- FileResidents collect water from a NWC truck for domestic use.
Balford Henry, Acting News Editor
WILL THE assumption of $6.5 billion of National Water Commission (NWC) debt by the Ministry of Water and Housing make much of a difference to the current financial situation affecting it?
One thing is certain and it is that the NWC will still be seeking a tariff increase from the Office of Utilities Regulation (OUR) this year and that it will need to collect the millions still owed by Government agencies and the public to survive.
Minister Donald Buchanan in announcing the assumption of the debts on Wednesday, pointed out that it was, "out of recognition that the NWC's tariff has never been sufficient to recover capital costs."
Mr. Buchanan also sought to allay the fears of the OUR that the NWC's situation may be attributed to mismanagement, by stating unequivocally that, "the decision of the Cabinet to assume them (debts), has nothing to do with poor management at the NWC, but rather to recognize and accept the fact that the NWC will never be able to pay for that magnitude of capital expansion, when the tariffs it is granted do not make provision for this."
Buts if the management of the NWC is efficient, then what explains the sudden turnaround in its financial fortunes?
The explanation seems to be that the Ministry, itself, in its determation to achieve what it had hoped would be another "solid achievement" to bolster its bid for a fourth term had overburdened the commission, just when it seemed to be digging its way out of a financial grave dug under a political feeding tree.
Burden
The NWC has carried a burden of hundreds of casual workers whose employment has been due more to a political pork barrel than a need for human resource expansion for many, many years.
In addition, it has carried the burden of hundreds of millions of dollars in unpaid water bills owed to it by virtually every Government ministry and agency one can think of, as well as communities which refuse to pay their bills, its unability to keep wasted water under control and most recently the baggage of trying to become a vehicle for the Government's "solid achievement" claims.
The Commission got a breather in February, 1999, when the Office of Utilities Regulation (OUR) granted it a K-Factor allowing for the tacking on of an additional charge to customers' bills directly for funding the installation of meters and the purchase of water pumps. The charge raised over $250 million for the Commission.
But by late last year, when the Commission sought a resumption of the K-Factor, as an interim means of improving its revenues, the OUR had become concerned about its performance and this was ably addressed by deputy director, J. Paul Morgan, at a press conference last November.
According to Mr. Morgan, who has intimate knowledge of the management of the NWC, the Commission's profitability was "steadily declining" and the OUR was worried that the situation would have to be carefully monitored, so as to avoid a return to the previous state of unprofitability.
As Mr. Morgan pointed out, this state of unprofitability would impact on the company's level of efficiency.
The unaudited financial statements up to then showed that the operating surplus had been cut from the $474 million achieved the previous year, to $50 million up to March, 2001. This was a 90 per cent reduction, which suggested that the turnaround the former Minister had so arrogantly flaunted was short-lived.
In addition, while the NWC has consistently disclaimed this, the OUR insisted that the Commission had failed to meet the operating targets which had been set when it got, not only the right to introduce the K-Factor for two years, but also to charge 100 per cent of water bills for sewage services to its customers.
The OUR said the NWC failed to meet targets such as, metering 85 per cent of its customers, reducing the level of unaccounted for water to 55 per cent by February, 2001 and slashing employees' cost from 45 per cent to 30 per cent. The latter, in fact, rose instead, to 50 per cent by last year when the trade unions opted out of the two-year Memorandum of Understanding (MOU) which had previously restricted pay and benefits improvements and negotiated a two-year contract.
It is obvious, therefore, that from early 2001 the signals were clear that the dramatic success achieved in 1999 and 2000 was turning imto a disaster, which could easily bankrupt the company.
But, what did the Government do?
Instead of trying some damage control, it stopped providing the grants which were needed to meet the heavy burdens it had placed on the back of the NWC, including the need to provide potable water for all by 2005, and offered loans, instead.
The cow was so ruthlessly milked that within months of success, it was now struggling to stay alive.
Still in poor state
The fact is that even at this moment and even with the $6.5 billion write-off, the NWC is still in a poor state.
Currently it is auditing its operations in order to provide enough evidence to support a request for a rate increase from the OUR, paid for by the IDB.
In addition, it is going to cost the Commission many millions of dollars to meet payments under an expanded pension scheme which now includes fortnightly paid workers.
These workers were granted pensionable rights from 1988 by the previous Government, as part of the celebration of the Year of the Worker, that year. However, it was delayed annually by the commission, due to the unavailability of funds, until last year.
The Commission has started introducing provisional payments to some 10 per cent of the beneficaries, including many of these people who have already retired and who have never contributed to the fund.
The Commission has responded to recent criticisms from various quarters about the delay in paying the pensions, as well as the fact that the suggestion that it really ought to be paid by the Government, by calling these statements "unfortunate".
"The Commission has committed to the payment of pension benefits to previously unpensionable employees...To date, all affected employees still with the Commission are covered by a pension scheme. Furthermore, since April 2000 some 874 former employees have been receiving payments. Some 577 files have been submitted to the Ministry of Finance and 187 cases have been finalised by the Ministry. The Commission continues to work on the full implementation of its commitment," the NWC said Friday.
Achievable objectives
It also confirmed that, "no decision has been taken by the Commission about job cuts for now, nor any date in the future."
It insists that the Government's objective of potable water for all by 2005 is still achievable, despite the current problems, pointing out that access is not limited to piped water supply to homes but includes those by other modalities within easy reach of household.
"Note further that since the outlining of this objective, more than 400 communities have received water for the very first time; the Jamaica Survey of Living Conditions 2001 already records 84 per cent of all Jamaican household already have access to potable water (71 per cent via piped water and a further 13 per cent via standpipes). Both signal the partial achievement of that objective," the NWC said Friday.
It is obvious that the objectives of the projects being undertaken by the NWC are rather well-intentioned and that despite all its problems its targets are still achievable.
But, whatever the Minister or the Commission has to say about the reason for the current dilemma, they have to admit that there has been poor judgment and the most obvious source of the blunder was the political passion to create another fleeting "solid achievement".
It is probably time we move the NWC outside of this sphere of political influence which is obviously inhibiting its growth.
