The Tribune

• Hits record $21.7m at end-April 2021

• Sum rose by $2.2m during that month

• Govt and utility increasingly cash strapped

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Water & Sewerage Corporation’s debt to its main BISX-listed supplier has hit “an all-time high” of $21.7m as COVID-19 continues to erode the government’s ability to prop up the cash-strapped utility.

Consolidated Water, unveiling its results for the 2021 first quarter yesterday evening, revealed that the sums owed by the Water & Sewerage Corporation jumped by a further $2.2m in April with more than three-quarters deemed “delinquent” or over 90 days past due at end-March 2021.

However, the operator of the Blue Hills and Windsor reverse osmosis plants that supply all the Corporation’s New Providence customers with their daily water said it had taken no provisions, and was not treating the debts as so-called “doubtful accounts”, because it remained confident that the struggling Public Treasury would eventually come through and pay what is owed.

Consolidated Water Bahamas’ accounts receivable balances (which include accrued interest) due from the Water & Sewerage Corporation of The Bahamas amounted to $19.5m as of March 31, 2021, and $16.8m as of December 31, 2020,” the BISX-listed water supplier said in its form 10-Q filed with the US Securities & Exchange Commission (SEC).

“Approximately 78 percent of the March 31, 2021, 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 April 30, 2021, Consolidated Water Bahamas’ accounts receivable from the Water & Sewerage Corporation totalled an all-time high of approximately $21.7m.”

The latter date is one month after the 2021 first quarter ends. The fact the Water & Sewerage Corporation’s debts have continued to increase is a further sign of both the increasing financial strain it is facing, as customer difficulties in paying their bills persist, and that of the government as the latter’s revenue streams have yet to fully recover from the pandemic amid a $1.327bn projected deficit.

The government, meaning the Bahamian taxpayer, has traditionally been relied upon to bail out the Water & Sewerage Corporation and keep the latter’s debts to Consolidated Water under control, but COVID-19 has made this an increasing challenge as the reverse osmosis supplier indicated last night.

“From time to time (including presently), Consolidated Water Bahamas has experienced delays in collecting its accounts receivable from the Water & Sewerage Corporation,” the BISX-listed firm said. 

“When these delays occur, we hold discussions and meetings with representatives of the Water & Sewerage Corporation and The Bahamas government and, 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.”

“As of March 31, 2021, we have not provided an allowance for doubtful accounts for Consolidated Water Bahamas’ accounts receivable from the Water & Sewerage Corporation,” Consolidated Water continued.

“We believe the delays we have experienced in collecting Consolidated Water Bahamas’ receivables have been extended by the severe adverse impact of the COVID-19 pandemic on The Bahamas government’s revenue sources. Based upon our discussions and collection history with The Bahamas government, we believe that our accounts receivable from the Water & Sewerage Corporation are fully collectible.”

Consolidated Water added, though, that it could be challenged to maintain “sufficient liquidity to meet its obligations” if the situation continues, which would force it to take a provision for doubtful accounts and stop the recognition of revenues on water supply agreements with the Water & Sewerage Corporation.

And Consolidated Water is far from the only reverse osmosis supplier to experience challenges in obtaining payment from the Water & Sewerage Corporation. Tribune Business has reported extensively on how Aqua Design Bahamas, operators of plants in south Eleuthera, San Salvador and Inagua, had threatened to cut off water supply over a $3.8m debt that was set to increase to $4.5m.

Adrian Gibson, the Water & Sewerage Corporation’s executive chairman, revealed last year that it faced a “roughly $9m shortfall” in residential customer payments as a result of being directed to cease all disconnection activity since late March 2020 due to the COVID-19 pandemic.

It was also dealing with a $30.8m “backlog” on payments due to vendors at end-August 2020, a sum that continues to grow, and a $15m-plus year-over-year decline in revenue for the year to-date.

For the 2021 first quarter, Consolidated Water said its bulk water revenues fell year-over-year from $6.44m to $6.246m due to its Bahamian subsidiary reporting $166,000 less revenue due to lower energy costs, which reduced the expenses it passed on to the Water & Sewerage Corporation.

“Gross profit for our bulk segment was $2.091m (33 percent of bulk revenue) and $1.876m (29 percent of bulk revenue) for 2021 and 2020, respectively. Gross profit in dollars and as a percentage of revenue increased in 2021 as compared to 2020 principally due to a decrease in operating expenses (primarily repairs and maintenance costs) for Consolidated Water Bahamas of approximately $188,000,” the company said.