Transparent, Business Writer

Carib Engineering Corporation Limited (CEC), started April 1983, is wholly owned by the government and was set up to implement the Yallahs Pipeline Project that was meant to be the first phase of the Blue Mountain Water Supply Programme.

CEC's role was later expanded to include responsibility for island wide supply schemes, and eventually changed its name to become Rural Water Supply Limited (RWS).

Water supply

In 2004, then Minister of Water and Housing, Donald Buchanan, reported that: "Ninety-eight per cent of urban Jamaica is supplied with an adequate supply of water, while only 85 per cent of rural Jamaica has access to what is called the improved water sources."

Two years later, in 2006, Buchanan announced that 77 per cent of Jamaicans have access to potable water and that RWS would work to give all communities access to piped water by 2010.

How does one reconcile these numbers?

In 2008, Dr Horace Chang, the current minister of housing and water, estimated that only 50 per cent of rural communities have access to potable water but said that would change by 2015.

This leaves us wondering who makes these estimates and why has the projection changed?

Is a master plan being developed only now? Why did RWS originally project that rural communities would have water by 2010 with no apparent master plan? Residents of rural Jamaica must be quite confused about whether they have potable water or not.

RWS is a big company. Between 1999 and 2004, it undertook 37 projects, totalling $3.2 billion.

The Ministry of Housing, Transport, Water and Works was granted more than $264 million for its rural water supply project in the 2007/08 estimates of Expenditure. The 2008/09 Estimates has a bigger allocation of $394 million.

LATE ACCOUNTS

The last audited accounts for RWS, signed by auditor Lee Clarke Chang in August 2006, are supposedly for the period ending March 2006, even though page 19 of the accounts incorrectly announces 2005.

The annual report, though attractive, fails to state board membership and is filled with pictures of then ministers and senior management, under the direction of Judith Reid (earnings $3.6 million per annum). Noel Donaldson is the current chairman.

Work-in-progress consisted of over 30 projects. The largest was Darliston Water Supply Scheme that had cost about $180 million. This appears to cover phase two of the project that improves water supply to Whithorn, Caledonia, Darliston, Long Hill, Ashton, Bognie, Salem and Petersville - areas largely in Eastern Westmoreland, the seat held by former Prime Minister PJ Patterson up to his resignation from political office.

In March 2006, RWS had a net worth of $27 million, cash and investments of $51 million, revenue of $23 million, subject to tax and made a profit after tax of $5 million. Tax losses to be used against future profits were $19 million.

By May 2008, RWS should have published its March 2007 accounts and be in audit for 2008. Delays give it a bad rating on accountability to the public.

STATUTORY DEDUCTION ARREARS

In spite of its relatively strong cash position, RWS appears to have been a bit naughty by not paying over statutory contributions on time. Some $9.6 million was owed on these contributions compared to an annual salary bill of only $12 million. Does the $9.6 million include relevant fines and penalty?

No details are given of the $17 million 'restated loss' shown in the accounts for 2004 although this probably relates to the transition to the laborious IFRS standards.

DELINQUENT REGISTRATION

A check at the Companies Office of Jamaica, formerly the Registrar of Companies, demonstrates that RWS has not updated its corporate records since inception in 1983. The registrar shows the company being owned by Jamaica National Investment Company and one John Williams of Ocean Boulevard, Kingston, and its board as Messrs Abrahams, Clarke, Davidson, Minler, Stockhausen (two persons of similar name shown as directors), and Williams.

This failure to update corporate records is unacceptable.

business@gleanerjm.com