MINISTER OF Water and Housing, Donald Buchanan, tabled responses to questions in the House last week. The following are excerpts of the Minister's responses to questions posed by Jamaica Labour Party MP Horace Chang about the operations of the state-owned National Water Commission.
QUESTION 1
Has an audit of the National Water Commission (NWC) been done by the Firm KPMG?
ANSWER
KPMG is undertaking a review of the NWC and will make recommendations for improving the operating efficiency, service delivery and profitability of the utility.
QUESTION 2
If the answer is in the affirmative -
a) Will the Minister state the Terms of Reference of this Audit and state if the audit is complete?
b) Will the Minister lay the completed Audit on the table of the House?
ANSWER
a) The review is not yet completed.
b) The results of the review will be made available to the House after the final report is completed.
QUESTION 3
Is the Minister aware that the Government of Jamaica has assumed responsibility for $6.5 billion liability for the National Water Commission and Caribbean Engineering?
ANSWER 3
Yes, the Ministry of Finance and Planning, subsequent to Cabinet approval, has converted some $6.5 billion covering conversion of loans for capital development to grants, as well as assumed current debts of the NWC for capital developments. Carib Engineering is not the subject of this $6.5 billion.
QUESTION 4
If the answer to the above is in the affirmative
a) Will the Minister give details to this House as follows:
i) The circumstances leading to the assumption of the liabilities?
ii) The name of the contractors and the
contract sum.
iii) The location of the related work projects.
b) Will the Minister state if these contracts were approved by the National Contracts Committee?
ANSWER
(a) The truth is that the NWC has never been in a position to provide the resources to "improve water supply services throughout the island", since throughout its 22-year history it has never been granted a tariff with provisions for capital cost recovery. The Government is now moving to address the situation. In the impending tariff application to the Office of Utilities Regulation (OUR), the NWC will ask for a provision to be made to cover a portion of its capital expenditure.
As stated above, the $6.5 billion is divided into conversion of old loans into grants and assumption of current debts. In respect of the conversion, the Government of Jamaica since 1989, has undertaken the most extensive programme of water supply and sewerage infrastructure in the history of this country, utilising funding from bilateral and multilateral agencies.
Loan agreements with respect to the projects outlined above, were concluded between the Government of Jamaica (Ministry of Finance and Planning) and respective lending agencies, with provisions for on-lending to the NWC. Therefore, for many years, the proceeds from these loans allocated to the NWC through the national budget under Capital "B" Head had been recorded in the books of the Ministry of Finance, and Planning as "loans" to the NWC. The conversion was a mere paper transfer to make these "loans" grants to the NWC, as they should have been in the first instance. Further, the projects which were the subject of these loans really represent public goods, with positive externalities, and although not financially viable, were economically justified.
(b) All contracts were tendered and with the appropriate Cabinet approval except for some in the category of "Sundry rural water supply projects." This relates to the nature of the water supply extension programme, a significant portion of which were of such size that they were executed in house by the agencies.
QUESTION 5
Is the Honourable Minister aware that unaccounted for water consumes sixty per cent of our total production and constitutes the single greatest loss to the NWC?
ANSWER
Unaccounted for Water (UFW) is the difference between the volume of water produced and volume of water for which customers are billed, taken as a percentage of the volume of water produced. Figures reported for UFW at the NWC are generally rough estimates because in order to have accurate figures for UFW, both consumption billed and water produced must be accurately metered. The vast majority of consumers have now been metered but many sources are still not metered. Efforts are under way to increase metering of both consumers and sources.
Our rough estimates is that UFW is approximately 60 per cent, half of which is estimated to be due to theft of water. Leakage therefore accounts for approximately 30 per cent of water produced and this is expected based on the age of the pipelines throughout the country. In many instances, simply repairing leaks is ineffective and wholesale replacement of lines is required. Various projects have been initiated to address UFW as described below.
QUESTION 6
If the answer to the above is in the affirma-tive -
a) Will the Honourable Minister indicate to this Honourable House what programmes will be implemented to reduce this amount to acceptable levels?
ANSWER
NWC has launched a number of major initiatives to reduce UFW. These include the following:
a. KMA Water Supply and Rehabilitation Project which will cost over US$80 million and is being funded by the GoJ and the Japan Bank for International Co-operation (JBIC). Consultants have already been selected for this project and they commenced work on the engineering designs late last year. The project is targeted at reducing UFW in St. Catherine and will involve the standard measures to achieve this including:
i. Replacement of old mains;
ii. Metering and pressure zoning;
iii. Leak detection and repairs;
iv. Customer surveys to update billing data base.
