The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Water & Sewerage Corporation’s chairman yesterday said he will suggest a BTC-style privatisation for the utility when he meets with the Prime Minister and other Cabinet members.

Adrian Gibson, also the Long Island MP, told Tribune Business that a public-private partnership (PPP) type model, where the Government sold a significant equity stake to a private investor, “could work at Water & Sewerage”.

Emphasising that this was not government policy, Mr Gibson said: “One of the points I am going to advocate when I speak to the Minister [of Works], Prime Minister and others, is the potential for the Water & Sewerage Corporation to take on the style of a BTC, a PPP, in the future.”

Pressed for more detail, Mr Gibson said he was not suggesting a management company to run the Corporation’s operations but, rather, a similar structure to the 2011 BTC privatisation where a majority 51 per cent equity stake was sold to Cable & Wireless Communications (CWC).

Despite the Christie administration’s tinkering, CWC has retained the largest shareholding and Board/management control, and Mr Gibson yesterday advocated for the Water & Sewerage Corporation “a similar set-up to BTC, where they have a PPP and the Government owns a percentage and a private entity owns a percentage.

“I think what BTC has done, that approach could work at the Water & Sewerage Corporation. That’s just my opinion. That’s not government policy,” he added.

Any talk of PPPs and privatisation, especially a structure based on the “BTC model”, will likely trigger alarm bells among Corporation staff and the two trade unions that represent them, given that the instinctive reaction is to fear for their jobs and benefits.

However, such comments are likely to be welcomed by many outside observers who believe that the Government should ‘get out of business’, and that Bahamian consumers and businesses have ‘paid the price’ for inefficient public sector bodies such as Water & Sewerage through taxpayer subsidies and other excessive costs.

Mr Gibson, meanwhile, served notice of his intent to alter both the Corporation’s billing methods and collection cycle - a move he estimated will increase annual revenues by around $4 million.

This will be achieved by a one-third cut in the first ‘block’ of water consumption where consumers are charged at an initial, lower rate. Instead of 3,000 gallons, this will be reduced to 2,000 gallons, enabling the Corporation to apply a higher charge to the 1,000 gallon difference.

Mr Gibson also reiterated that the Corporation plans to reduce customer billings from a quarterly, three-month cycle to two months in a bid to improve cash flow and reduce the time between service supply and payment.

“What the results have shown is we will raise an additional $4 million per year,” he told Tribune Business of the consumption ‘block’ reform. The plans coincide with efforts to reduce the Corporation’s $45 million-plus accounts receivables “in the shortest possible time” (see other article on Page 1B), and the creation of an internal Business Development Unit.

Describing the Corporation as in the first year of a three-year “recovery period”, Mr Gibson said: “We have formed a reorganisation plan, focusing on customers, to increase revenue, reduce cost and win back market share.

“Customer win back schemes, incentive sales and discounts for returning customers, this business unit will oversee that. It will pursue new business, liaising with the Prime Minister’s Office and Ministry of Works on new housing and commercial developments. This unit will also be linked to writing off bad debts, assisting write-offs where the funds cannot be collected.”

Mr Gibson added that the Business Development Unit would also assess the feasibility of increasing the Corporation’s tariff rates, which have not seen a raise since 1999. This has resulted in the utility selling water ‘below cost’, and forced the taxpayer to step in with annual subsidies reaching up to $30 million - effectively representing a ‘wealth transfer’ from the Public Treasury to the Corporation’s customers.

The Inter-American Development Bank (IDB) has also warned that the gains from the $81 million project it financed to slash losses from the Corporation’s distribution system, amounting to millions of gallons per day, will be lost unless revenues rise through a tariff increase to fund maintenance and other capital works.

Mr Gibson said there were “other avenues we are exploring” besides a tariff increase to boost the Corporation’s revenues. He added that it was planning to “heighten our online bill payment application”, and is encouraging consumers to use its mobile App to regularly service their bills.

The chairman also promised to “provide discounts and rebates” to Water & Sewerage customers whenever “known water quality issues”, such as salty, rusty and/or hard water was experienced.