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WASA remains burden on taxpayers

Published: 
Sunday, September 23, 2018
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The water rate comparisons for the Caribbean

Joel Julien

Aged infrastructure, overstaffing, an inability to raise enough revenue to meet its expenditure, and a heavy dependence on taxpayers for its survival, were some of the keys reasons cited by Government to support its decision to close down state-owned oil company Petrotrin.

However, these issues are not only limited to Petrotrin, and can easily describe the current situation at the Water and Sewerage Authority (WASA).

WASA's financial figures paint a worrying picture.

According to the figures from the last fiscal year, WASA's expenditure was $2.88 billion. WASA's income for that period was only $709 million.

In order to offset this huge shortfall between income and expenditure, the Government had to provide a subvention of $1.9 billion.

Last year's subvention was not an anomaly though as Government has had to fork out as much as $10 billion in the last five years to help keep WASA afloat.

Of the total expenditure, WASA had last fiscal, personal expenditure including salaries, overtime, and allowances amounted to 38 per cent.

Personal expenditure in WASA last year alone amounted to $1.1 billion.

Overtime for last year alone accounted for $126 million.

"Without the Government subvention, WASA would not be able to cover its operating expenditure such as paying its wage bills or meeting its obligations to contractors," the 15th report from the Parliament's Public Accounts Committee (PAC) stated.

Severely overstaffed

One of the reasons for WASA's hefty wage bill is the fact that it is severely overstaffed.

WASA currently has approximately 5,150 employees, both daily and monthly paid, on its payroll.

The company is overstaffed by some 2,000 employees.

Two-thirds of WASA's labour force is involved in "field operations".

"When compared to its regional counterparts, the standard for field work is seven employees per thousand connections. WASA currently operates at around 13 employees per thousand connections. This is approximately twice the size of its regional counterparts," the PAC report stated.

One way to help WASA increase its revenue is to increase the water rates.

The Regulated Industries Commission (RIC) is currently in the second phase of the Price Review Process for WASA, which includes "the circulation of various consultative documents for stakeholder feedback".

WASA rates were last reviewed and implemented 25 years ago in 1993.

According to the International Benchmarking Network for Water and Sanitation Utilities (IBNET), T&T's water rates are the second lowest in the Caribbean region.

T&T's water rate per cubic metre is 31 cents US.

The water rate in the Bahamas is the highest in the region at US$3.72 per cubic metre.

The water rate for the majority of the countries in the region, including Barbados and Jamaica, was more than US$1 per cubic metre.

But even if WASA is able to get more money through the implementation of higher water rates they still face several infrastructural challenges that makes the authority inefficient.

Debt portfolio of $5.37 billion as at December 2017

WASA was established in September 1965.

At that time total daily water production in T&T was 45 million gallons per day.

WASA's total daily production now stands at approximately 220 million gallons per day.

This represents a 400 per cent increase in 43 years.

WASA's infrastructure, however, did not improve as much and this has resulted in a significant loss in treated water through leakages.

Between 43 and 50 per cent of WASA's water is lost through leakages.

The international standard for daily water loss is between 15 and 20 per cent.

"Given the financial challenges facing WASA, the Authority was unable to finance an extensive exercise to replace all aged infrastructure in the country that were over 40 years old," the PAC report stated.

"This was a major area of concern because most of the pipelines/plants have a useful life of 25 years," it stated.

It is estimated to cost $3 billion to replace WASA's ageing infrastructure, transmission, and distribution lines.

This ageing infrastructure is responsible for the more than 2,000 leaks that WASA says needs repairs.

Earlier this month, thousands of citizens along the East-West corridor were left without water for two full days when a 36-inch pipeline ruptured along the Beetham Highway.

Several schools and offices in and around the capital city had to be dismissed early during those days because there was no water.

Even if WASA was to turnaround overnight and become profitable the authority still has a debt portfolio of $5.37 billion as at December 2017.

The majority of that debt is $3.7 billion for the loan portfolios of Government guaranteed facilities taken by WASA.

The debt also includes $403 million toward the Desalcott Loan Facility and $136.9 million due to Desalcott for the purchase of processed desalinated water.

"Officials from WASA stated that over the next five years, cost reductions, as well as increases in revenue, will be utilised to reduce the accrual balance over the medium and long-term," the PAC stated.

The weakness in WASA's financial reporting has also caused difficulties.

The external audits of financial statements for the fiscal years ended September 30, 2014 and 2015 commenced October last year.

When the PAC met in December last year it had to examine WASA audited financial statements for the period 2008 to 2013.

"Accountability to Parliament for the utilisation of public funds, was weakened by WASA's failure to submit its audited financial statements for scrutiny in a manner consistent with the Exchequer and Audit Acts stipulated six month period," the PAC stated.

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