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Editorial: Beyond a halfway house for NWC

Published:Monday | July 27, 2015 | 7:00 AM

Since the Inter-American Development Bank (IDB) is putting their money behind it, we assume that the agreement between the National Water Commission (NWC) and the Israeli company, Miya, for NWC to waste less and earn more from the water it distributes in Kingston and St Andrew, is good for Jamaica.

But we also take the deal as something of a nod and a wink in acknowledgement of the incapacity of the NWC's bosses to manage the business and that the deal is a sort of halfway house - a compromise between the Government's continued ownership of the water company and what the external funders know is best for it, which is divestment.

The problems faced by NWC are well-known: it earns nothing from around 65 per cent of the potable water it produces, or in the argot of the business, non-revenue water (NRW); the NRW dribbles away in old, leaky pipes, or is stolen by consumers; a not-insignificant amount is given away by the Government as social welfare.

These factors exist, in part, because the NWC has, for a very long time, been unable to afford to overhaul and modernise its infrastructure. The politics of government ownership means it cannot charge the economic price for water. Yet, the Government's own fiscal circumstance prevents it from allocating the capital required by the NWC for capital investment. Further, the NWC, even if it really wanted to make a go of things, can't borrow to do the job. Its debt becomes a contingent liability of the Government, which has to abide by strict debt-to-GDP ratios under its agreement with the International Monetary Fund.

All of these add up to a very precarious existence for the NWC, whose return to solvency two years ago, after many years accumulating over J$17 billion in deficit, rested significantly on the revaluation and sale of its assets.

Miya's US$42.5-million, five-year performance-based project, insofar as we understand it, is aimed at consolidating the turnaround beyond accounting. The estimate is that 54 per cent, distributed in Kingston and St Andrew, is not now paid for. The aim is to bring that down to 20 per cent, or a saving of 70 million litres a day. Since savings is the cheapest way to take income to the bottom line, the targets, if achieved, will be major for the NWC.

 

sustainability

 

The broader question, though, is whether it is sustainable beyond the IDB support and the departure of the Miya co-managers, or some might claim, overlords providing operation and technical guidance to the NWC. The presumption here, it appears, is that the NWC will have the internal resources to not only maintain its Kingston and St Andrew infrastructure, but the wider national water system. The best option to ensure that this is indeed so is to privatise and appropriately regulate the NWC to ensure that investment in the water infrastructure doesn't take place in fits and starts.

At another level, it would be useful if Robert Pickersgill, the responsible minister, would outline, or have done on his behalf, a larger national policy on water and a strategic plan with specific time frames, to enhance the harvesting and appropriate distribution of the commodity between water-surplus regions and the rest of the island.