The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Water & Sewerage Corporation is taking “about as much water” as its main BISX-listed supplier can produce even though its debts to the latter rose 41.5 percent during the 2023 third quarter.

Consolidated Water, which supplies the state-owned utility with water from its Blue Hills and Windsor plants, revealed in its results filings for the three months to end-September 2023 that the outstanding sums owed to it by the Water & Sewerage Corporation increased by almost $7m during that period to $23.2m.

That compared to $16.4m at end-June 2023, and more than three-quarters - or three out of every four dollars - of the sum now due for payment by the Water & Sewerage Corporation is more than 90 days past due.

Consolidated Water, in its latest 10-Q filing with the US Securities & Exchange Commission (SEC), said it had again held recent discussions with the Government’s Ministry of Finance to determine when the outstanding monies will be paid. The ministry again reiterated its goal of bringing the Water & Sewerage Corporation’s payables current although that target seems as far away as ever.

“Consolidated Water (Bahamas)’ accounts receivable balances (which include accrued interest) due from the Water & Sewerage Corporation amounted to $23.2m and $16.3m as of September 30, 2023, and December 31, 2022, respectively. Approximately 76 percent and 65 percent of the accounts receivable balances were delinquent as of those dates, respectively,” Consolidated Water said.

“Consolidated Water (Bahamas) recently held discussions with the Ministry of Finance of the Government of The Bahamas, which stated that the Government intends to return all of Consolidated Water (Bahamas) accounts receivable from the Water & Sewerage Corporation to current status.

“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,” Consolidated Water 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, though, said the Water & Sewerage Corporation’s demand for reverse osmosis water continues to benefit its Bahamas operations. David Sasnett, its chief financial officer, told the company’s 2023 results conference call that bulk water sales in The Bahamas increased by 6 percent during the ​2023 third quarter.

“Our bulk revenues declined slightly, primarily due to the decrease in the price of energy paid by Consolidated Water (Bahamas),” he added. “This decreased the energy pass through component of Consolidated Water (Bahamas) rates. 

“The decrease in bulk segment revenue due to energy was partially offset by a 6 percent increase in Consolidated Water (Bahamas) volume of water sold. I should say we are producing about as much water as we can produce in The Bahamas for the Water & Sewerage Corporation, so our operations there are very favourable to our company.”

Consolidated Water, in its filing with the SEC, said it “continues to believe that no allowance for doubtful accounts is required for Consolidated Water (Bahamas) accounts receivable from the Water & Sewerage Corporation”. Yet it conceded that “the delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary”. 

However, it added: “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. 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.”

“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.”