By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Water & Sewerage Corporation’s persistent financial woes saw it run up an unpaid $14 million bill with its main BISX-listed supplier by year-end 2013, it was revealed last night.
Consolidated Water, the operator of the Blue Hills and Windsor reverse osmosis plants, disclosed in its annual financials that the Government had pledged to “take steps” to reduce the sum owed during 2014.
The company’s filings with the US Securities & Exchange Commission (SEC) were also vague on the fate of the now-expired management contract for the Windsor plant, which generated $7.5 million in revenues for Consolidated Water last year.
The BISX-listed operator, which has promised an initial public offering (IPO) of shares in its Bahamian subsidiary if it continues at Windsor, said it was “unable to determine” if its agreement would be renewed for five years or the likely terms.
Another situation that remains unchanged is the Water & Sewerage Corporation’s ongoing cash flow problems, which show the importance of the $81 million project to overhaul its operations - the benefits from which are expected to emerge shortly.
“From time to time, Consolidated Water (Bahamas) has experienced delays in collecting its accounts receivables due to financial difficulties experienced by the Water & Sewerage Corporation,” the company said in its year-end filing.
“Consolidated Water (Bahamas) was due approximately $13.9 million from the Water and Sewerage Corporation as of December 31, 2013. We have been informed previously by representatives of the Bahamas government that the delay in paying our accounts receivables is due to operating issues within the Water and Sewerage Corporation, that the delay does not reflect any type of dispute with us with respect to the amounts owed, and that the amounts will ultimately be paid in full.”
Consolidated Water added: “The Bahamas government has informed us that they will be taking steps to reduce the balance of the amount Water and Sewerage Corporation owes to Consolidated Water (Bahamas)over the course of 2014.
“We believe that the accounts receivable from the Water and Sewerage Corporation are fully collectible, and therefore have not provided any allowance for possible non-payment of these receivables as of December 31, 2013.“
Consolidated Water, though, reiterated that the unpaid $14 million bill meant it was delaying obtaining a performance bond for its Blue Hills reverse osmosis plant, which is meant to guarantee its performance to the Corporation.
“Our contract to supply water to the Water and Sewerage Corporation from our Blue Hills plant requires us to guarantee delivery of a minimum quantity of water per week,” the BISX-listed operator said.
“If we do not meet this minimum, we are required to pay the Water and Sewerage Corporation for the difference between the minimum and actual gallons delivered at a per gallon rate equal to the price per gallon that Water and Sewerage Corporation is currently paying us under the contract.”
It added: “The Blue Hills contract expires in 2032 and requires us to deliver 63 million gallons of water each week. We are required to provide the Water and Sewerage Corporation with performance and operating guarantees, in the form of a bank-issued letter of credit, to secure any payments we may be required to make under the minimum delivery requirements of the Blue Hills contract.
“We expect to obtain a performance bond for the Blue Hills plant once Consolidated Water (Bahamas) has received payment of its delinquent accounts receivable from the Water and Sewerage Corporation. “
Elsewhere, with its original Windsor contract having expired in July 2013, Consolidated Water confirmed that it had submitted a five-year extension proposal to the Government and was awaiting a formal answer.
“At the request of the Government of the Bahamas, we continue to operate the Windsor plant to provide the Government with additional time to decide whether or not government will enter into a new water supply agreement with us for the Windsor plant,” Consolidated Water said.
“We generated $7.5 million in revenues from this plant during the year ended December 31, 2013.”
The Bahamas remains the most important jurisdiction for Consolidated Water in terms of water volumes, its three reverse osmosis plants - two in Nassau, one in Bimini - accounting for 15.2 million, or 58.5 per cent, of the 26 million bulk water gallons it produces daily.
The Windsor and Blue Hills plants supplied the Water and Sewerage Corporation with a collective 4.6 billion gallons of water in 2013, the same total as the previous year.
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