Water company to get tough on $1.3B customer arrears
-owes GPL $259M

Stabroek News
December 5, 2002

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With customer arrears totalling $1.3B, the Guyana Water Incorporated (GWI) is facing a cash crunch and starting next week will be embarking on a countrywide disconnection campaign.

Speaking at a press conference yesterday, Managing Director Paul Bonar said the water utility had been running at a loss since the Guyana Water Authority (Guywa) merged with the Georgetown Sewerage and Water Commissioners (GS&WC) in March. This was mainly because several big businesses and domestic customers are in arrears to the tune of $1.3B.

"As you are aware the company is now semi-autonomous and as such is required to generate its own finances to offset all operational expenses," Bonar said. The company is to be run by a British-based corporation Severn Trent come January 1 as part of a five-year contract funded by a UK development agency.

The subsidies already reduced following the merger are to be decreased even further, Bonar told the media. "Our collection from our customers by using lenient measures of collection have not proven to be very successful, thus the company is now forced to employ stronger measures in our revenue collection process in order to ensure the continuity of the organisation."

Bonar said that the financial crunch has also been brought on by the increase in the cost of energy supplied by Guyana Power and Light (GPL). He said for the first five months going into the month of October GWI's expenditure was in the vicinity of $800M, while its collection was less than $400M. He said half of the expenses is accounted for by electricity and averaged $80M for the first four months of the year increasing from October to about $100 million. Bonar said as a result GWI has not been able to provide consumers with the same hours of service as in the past.

He said GWI plans to tackle the problem in two ways, one is to manage energy costs more efficiently. "And we have to do this by modifying our schedules for delivery of water to customers and where possible utilise our own in-house generating capacity." He said currently at some of the corporation's treatment plants there were generators normally used for blackouts, but those would now have to be converted into delivering full-time service. He acknowledged that the generators might not be able to deliver full-time power so GWI would still have to depend on GPL.

The managing director said the Corporation owes GPL $259M. He added that "GPL had approached us on Monday and warned us that until we can cover our outstanding balances they will pursue a disconnection campaign to remove energy supplies from our pump stations."

Bonar said they are at present negotiating with GPL on the matter and are hoping to reach an amicable solution to the problem.

However, a part of the $259M was from outstanding bills of the GS&WC and Guywa. Bonar said when GWI took over the water utility the total outstanding balance for GPL was about $650M.

According to him the second component of GWI's strategy was to encourage customers to pay their bills by any method available. He said a lot of customers have shown a willingness to pay, but the number of defaulters is very great. "So we may have to disconnect some customers and those with significant arrears would be taken to the court."

Bonar said GWI also needs the funds to finance capital programmes, apart from the monies provided by the external funding agencies. Asked if Severn Trent management could help with revenue collection, Bonar said, "yes I think so because we'll be having investment coming in next year and with the advent of the management contract, donor agencies will have more confidence in the corporation."

He said for the five years of the contract the GWI capital programme is set to deliver US$87M worth of improvements and half of this has been received already. He said over the next two years GWI will expend about US$26M in new capital programmes some of which are in progress already. (Nigel Williams)

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