The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday shown to have made zero progress during the 2023 first half in reducing the Water & Sewerage Corporation's $16.4m debt to its main BISX-listed reverse osmosis supplier.

Consolidated Water, which supplies the state-owned utility with water from its Blue Hills and Windsor plants, revealed in its results filings for the 2023 second quarter and year's first six months that the sums due to it have actually increased slightly by $100,000 from the 2022 year-end figure of $16.3m.

And, while the $16.4m debt at end-June 2023 represents a slight decrease from the $16.6m recorded at end-March, close to two-thirds of the former amount was described as "delinquent" - meaning that it is 90 days or more past due.

While yesterday's Consolidated Water results announcement showed that the Water & Sewerage Corporation's debt problems are not getting much worse, it does not represent any further progress towards achieving the Ministry of Finance's pledge to eliminate all outstanding balances and reduce the sums owed to the BISX-listed supplier to zero.

Consolidated Water is responsible for producing all water consumed by the Water & Sewerage Corporation's customers on New Providence and, in its results filing, it disclosed: " Consolidated Water (Bahamas) accounts receivable balances (which include accrued interest) due from the Water & Sewerage Corporation amounted to $16.4m and $16.3m as of June 30, 2023, and December 31, 2022.

"Approximately 64 percent of these accounts receivable balances were delinquent as of both of those dates." However, given that successive administrations have always ensured the Water & Sewerage Corporation eventually makes good on its debts via the Bahamian taxpayer, Consolidated Water has never taken a provision against these sums as doubtful debts.

"From time to time, Consolidated Water (Bahamas) has experienced delays in collecting its accounts receivable from the Water & Sewerage Corporation. When these delays occur, the company holds 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," the BISX-listed firm added.

"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."

"Consolidated Water (Bahamas) has received correspondence from the Ministry of Finance of the Government of The Bahamas that stated the Government intends to return all of Consolidated Water (Bahamas) accounts receivable from the Water & Sewerage Corporation to current status."

That is proving to be a multi-year effort. Given that Consolidated Water's group-wide balance sheet showed it as carrying $30.302m in accounts receivables at end-June 2023, more than half that sum is accounted for by the Water & Sewerage Corporation.

"If Consolidated Water (Bahamas) is unable to collect a sufficient portion of its delinquent accounts receivable, one or more of the following events may occur," the company warned. "Consolidated Water (Bahamas) may not have sufficient liquidity to meet its obligations. The company may be required to cease the recognition of revenue on Consolidated Water (Bahamas) water supply agreements with the Water & Sewerage Corporation.

"The company 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 the company’s consolidated financial condition, results of operations and cash flows."

The importance of Consolidated Water's Bahamian operations to the overall group's performance was highlighted by the 10.9 percent, or more than $1.5m, year-over-year increase in its bulk water segment revenues for the 2023 first half compared to the same six months last year.

Bulk water revenues rose to $17.487m from $15.774m, which was attributed to a 9 percent increase in the volume of water sold to the Water & Sewerage Corporation as well as an increase in the energy costs that Consolidated Water's Bahamian operation passed on to the state-owned utility.

"Our contracts to supply water to the Water & Sewerage Corporation from our Blue Hills and Windsor plants require us to guarantee delivery of a minimum quantity of water per week," Consolidated Water added. "If the Water & Sewerage Corporation requires the water and we do not meet this minimum, we are required to pay the Water & Sewerage Corporation for the difference between the minimum and actual gallons delivered at a per gallon rate equal to the price per gallon that the Water & Sewerage Corporation is currently paying us under the contract.

"The Blue Hills contract expires in 2032 and requires us to deliver 63m gallons of water each week. The Windsor contract expires in 2033 and requires us to deliver 16.8m gallons of water each week."