The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Water & Sewerage Corporation’s main supplier yesterday reassured the capital markets that the $16m debt currently owed to it by the state-run utility is “just the way The Bahamas operates”.

David Sasnett, chief financial officer of BISX-listed Consolidated Water, said the financially-strapped corporation is simply unable to pay its bills when they come due after it was suggested by one financial analyst that the water supplier is being given a “hard time collecting receivables on time”.

Revealing that the Water & Sewerage Corporation is also paying interest on its eight-figure debt to Consolidated Water, Mr Sasnett told those attending the company’s 2020 first quarter results conference call that the government - meaning Bahamian taxpayers - will reduce the sum outstanding to “a much lower level” once the situation with COVID-19 stabilises.

Responding to concerns that the pandemic will worsen the corporation’s inability to pay its bills, he said: “It’s important to recognise that Hurricane Dorian hit The Bahamas back in September. That really set the island back. And then, obviously, they have been impacted by COVID-19 because they’ve closed the islands for tourist travel, but the situation that exists with our receivables, we’ve actually seen a slight decline in the receivables from the end of the year.

“And there was also a slight decline moving into April. This is a pattern that’s existed for as long as I’ve been with the company, and I’ve been with this for about 14 years now. It’s just the way The Bahamas operate. The Water & Sewerage Corporation can’t really meet the financial commitment for our bill. So periodically, the receivable balance is billed, and then the government steps in and makes lump sum payments on their behalf and brings the receivable balance down under control.”

Consolidated Water supplies the corporation and all its New Providence customers with water from its Blue Hills and Windsor reverse osmosis plants. Mr Sasnett added of the BISX-listed firm’s financial issues: “It’s important to note that they [the Water & Sewerage Corporation] are paying us interest on these receivables.

“So we’ve never recorded any kind of allowance for doubtful accounts, and we feel very confident that when things stabilise, the Government will bring the receivables back down to a much lower level. In the meantime, they’re paying us periodically. Like I said, we received a substantial payment in April, and we’re confident that over the long-term we will collect 100 percent of these receivables.

“We presently have a bit of a liquidity problem there in The Bahamas, but the Government recognises that, and I think they will pay us. And I think you’ll see hopefully, once we get past the impacts of COVID-19, I think you’ll see those receivables come down to more traditional levels. They’re not at their highest level. When they do, they actually had more money than they have now at some point in time in the past.”

Tribune Business reported yesterday how the Water & Sewerage Corporation reduced the debt owed to its main BISX-listed supplier by almost $2m during April 2020 despite suffering a 61 percent revenue decline for the same month.

The state-owned utility slashed the sum it owes from $17.8m at end-March 2020 to $16m at April 30, with its ability to do so likely to be linked to a one-off $5m payment it received from the government in March 2020.

“Consolidated Water (Bahamas) accounts receivable balances due from the Water and Sewerage Corporation of The Bahamas amounted to $17.8m as of March 31, 2020, and $18.4m as of December 31, 2019,” the BISX-listed water supplier said in its SEC filings.

“Approximately 75 percent of the March 31, 2020, accounts receivable balance was delinquent as of that date. The delay in collecting these accounts receivables has adversely impacted the liquidity of this subsidiary. As of April 30, 2020, Consolidated Water (Bahamas)’ accounts receivable from the Water and Sewerage Corporation totalled approximately $16m.”

Consolidated Water added that it has yet to see a reduction in the Water & Sewerage Corporation’s demand for its product despite the COVID-19 pandemic although this was likely to change if economic conditions do not improve in the coming months.

“The volume of water Consolidated Water Bahamas sold to the Water & Sewerage Corporation did not vary significantly from March 2020 to April 2020, despite the downturn in economic activity on New Providence that began in April 2020 that stems from the preventative measures taken by the government in March 2020,” Consolidated Water said.

“However, we believe that at some point in the coming months, if the current economic conditions in The Bahamas do not improve, Consolidated Water (Bahamas) will experience a decrease in the demand for its water, with a resulting decline in its revenue.”