The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Water & Sewerage Corporation’s main BISX-listed supplier says it expects to see “a rapid improvement” in the $21.7m debts owed to it by end-September 2021.

Consolidated Water executives, in a conference call with analysts to discuss the company’s 2021 first quarter results, said the sums owed by the state-owned utility had reached a record “all-time high” because the government was “strapped for cash” and unable to subsidise as in pre-COVID and Dorian days.

Rick McTaggart, its chief executive, voiced optimism that the upcoming 2021-2022 Budget that is due to be unveiled in the House of Assembly next Wednesday will allocate sufficient funding to pay down the accounts receivables balance owed to its Bahamian subsidiary.

He added that past practice had shown the government typically paid down the Water & Sewerage Corporation’s debts over the summer months, usually July and August, due to the infusion of funds associated with the new fiscal year.

“We have conversations with them practically every couple of weeks,” Mr McTaggart said of the Government, when questioned on the record Bahamian debt. “They’re strapped for cash right now. We don’t know the inner workings of the Government, but what has happened in the past when receivables get this large they pay them down over the summer months, July and August.”

He added that Consolidated Water was “very hopeful that pattern” will repeat itself in 2021. David Sasnett, the company’s chief financial officer, said that while the $21.7m debt was “quite substantial, it’s not the first time it’s exceeded the $20m mark”.

He added that the Government had “never defaulted on our receivables” before, leading the Blue Hills and Windsor reverse osmosis plant operator to believe the sums are “fully collectible”.

Yet Mr Sasnett warned: “We would hope to see a rapid improvement in the level of those receivables by the end of the third quarter this year”.

Tribune Business reported earlier this week how 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 on Monday 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 company that supplies 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, amounted to $19.5m as of March 31, 2021, and $16.8m as of December 31, 2020.

“Approximately 78 percent of the March 31, 2021, accounts receivable balance was delinquent as of that date [March 31],” the firm said. “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.

“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,” Consolidated Water said in filings with US capital markets regulators.

“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.”

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.