The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Water & Sewerage Corporation's outstanding debts to its main BISX-listed reverse osmosis supplier increased slightly to $16.6m during the 2023 first quarter despite government pledges to eliminate this, it was revealed yesterday.

Consolidated Water, the Blue Hills and Windsor reverse osmosis plants operator, in its results filing for the three months to end-March 2023 disclosed that the sum owed by the state-owned utility had risen by $300,000 or almost 2 percent since year-end 2022.

Documents filed with the US Securities & Exchange Commission (SEC) noted that the increase is moving in the opposite direction to previous assurances from the Ministry of Finance that the Government ultimately intends to eliminate debts owed to Consolidated Water, of which 65 percent or almost two-thirds - some $10.79m - are delinquent meaning they are 90 days or more past due.

"Consolidated Water (Bahamas) accounts receivable balance (which includes accrued interest) due from the Water & Sewerage Corporation amounted to $16.6m and $16.3m as of March 31, 2023, and December 31, 2022, respectively. Approximately 65 percent of these accounts receivable balances were delinquent as of both of those dates," the BISX-listed reverse osmosis supplier said yesterday.

"From time to time, 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 and, as a result, payment schedules are developed for the 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 continued.

"As of March 31, 2023, we have not provided an allowance for doubtful accounts for Consolidated Water (Bahamas) accounts receivable from the Water & Sewerage Corporation. We have 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."

Based on Consolidated Water’s 2023 first quarter and 2022 year-end results, the Government has some way to go in achieving that objective even though the Water & Sewerage Corporation received an additional $20m in the mid-year Budget to help it cover its bills to all reverse osmosis suppliers.

However, Consolidated Water never usually makes too much of the Water & Sewerage Corporation’s debts because it remains its largest group-wide customer, accounting for almost one-third of total revenues. “A significant portion of our consolidated revenue is derived from our water supply agreements with the Water & Sewerage Corporation. The loss of the Water & Sewerage Corporation as a customer would adversely affect us,” the company admitted among its risk factors.

“One bulk water customer, the Water & Sewerage Corporation, accounted for approximately 32 percent of our consolidated revenue for 2022. If, for financial or other reasons, the Water & Sewerage Corporation does not comply with the terms of our water supply agreements our consolidated financial condition, results of operations and cash flows could be materially adversely affected.”

And Consolidated Water also warned: “If Consolidated Water Bahamas is 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 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.”

Consolidated Water said its two New Providence-based reverse osmosis plants, Blue Hills and Windsor, are capable of producing a combined 14.8m gallons of water per day. For the 2022 full-year, they supplied the Water & Sewerage Corporation’s customers with 4.6bn gallons compared to 4.4bn in 2021.