The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Water & Sewerage Corporation’s debts to its main supplier rose by 17 percent over the two months to end-February 2021 to reach almost $20m, it was revealed last night.

BISX-listed Consolidated Water, in its annual year-end 10-K filing with the US Securities & Exchange Commission (SEC), confirmed the ongoing challenges the state-owned utility faces in paying its bills by disclosing that sums owed had increased by $2.8m in the period since year-end 2020.

Consolidated Water has always adopted a fairly relaxed, sanguine attitude towards the Water & Sewerage Corporation’s persistent eight-figure receivables given that it has been able to rely on the government, via the Bahamian taxpayer, to bail-out the utility and pay down these debts.

However, with more than 75 percent or three-quarters of the $16.8m owed at year-end 2020 classified as “delinquent”, meaning it is three months or more past due, Consolidated Water acknowledged its Bahamian subsidiary’s liquidity is being affected as the government struggles to cover the Water & Sewerage Corporation’s bills amid the financial ravages inflicted by the COVID-19 pandemic.

“Consolidated Water (Bahamas) accounts receivable balances (which include accrued interest) due from the Water & Sewerage Corporation amounted to $16.8m and $18.4m as of December 31, 2020, and 2019, respectively,” the company’s form 10-K said.

“Approximately 76 percent of the December 31, 2020, accounts receivable balance was delinquent as of that date. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary. As of February 28, 2021, Consolidated Water (Bahamas)’ accounts receivable from the Water & Sewerage Corporation totalled $19.6m.”

Consolidated Water conceded that Hurricane Dorian, which knocked out Abaco as the Water & Sewerage Corporation’s second main revenue generator behind New Providence and inflicted $30m in restoration costs, had combined with the COVID-19 pandemic to further undermine timely repayments to it.

“We believe the delays we have experienced in collecting Consolidated Water (Bahamas)’ receivables were extended due to the impact of Hurricane Dorian, which devastated the northern Bahamas in September 2019, and the severe economic impact of the COVID-19 pandemic on The Bahamas government’s revenue sources,” Consolidated Water said.

“From time to time (including presently), Consolidated Water (Bahamas) has experienced delays in collecting its accounts receivable from the Water & Sewerage Corporation. When these delays occur, we hold discussions and meetings with representatives of the Water & Sewerage Corporation and The Bahamas government. As a result, payment schedules are developed for Water & Sewerage Corporation’s delinquent accounts receivable.

“All previous delinquent accounts receivable from the Water & 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,” it added.

“As of December 31, 2020, we have not provided an allowance for doubtful accounts for Consolidated Water (Bahamas)’ accounts receivable from the Water & Sewerage Corporation. [But] if Consolidated Water (Bahamas) continues to be unable to collect a significant portion of its delinquent accounts receivable, one or more of the following events may occur.

“Consolidated Water (Bahamas) may not have sufficient liquidity to meet its obligations, we may be required to cease the recognition of revenue on Consolidated Water (Bahamas)’ water supply agreements with the Water & Sewerage Corporation; and (iii) we may be required to provide an allowance for doubtful accounts for Consolidated Water (Bahamas)’ accounts receivable. Any of these events could have a material adverse impact on our consolidated financial condition, results of operations and cash flows.”

The Water & Sewerage Corporation represents 30 percent of Consolidated Water’s revenues, and is its largest client. The latter supplies the water that the state-owned utility pipes to Bahamian businesses and households from its two Nassau-based reverse osmosis plants at Blue Hills and Windsor.