The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Water & Sewerage Corporation’s $246m in “good faith” should have ensured its main water provider avoided making “simply unacceptable” warnings about potential supply disruption, its executive chairman said yesterday.

Adrian Gibson, pictured, told Tribune Business that BISX-listed Consolidated Water had received multiple payments on the $16.1m arrears it alleges the corporation owes prior to, and just after, end-September 2018 and the closing of its financial year’s third quarter.

Suggesting that the company’s concerns were already being addressed, and that there was no need to sound the alarm in its 2018 third quarter results filings with US regulators, Mr Gibson said the two sides’ long-standing business relationship should have given Consolidated Water extra reassurance and comfort.

He revealed that the BISX-listed water supplier, which provides the corporation with most its New Providence water from the Blue Hills and Windsor reverse osmosis plants, had received an average $20m per year in payments since the former facility began production in June 2006.

Mr Gibson, revealing that Consolidated Water has received a total $245.67m for its supply in the 12-plus years since, said the corporation had made multiple payments since the start of the 2018-2019 fiscal year to both reduce the arrears and stay current.

Besides using its overdraft account to pay the BISX-listed provider $2m while waiting to receive its $25m budget subsidy, the executive chairman revealed that the corporation paid a further $5m - in two separate tranches - to Consolidated Water in September 2018 prior to the third quarter’s end and filing of its results.

A further $3.621m was paid by a combination of the Corporation and Ministry of Finance in October, again before the company’s results were released, with Mr Gibson revealing that Consolidated Water has received $15.502m for its New Providence water supply services for 2018 to-date.

“I can tell you that between June 23, 2006, to the present day, Consolidated Water has been paid $245.67m, with the last payment being on November 9, 2018,” he told Tribune Business. “We have paid a notable sum of money over the years.

“We’ve demonstrated time and time again that we are a good faith partner in this business, and in the provisioning of water to our people. We have other issues that have arisen, issues we are currently dealing with, but we believe we have demonstrated over the years a willingness to have a business relationship that was productive for both sides.”

Tensions over mounting debts and arrears have occasionally flared before in the relationship between Consolidated Water and the Corporation, but this latest one appears to be the most serious rift yet and - if anything - the situation appears to be escalating.

Mr Gibson yesterday indicated surprise at the tone and content of Consolidated Water’s third quarter results filing given that the Corporation and Ministry of Finance were already honouring the payment plan agreed between the two sides.

“We have a payment arrangement we have been honouring,” he told Tribune Business. “For the past month we have paid $3.621m; some $2m from the Ministry of Finance, and $1.621m from the Water & Sewerage Corporation.

“That’s what the payment arrangement speaks to, and what we’ve been doing to pay off any arrears and keep current. We have a plan to have the arrears in line by next year.”

Mr Gibson said the Corporation’s efforts to tackle its debt to Consolidated Water had begun well before October and the two sides’ payment plan agreement, adding: “For this year to-date we’ve paid Consolidated Water $15.502m.

“In September, prior to their filings, we made two payments to Consolidated Water: $2.25m on the 3rd, and $2.743m on the 14th. And, whilst we waited on the Budget to clear and receive our subsidy, in July we made two good faith payments of $1m each from our overdraft account.”

Arguing that all this should have made Consolidated Water’s alert unnecessary, Mr Gibson added: “As far as we all knew we had an established agreement, and giving any presumed, perceived or apparent warning via the media with respect to disruption of the water supply is simply unacceptable.

“I reiterate that we will not stand pat in the face of water services to our citizens and visitors being potentially disrupted in the face of such a payment agreement, and hundreds of millions of dollars already changing hands.”

Many observers, though, will likely argue that all the problems and tensions would not exist if the Water & Sewerage Corporation paid its bills in full and on time - an issue that existed long before Mr Gibson was appointed executive chairman.

Consolidated Water, meanwhile, yesterday lashed out at Tribune Business over this newspaper’s exclusive revelation of the payments dispute, branding its report as “inflammatory” and a “misrepresentation” of the company’s filing with the Securities & Exchange Commission (SEC), the US capital markets regulator.

Rick McTaggart, its president and chief executive, accused this newspaper of suggesting that the company would cut-off supply to the Water & Sewerage Corporation from its two reverse osmosis plants, at Blue Hills and Windsor, as a means to pressure the state-owned agency into paying its debt.

Tribune Business, though, never reported or suggested a deliberate supply cut-off, and stands by its original article. Consolidated Water’s SEC filing clearly stated that its Bahamian subsidiary would lack the financing “to continue normal operations” unless the Ministry of Finance sticks to a proposed payment plan to settle some $16.1m in arrears.

“If the Ministry of Finance does not adhere to this proposed payment schedule, or the Water & Sewerage Corporation continues to be significantly delinquent in paying Consolidated Water (Bahamas) invoices, then in the coming months one or more of the following events may occur,” the SEC filing stated.

“One, Consolidated Water (Bahamas) may not have sufficient liquidity to continue normal operations. Two, we may be required to cease the recognition of revenues on Consolidated Water (Bahamas) water supply agreements with the Water & Sewerage Corporation, and three, we may be required to provide an allowance for Consolidated Water (Bahamas) accounts receivable. Any of these events could have a material adverse impact on our results of operations, financial position and cash flows.”

Given that Consolidated Water (Bahamas) does just one thing, the production of reverse osmosis water that is supplied to the Water & Sewerage Corporation, any negative impact to “normal operations” must directly affect this function.

Mr McTaggart, though, charged: “We view The Tribune’s article on Friday 9 November as inflammatory. We don’t have any intention of disconnecting water service to the Water & Sewerage Corporation and, in turn, to Bahamians and New Providence.

“Recent press articles have drawn incorrect inferences from financial disclosures that our parent company is required to make to our Bahamian and international investors regarding the overdue Water & Sewerage Corporation water invoices.”

He then confirmed: “The fact is that we’re not being paid in a timely manner, and it’s putting tremendous financial strain on the company, but the chance that we would initiate a water service interruption is zero.

“We have enjoyed a good working relationship with the Water & Sewerage Corporation for the past 21 years, even though payments of our invoices have been delayed from time to time over the years, so we’ve always felt comfortable that the Water & Sewerage Corporation would eventually settle its debts as they have in the past.

“We have a deep appreciation of our responsibilities as a critical supplier of water here [in The Bahamas]. So we’re not going to turn off the plants just to try to pressure someone. To conclude otherwise is simply not correct.”