$Billion NWC leak - Agency racks up massive losses, committee fears bad debt won't be recovered
Published:Thursday | October 31, 2013 | 12:00 AM
Edmond Campbell, Senior Staff Reporter
Losses amounting to billions of dollars which have been racked up by the National Water Commission (NWC) over the six-month period April to September 2013 left members of a parliamentary oversight committee incensed yesterday during a meeting in Gordon House.
Over the period under review, the NWC recorded losses totalling $3.5 billion, with $920 million of that amount registered in September alone.
In addition, the financially beleaguered state company reported that it had recorded a year-to-date bad debt of $13.8 billion.
Discussing chronic inefficiencies plaguing the commission, members of the committee insisted that the NWC should treat its current situation as a "state of emergency".
Committee member Mikael Phillips told executives of the commission that consumers were eagerly anticipating an efficient water system and a significant reduction in losses so that the agency would not have to apply for a tariff increase at the expense of customers.
GRANTED INCREASE
On October 2, NWC customers started paying more after the Office of Utilities Regulation granted an increase in the tariff structure, which saw water-rate increases ranging from 13 per cent to 18 per cent.
Another committee member, Fitz Jackson, castigated the agency for how it dealt with its customers who sought to work out payment arrangements.
Jackson referred to complaints by residents in sections of his South St Catherine constituency, who had made attempts to clear part of their arrears, but had been turned away by NWC employees, who insisted that they pay the full amounts that had accrued.
Discussing reasons for the losses, NWC Vice-President Mark Barnett cited drought, variations in climatic conditions, depreciation of assets at a higher rate than was projected, and sustained losses in foreign exchange of $305.98 million.
He said the commission had budgeted foreign-exchange losses amounting to a little more than $70 million up to September.
Commenting on plans to collect money owed to it, Barnett said the strategy was to allow customers to clear their arrears over a longer period. The commission is also looking at introducing incentives to customers who clear their arrears.
He said the NWC was also engaging collection agencies to bring in sums owed by consumers.
COULD SELL BAD DEBT
Another controversial option that the NWC has not ruled out is to sell the debt to other agencies at discounted rates.
Jackson cautioned the commission about pursuing the sale of bad debts. He advised that the terms of the debt sale should be made known at the outset to the public.
"What I am fearful of, based on experiences I have had in the past, is that the terms to the buyer are not any better than what the debtor would have had," he said.
In relation to the $13.8 billion in bad debts, committee member Richard Parchment argued that the NWC, in many instances, billed its customers, even though large sections of a community might not have had the precious fluid flowing through their pipes.
"I know, in my area, hundreds of customers have been billed, month after month, and [they have received] no water," he said.
Committee Chairman Edmund Bartlett suggested that the massive bad debt might be uncollectible because water was not actually provided. He said the sale might not have taken place though the billing took place.