The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Water & Sewerage Corporation owed an $11 million receivable to its main, BISX-listed water supplier at year-end 2016, it was revealed last night, although the latter’s revenues were down $1.5 million year-over-year.

Consolidated Water, unveiling its 2016 financial results via a ‘10-K’ filing with the Securities & Exchange Commission (SEC), disclosed that the Corporation’s outstanding debt to it had increased by 134 per cent year-over-year.

Yet despite the year-end receivable more than doubling, Consolidated Water said it had not provided for the debt because the Water & Sewerage Corporation had paid all bills due to it in the past - via the annual $20 million-plus taxpayer subsidy received from the Government.

“From time to time, Consolidated Water (Bahamas) has experienced delays in collecting its accounts receivable,” the 10-K filing said. “Representatives of the Bahamas government have informed us that their previous delays in paying our accounts receivables did not reflect any type of dispute with us, with respect to the amounts owed.

“To-date, we have not been required to provide an allowance for any delinquent Consolidated Water (Bahamas) accounts receivable as such amounts were eventually paid in full. Based upon our experience, we believe that the accounts receivable from the Water & Sewerage Corporation are fully collectible, and therefore have not provided any allowance for possible non-payment of these receivables.

“Our accounts receivable balances due from the Bahamas government amounted to $11 million and $4.7 million at December 31, 2016, and 2015, respectively.”

Meanwhile, Consolidated Water said 2016 revenues from its bulk water segment, which include the Blue Hills and Windsor plants in Nassau, fell by 7 per cent year-over-year - from $31.854 million to $29.647 million,

It added that most of the decline, some 62.8 per cent, related to a $1.507 million year-over-year decline in its Bahamas revenues. Consolidated Water blamed this on “a significant decrease in the prices of diesel fuel and electricity from 2015 to 2016, which reduced the pass-through energy component of our bulk water rates”.

However, the bulk water segment’s operating income and gross profit were flat in 2016 compared to the prior year, as reduced energy costs drove margins two percentage points higher to 34 per cent.

Consolidated Water also confirmed the December 28, 2016 agreement with the Water & Sewerage Corporation that extended its Windsor plant supply contract for 15 years through to 2031.

In return for the Water & Sewerage Corporation agreeing to take a minimum of 16.8 million gallons per week from Windsor, the BISX-listed supplier will be investing $8.9 million to ensure the plant “can meet its performance guarantees during the extended agreement period”.

“The per gallon price for the water supplied under the extended agreement, excluding the pass-through energy component, is approximately 18 per cent less than the price in effect at December 31, 2016,” Consolidated Water added.

“The remaining terms of the amended agreement are substantially consistent with those of the original Windsor water supply agreement.”

Consolidated Water also revealed that the Water and Sewerage Corporation accounts for 33 per cent, or one-third, of its total annual revenues through the two New Providence-based reverse osmosis plants.

Blue Hills and Windsor combined can generate 15.2 million gallons per day for the Water and Sewerage Corporation’s customers, accounting for 57.4 per cent of the BISX-listed provider’s total water production.

“During 2016, we supplied approximately 3.8 billion gallons (2015: 3.7 billion gallons) of water to the Water & Sewerage Corporation from these plants,” Consolidated Water added.

“We supply water from the Blue Hills plant, our company’s largest seawater conversion facility with a capacity of 12 million gallons per day, under the terms of a water supply agreement with the Water & Sewerage Corporation that expires in March 2032 that requires us to deliver - and requires the Water & Sewerage Corporation to purchase - a minimum of 63 million gallons of water each week.”