Billions down the drain - NWC loses big to theft, leaks, etc since start of year
Edmond Campbell, Senior Staff Reporter
WITH SIGNIFICANT losses amounting to $2.1 billion as at October 2012, the National Water Commission (NWC), which is collecting only 32 per cent revenue from the water piped to local consumers, is planning to make an application for a rate increase.
The NWC had projected losses totalling $631 million as at October 2012 for the current financial year. Last year, the commission recorded losses amounting to nearly $3 billion.
NWC officials admitted yesterday that the commission was not collecting revenue for 68 per cent of the precious commodity produced, but noted that the figure was trending down.
Garth Jackson, vice-president of engineering and project delivery at the commission, told yesterday's sitting of Parliament's Public Administration and Appropriations Committee (PAAC) that 34 per cent of the water piped was lost to leakage. He said a similar percentage was spread across a range of avenues of revenue loss, including illegal connections.
Committee member Audley Shaw said he had seen very little change in the 68 per cent loss estimate since the 1990s when he was opposition spokesman on utilities.
Shaw said that, at that time, the NWC was not collecting revenue for 68 per cent of water produced.
Disclosure of the commission's plans to apply to the Office of Utilities Regulation (OUR) for a rate increase triggered intense debate during the PAAC meeting.
Vice-president of Human Resources at the NWC, Harold Minott, said the commission was now developing a tariff review to submit to the OUR.
The commission's last application for a rate increase was approved by the utilities regulator in 2008.
Minott contended that the cost of water production and distribution has escalated.
"We have had to hold water rates for some time while our costs are going up. At present, we are developing a tariff review that will be submitted to the OUR."
Committee member Mikael Phillips raised concern about the planned application for a rate increase to NWC customers. He said the commission had failed to take sufficient steps to increase efficiency to earn more revenue.
"When I hear the (NWC) wanting to collect more when there are certain inefficiencies within the commission itself because we have money there to invest in improving our revenue stream ... ," Phillips lamented. "There is a $10.74 billion for financial year 2012-2013 for projects which will bring in more revenue; we have only gone 19 per cent of that budget yet so far."
At the same time, the commission's board met on Wednesday to discuss strategies to ramp up the commission's revenue performance over the next four months.
Minott said there was an anticipated level of expansion in the customer base.
Acknowledging that there were deficiencies in its old metering system, he said the NWC was moving to install 100,000 meters to correct some of the problems in relation to billing.
The committee was also informed that, to date, very little implementation of the NWC's K-Factor projects were implemented.
The K-Factor appears on customers' bills as percentage charge. It is intended to acquire funding to carry out capital projects to meet regulatory requirements as well as tackling non-revenue water- reduction activities.
Committee Chairman Edmund Bartlett charged that the customer was paying K-Factor costs but there was no relief in sight because none of the projects have been implemented.
Meanwhile, the NWC is putting in place plans to go after delinquent customers.
"The NWC in our recent meetings is about to invoke the NWC Act to the fullest extent possible where legal action as is necessary will be taken to recover huge outstanding sums from customers right across Jamaica, whether corporate or individual customers, and that is expected to generate increased returns to us," Minott disclosed.