The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Water & Sewerage Corporation is aiming to cover 100 per cent of its expenses by 2020, as it “aggressively” pursues deadbeat customers owing more than $45 million.

Adrian Gibson, the Corporation’s chairman, yesterday told Tribune Business that it planned to deploy a full arsenal of collection tactics to reduce its delinquent accounts burden and achieve self-sufficiency.

With 83 per cent of delinquent accounts located in New Providence, Mr Gibson said the state-owned water provider planned to take the offensive following an internal restructuring that involves a merger of the Corporation’s call centre with its credit collection and customer service functions.

Following the termination of external collections agencies, he added that the focus on non-paying customers was critical to a turnaround strategy that aims to “progressively reduce reliance” on the Bahamian taxpayer - who in the past has been called upon to provide annual subsidies of $30 million or more to the Corporation.

Besides disconnections, phone calls and legal action, Mr Gibson said “roving collections teams” will be deployed in the Family Islands to visit non-payers in person - especially large customers and businesses. A crackdown on the illegal use of meters, and commercial properties paying for water at residential rates, is also anticipated.

Reiterating that the Corporation must be run as a business, the chairman also promised that meter readers will have a daily target for the number of readings they must do. Pledging the increased use of technology, plus better data sharing and collection, Mr Gibson said he wanted to cut the time between meter reading and customer billings by one-third.

Describing the Corporation as being in the “first year of a three-year recovery period”, he outlined his ambition to transform it into “a highly regarded, self-financing service provider”.

“What we hope is for 100 per cent of operating costs, maintenance and interest expenses to be fully covered by the 2020 fiscal year,” Mr Gibson told Tribune Business, a goal that fits with the Government’s drive to make all state-owned enterprises (SOEs) self-sufficient.

“Given that we want to aggressively collect the Corporation’s money, we’ve developed accounts receivables reduction strategies that involve a combination of methods. What has happened in the past, we don’t find it workable.

“Notwithstanding the external collections agencies, accounts receivables have grown and are now $45.095 million.” Data seen by Tribune Business shows that some 83 per cent of this sum, or $37.431 million, is owed by delinquent New Providence customers, with the balance - $7.664 million or 17 per cent - due from those on other islands.

Some $35.185 million, or 76 per cent, of the Corporation’s accounts receivables are 90 days or more past due, which - in banking terms - means they are non-performing. The total sum owing also increased by 32 per cent, or $10.92 million, during the eight-year period from January 2010 to March 2018, further adding to the utility’s cash flow problems.

When it comes to the Family Islands, Abaco and Eleuthera account for two-thirds of the non-New Providence customer receivables, contributing $2.781 million and $2.626 million, respectively. However, the data shows that the sums owed on both islands actually declined, by 23 per cent and 6 per cent, respectively, during the eight years to March 2018.

The huge collective debt owed by customers is a major obstacle to both the Corporation’s financial performance and its ability to operate as a business, with Mr Gibson revealing that it had made “some internal adjustments to our financial model” so it could focus on the collections effort.

“A primary reason for developing this model is the increasing cost of water production, and the fact we must be able to make up for required operating expenses and capital expenditure,” he told Tribune Business.

“The accounts receivables strategy should provide a blueprint for recovering outstanding debt for the Water & Sewerage Corporation... It will aid in the financial transformation of the Corporation, so that Water & Sewerage transforms itself into a highly-regarded, self-financing service provider.

“While collecting these sums we must also simultaneously address our internal financial model so the Corporation doesn’t get to this point again, and also streamline the Corporation and its operations so it can operate like a properly functioning business. No business can have this kind of receivable and be profitable.”

Mr Gibson disclosed that the Corporation was aiming to reduce ‘days in accounts receivable to less than 100’, adding: “To be frank with you, I wanted to be way below 100 days by then.”

Describing revenue increases as “our overarching goal”, he acknowledged that cash collection efficiency was “below standard” on some Family Islands. Warning delinquent customers of what is to come, the chairman added: “We are employing aggressive collection methods, visiting large customers, business houses, and using the telephone. There will be roving collections teams throughout the Family Islands.

“We’ll take this approach on all Family Islands and New Providence. We’ll engage in weekly disconnection exercises, and quarterly marked disconnection exercises.” Mr Gibson said radio and other advertisements would precede the latter, with full tracking of their effectiveness and the response by delinquent customers.

He also promised an “aggressive write-off” of aged receivables that were impossible to collect, especially in the case of damaged and unoccupied properties, premises where meters had been removed, and where clients have left the Bahamas.

“We’re going to have staff retrained in writing-up these adjustments, and to ensure accountability a tracking log of these adjustments will be kept by the Finance Department and Family Islands unit, documenting the type of adjustment, the date, and the intent of the adjustment,” Mr Gibson added.

“In terms of the delinquency process, we are going to engage in phone calls and issue delinquency letters. These will speak to legal actions, and legal action will be taken. We’re looking to update customer accounts with phone numbers and other data.”

Meter reading audits will also be employed by the Corporation, with meters sent to the accounting department “for verification” once read - and prior to bills being sent out. The electronic transfer of meter readings, Mr Gibson added, would reduce the potential for data losses and the ‘time lag’ between readings and the dispatch of customer bills.

“We are going to locate and update all water meter installations on New Providence before the end of this year,” he told Tribune Business. “This will ensure that all meters are installed, and no one is using our meters illegally without us knowing

“We will ascertain which properties are rental properties, and which properties are commercial properties. We have some commercial properties paying as residential.” Daily targets will be set for meter readers, while a meter sequencing survey will also be conducted.

Mr Gibson said the internal reforms, and delinquent accounts drive, were intended “to develop a working structure for Water & Sewerage Corporation to manage its collection process and deal with customers”.

He added: “This will allow the Water & Sewerage Corporation to progressively reduce its reliance on the Government purse, and position itself for growth and development.”