The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Water & Sewerage Corporation’s main supplier is eyeing potential expansion possibilities on New Providence notwithstanding the $18.5m debt that the state-owned utility continues to owe it.

Senior Consolidated Water executives, in a recent conference call with Wall Street analysts to discuss their 2022 first quarter results, disclosed that the Water & Sewerage Corporation’s desire to “take every gallon we can produce” from its main Blue Hills reverse osmosis plant indicates there may soon be a need for more production capacity as the Bahamian economy continues to rebound from the COVID-19 pandemic.

Suggesting that new or expanded reverse osmosis plants at both Blue Hills and its other site, Windsor, Rick McTaggart, Consolidated Water’s chief executive, said: “We anticipate our bulk business will continue its very stable and profitable performance, and with the return of tourists to The Bahamas and significant economic activity, we see new potential opportunities to expand that business as water demand grows in New Providence and the Family Islands.”

BISX-listed Consolidated Water, in its results for the three months to end-March 2022, revealed that the volume of water it supplied to the Water & Sewerage Corporation during the period had increased by 6 percent year-over-year compared to the same period in 2021.

Asked by analysts to provide more details on The Bahamas opportunities, Mr McTaggart added: “The Blue Hills plant is producing pretty much at full capacity. We see the growth potential there as significant. It could involve expanding those plants at some point.

“The Windsor plant, which is the newest one there, we have a little bit of additional capacity to get out of that by doing some modifications, but once we get past that level you’re talking about new plants.....”

David Sasnett, Consolidated Water’s chief financial officer, then added of the Water & Sewerage Corporation: “They’re taking every gallon we can produce at Blue Hills. We’re producing more than ever before for them and have similar demand for Windsor, so we’re hoping that if things continue down this road we’ll have a need for more capacity.”

The Blue Hills plant, which is capable of producing 12m gallons of water per day, is contractually obligated to supply the Water & Sewerage Corporation with 63m gallons per week under a deal that runs until March 2032. Windsor, which has capacity to produce 2.8m gallons of water per day, must deliver 16.8m gallons per week.

Mr McTaggart made clear that Consolidated Water not only saw expansion being driven by the economy and tourism’s post-COVID revival, but by New Providence’s population growth. With the island inhabited by 275,000, or around 70 percent of The Bahamas’ population, he added that these numbers were only likely to swell as more persons migrated to Nassau from the Family Islands in search of work.

“I can tell you anecdotally, I was there at the end of March staying at one of the big hotels, and the place was jam packed,” the Consolidated Water chief said. “It seems there’s a big return of tourists to The Bahamas. There are no quarantine restrictions, just a reciprocal COVID test to come in and go back.

“Their tourism business seems to be going very well. That will be driving it and propelling growth. There’s a lot of smaller islands in The Bahamas, and everybody seems to end up in New Providence eventually to get work.”

Mr McTaggart spoke as the Water & Sewerage Corporation’s debts to the BISX-listed reverse osmosis plant operator were cut by 12 percent or $2.5m during April 2022, with the Government having committed to bringing the remaining debt current.

“Consolidated Water (Bahamas) accounts receivable balances (which include accrued interest) due from the Water and Sewerage Corporation of The Bahamas amounted to $21.2m as of March 31, 2022, and $21.5m as of December 31, 2021,” the company said in its filings with the US Securities & Exchange Commission (SEC). 

“Approximately 77 percent of the March 31, 2022 accounts receivable balance was delinquent as of that date. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary. From time to time (including presently), Consolidated Water (Bahamas) has experienced delays in collecting its accounts receivable from the Water and Sewerage Corporation

“When these delays occur, we hold discussions and meetings with representatives of the Water and Sewerage Corporation and The Bahamas government, and as a result, payment schedules are developed for Water and Sewerage Corporation’s delinquent accounts receivables. All previous delinquent accounts receivable from the Water and Sewerage Corporation, including accrued interest thereon, were eventually paid in full.

“Based upon this payment history, Consolidated Water Bahamas has never been required to provide an allowance for doubtful accounts for any of its accounts receivable, despite the periodic accumulation of significant delinquent balances. As of March 31, 2022, we have not provided an allowance for doubtful accounts for Consolidated Water (Bahamas) accounts receivable from the Water and Sewerage Corporation.”

​Consolidated Water added: “In February 2022, we received correspondence from the Ministry of Finance of the Government of the Bahamas that set forth a payment schedule providing for the gradual reduction over the course of 2022 of the Consolidated Water (Bahamas’) delinquent accounts receivable due from the Water and Sewerage Corporation.

“Such correspondence also indicated that the Government intends to return all of Consolidated Water (Bahamas) accounts receivable from the Water and Sewerage Corporation to current status.  As of April 30, 2022, Consolidated Water (Bahamas) accounts receivable from the Water and Sewerage Corporation totalled $18.7m.”