“So you are always carrying at least two to three months of receivables anyway. If you increase your rates, that base amount of receivables increases also, so your steady carrying amount of receivables increases,” he said.
Saunders, however, said that collecting the receivables would not eliminate the need to increase the CWSA fees.
“Even if we receive every bit of what is owed to us, our total revenue would still be EC$23.5 million and our debt servicing would still be EC$3.6 million,” he said.
Saunders said that a consultant several years ago noted that the CWSA is heavily dependent on the government.
“A utility needs to be financially self-sustaining because if you don’t do that then you are running the risk of having to apply to government every five, six years for a substantial increase. That is the case in a lot of utilities in the region,” he said.
He noted that the Barbados water authority was slipping so far that the Prime Minister had to approve a 60 per cent increase in 2009.