WASA faces $5B debt; rate review underway
The Water and Sewage Authority (WASA) is burdened with a $5 billion debt.
The company’s chairman, Romney Thomas made the shocking revelation at a Public Accounts Committee (PAC) meeting held on Wednesday.
“If I remember correctly, it’s around $5 billion,” he said.
WASA’s Director of Finance Giselle Spence (Ag.) gave a breakdown.
“That is broken down into different areas. So, it would be our accounts payable which is due to contractors and suppliers, in terms of validated invoices it’s about over 300 million (and) with respect to invalidated it could go up to approximately one billion. Also, we have the loan portfolio,” she explained.
Thomas told committee members that WASA faces several operational challenges including ageing infrastructure and shortfalls in revenue.
“We have some operational challenges, in terms of the ageing infrastructure we have at WASA, the pipeline network a lot of it needs to be replaced. And, that flows into the next challenge which is obviously a financial one, I don’t think we have revenues coming into the Authority to meet our operational needs.”
According to Thomas, the main way to increase revenue is to increase rates.
“We have to raise revenue. The number one way to raise revenue is to increase rates and that’s within the mandate of the Regulated Industries Commission (RIC), who have embarked upon a rate review for WASA,” he said.
Recently, the Regulated Industries Commission revealed that it would complete the rate review for WASA by the first quarter of 2018.
The WASA chairman added that the state-owned company is heavily dependent on government subvention to meet its operational expenses.
He noted that this year, government subvention to WASA amounted to about $1.9 billion, while the revenue generated by the company is about $700 million.
“We actually generate about one-third of the revenue that we actually require internally to sustain our operations. So, without government subvention we’d be, to put it bluntly, dead in the water. We will not be able to meet our wage bills, obligations to contractors, we would be very seriously challenged,” he noted.
He added that the company’s annual expenditure is around $2.6 billion.