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Supply cut-off threat on $4.5m Water Corp debt

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Water & Sewerage chairman Adrian Gibson.

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PUBLIC Works Minister Desmond Bannister. Photo: Donavan McIntosh/Tribune staff

• Three Family Islands ‘at risk’ of water loss Monday

• Plant operator argues ‘left with no feasible choice’

• Will ‘decommission’ and leave with all equipment

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Thousands of Family Island residents face having their water supply cut-off on Monday unless the Water & Sewerage Corporation settles an allegedly outstanding $4.5m debt.

Aqua Design Bahamas, the owner/operator of reverse osmosis plants that supply potable water to the state-owned utility in South Eleuthera, San Salvador and Inagua, yesterday argued it had been “left with no feasible choice but to cease operations” while acknowledging all three communities will be put “at risk”.

Directing blame at the Water & Sewerage Corporation, the company said it will “decommission” its plants and remove all equipment that it owns - a move that will effectively make it impossible for the utility or any other private provider to take over water production at such short notice.

Apart from $3.8m in past due debts, Aqua Design argued it had also been forced into its position by the Water & Sewerage Corporation “showing no interest” in renewing the contracts to operate the three plants which have now expired.

Responding to Tribune Business inquiries, the reverse osmosis plant operator said: “On May 3, 2021, Aqua Design Bahamas will be left with no feasible choice but to cease operations of its drinking water plants in the communities of South Eleuthera, San Salvador and Inagua.

“It is unfortunate that Water & Sewerage Corporation has chosen to allow the contracts that are necessary to operate these plants expire, placing the people of these communities at risk of losing access to its water supply.”

Seeking to pin the blame on the corporation, it added: “It’s important to understand that Aqua Design has done everything in our power to avoid this action. We have for more than 15 years been a loyal partner and supplier of water to Water & Sewerage Corporation for the people of The Bahamas. However, recent actions by Water & Sewerage Corporation have left us no alternative.

“Our position is as follows. Aqua Design has met all contractual obligations to supply the quality and quantity of desalinated water required at all the plants, and has made repeated efforts to resolve this matter. Our contracts to operate drinking water plants in these communities have expired and, despite several renewal options presented by Aqua Design, Water & Sewerage Corporation has declined to renew.”

Turning to its second grievance, Aqua Design then detailed the past due sums owed to it for water supplied to the Water & Sewerage Corporation together with another $740,000 bill that is coming due for payment on May 8, 2021. It also implied that the state-owned utility has no back-up plan for resuming, or taking over, water supply to those three areas if it makes good on its threat to pull out.

“The Water & Sewerage Corporation has been delinquent in paying for water production for several years, consistently owing millions of dollars over this time period,” Aqua Design said. “Across all of the islands where Aqua Design operates, the past due amount currently totals nearly $3.8m, with an additional $740,000 coming due on May 8, 2021.

“All plants and materials at Aqua Design facilities are the property of Aqua Design, and will be decommissioned, as is our contractual and legal right, on May 3 if this issue is not resolved. The Water & Sewerage Corporation does not own any of the equipment at these plants.

“We are not aware of any plans by the Corporation to provide water to these communities following the decommissioning of our plants on May 3. We ask the people of the Bahamas to inquire as to the Water & Sewerage Corporation’s plans for water production at South Eleuthera, San Salvador and Inagua,” it continued.

“If, indeed, they do not have an alternate plan, they should be urged to renew our contracts and fulfill their contractual obligations by coming current on all past due balances and remaining current on payments so as not to jeopardise the lives and livelihoods of the people that live in these communities.”

Neither Adrian Gibson, the Water & Sewerage Corporation’s executive chairman, nor Desmond Bannister, deputy prime minister, and who has ministerial responsibility for the water utility, responded to multiple Tribune Business calls and e-mails seeking comment on the situation before press time last night.

The Government, though, is likely to react furiously to Aqua Design’s stance. It will probably view it as akin to trying to extort payment by holding hundreds of families and Water & Sewerage customers hostage at the worst possible time - the middle of the COVID-19 pandemic - through threatening to cut-off water production despite the allegedly outstanding bills owed to it.

Mr Bannister adopted such a position last year when a similar dispute erupted between Aqua Design and the Water & Sewerage Corporation, which resulted in the former cutting off water production and supply to residents and businesses in central Eleuthera over a payment dispute.

The deputy prime minister slammed Aqua Design Bahamas for “the nastiest, most callous conduct I’ve ever seen” in deciding to cease water production, as he branded the reverse osmosis plant operator “greedy” for making tens of millions of dollars off the Bahamian people” through “one-sided” contracts that were signed off by former administrations.

In effect, the relationship between the Government and Water & Sewerage Corporation on one side, and Aqua Design - a subsidiary of SUEZ – Water Technologies & Solutions on the other - had completely broken down when that incident occurred in October 2020, and has likely been unsalvageable ever since.

Mr Gibson has also made no secret of his belief that many Family Island reverse osmosis plant operators have enjoyed financially advantageous deals, and that the Water & Sewerage Corporation’s customers and taxpayers will be better served if the state-owned utility takes over these facilities when the existing supply contracts expire.

Such deals, which saw the Water & Sewerage Corporation outsource water production to private operators on multiple islands, typically give multiple options when they expire. The parties can renew, or the operator sells the plant at its equipment to the Water & Sewerage Corporation at an agreed price, with a third option being that it simply takes its equipment with it.

Aqua Design’s statement indicates discussions on a transition to Water & Sewerage Corporation control or a new supplier have yet to even begin, and that it will exercise the third option - to take all its equipment with it - within days unless the Government bows to its demands.

While some observers will likely view the plant operator’s actions as the equivalent of using Bahamians as ‘bargaining chips’ or ‘pawns’ as part of hardball negotiating tactics, others will question why the Water & Sewerage Corporation simply does not pay its bills when they become due.

However, given that the Water & Sewerage Corporation sells water to consumers at a price below the cost of production, it has always required taxpayer support to cover its bills - and that was before Hurricane Dorian and the COVID-19 pandemic, which have merely increased the strain on the Public Treasury to prop it up.

Mr Gibson revealed last year that the Corporation faced a “roughly $9m shortfall” in residential customer payments as a result of being directed to cease all disconnection activity since late March 2020 due to the COVID-19 pandemic.

It was also dealing with a $30.8m “backlog” on payments due to vendors at end-August 2020, a sum that continues to grow, and a $15m-plus year-over-year decline in revenue for the year to-date.

Senator Clay Sweeting, the Progressive Liberal Party’s (PLP) central and south Eleuthera candidate for the upcoming general election, told Tribune Business that residents in the constituency were “frustrated and outraged” over the Government and Corporation’s failure to address their concerns after Aqua Design made public its cut-off threat.

“Water is critical to the survival of central and south Eleuthera, especially now with the pandemic, and nationwide. We’ve been plagued with this virus for more than a year,” Mr Sweeting said. “Now here we are, a few months later, and the Government has to show more than lip service. They’ve failed on so many fronts in development of the Family Islands, and now can’t even provide potable water.

“I’ve had numerous calls today, and my constituents are shocked and outraged that they’ve not heard one word from the Government, one word from the Corporation. This country is run like a circus. It;s high time the Government shows they really care about how they develop the Family Islands. The people of south Eleuthera don’t know if they will have water on Monday. This is not how to run a country.”

The Water & Sewerage Corporation’s two trade unions yesterday indicated they were both aware of the Aqua Design situation, and argued that the state-owned utility simply lacks the manpower and expertise to operate the three reverse osmosis plants themselves.

Dwayne Woods, the Bahamas Utilities Services & Allied Workers Union (BUSAWU) president, told Tribune Business: “I’m aware they’re [Aqua Design] disappointed the Corporation would allow the contracts to run out like that given that water is a public necessity....

“I know one thing: We don’t have persons trained enough to run those plants. What I will say to you is it’s impossible for the Water & Sewerage Corporation to take them over because we don’t have the trained personnel to run them.

“I have a grave concern for the people of Inagua and Eleuthera. I have a grave concern because the health and wealth of the nation depends on water. My advice to the public would be to prepare either way. But the failure to produce and distribute water to them will not be on the workers; it will sit squarely on the leadership of the Corporation,” Mr Woods continued.

“It will be no fault of ours that water is not produced and delivered to them. Don’t blame the workers. It has to be the leadership of the Corporation that is responsible for whatever is coming.”

Ednol Rolle, of the Water & Sewerage Management Union (WSMU), said Aqua Design had been “at odds” with Mr Gibson and the Corporation for some time. “It’s unfortunate, but I hope the customer does not come out badly because of it,” he added.

“If these people don’t receive a contract renewal, we should at least have some plan in place but I am not aware of any. I think he’s [Mr Gibson] taken the position regarding all the reverse osmosis plants that as their contracts come up for renewal they will take them over.”

Mr Rolle said the transition to Water & Sewerage Corporation control would be easier at plants where its staff have some involvement, and added: “We’ve talked about setting up a reverse osmosis division but no one’s in it, so this is going to be interesting and intriguing. How do you run something if no one is there? We will see.”

Comments

BahamasForBahamians 1 year, 2 months ago

Terribly captioned article. The company is not threatening a soul. Instead it is the WSC that threatens to have Bahamians water supply disconnected through its lack of payment or adherence to the arrangement between its supplier.

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DDK 1 year, 2 months ago

When did the government corporations become so lazy and corrupt that they cannot manage their own corporations? Seems all they now know are contracts and cuts thereof. If they are incapable of efficiently managing the utilities they should simply privatize them. Somehow the consumer ends up paying twice for services, no matter how they cut it.

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John 1 year, 2 months ago

Water, water everywhere but not a drop to drink!

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Clamshell 1 year, 2 months ago

It’s “nor any drop to drink” ... but, good point.

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DDK 1 year, 2 months ago

Further, when will it become obvious to all and sundry that these "majority rule" governments are non-sustainable??

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tribanon 1 year, 2 months ago

And just what do you mean by the term "majority rule" as used in the context of your question? I sincerely hope you don't mean the opposite of white!

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DDK 1 year, 2 months ago

Majority Rule is what it is, or whatever the politicians mean it to be since there is a national holiday for it🤣

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tribanon 1 year, 2 months ago

I will take it then that you're okay with the black triangle on our national flag standing for the strength and unity of our people.

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ohdrap4 1 year, 2 months ago

Norman solomon used to say the flag was sewn with white thread.

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tribanon 1 year, 2 months ago

He all too often just couldn't resist showing the kind of wit that dispayed his own true colours. And like so many of his time, it was unfortunately just culturally ingrained in him to do so.

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TalRussell 1 year, 2 months ago

@Comrade DDK, of course, none of the water taps scheduled cut-off will be the Sundries of similar red yokes. And, how was you know that the Sewage Man's, Adrian, is of the adopted Tribune DNA's yoke, yes?

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tribanon 1 year, 2 months ago

Incompetent Bannister yet again! More than enough said.

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ohdrap4 1 year, 2 months ago

DECADES AGO, SOME JACKASS BANNED RAIN WATER CISTERNS.

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becks 1 year, 2 months ago

Oh? And yet people keep building rain water cisterns

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ohdrap4 1 year, 2 months ago

Not too many nowadays in new providence.

Elbow cay in abaco has no choice.

And Ingraham made it difficult to get water wells, dont know if they enforced.

Thing is govts should never entrust water and electricity to private cos. You csn find many horror stories throughout the world where privatization of water production harmed the population.

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bogart 1 year, 2 months ago

You have brought up a very important issue. Climate Changes and sea levels rising brings salt water into common drilled wells used with electric pumps and pressure containment tanks. There should be encouragements going back to the cisterns to be built into the housing structures and gutters on ends od roofs channeling rain water into cisterns/water tanks.

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Economist 1 year, 2 months ago

No they were not banned.

They were removed as a requirement in the late 50's early 60's soas to make the cost of building more accessable to the average person.

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Dawes 1 year, 2 months ago

Government doesn't understand how business operates, in order for them to pay their bills and make a profit they need the people they have entered into contracts with to pay on time. yet again it appears our Government has not done that. Not only that they need to know how long the contract will go on for, so of course they want to know if it is going to be extended. So this company does the only thing left and go to the press to say we are turning off the water on X date. Not sure if the Government is aware but Suez bought GE water in 2017 for $3.4 billion, Suez is the parent company of Aqua designs, so losing Bahamas may be unfortunate but not life changing for the company. Whilst not having water is life changing for those Bahamians living there.

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tribanon 1 year, 2 months ago

Minnis and Bannister have let this critical water problem, like so many other critical problems facing our people, fester since May 2017 into the much bigger problem that it is now. And sadly it's not even the defining pinnacle of their shared gross incompetence because there are so many other critical issues facing our country that they have simply neglected to address in any meaningful way.

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DDK 1 year, 2 months ago

Problems been festering a lot longer than since May 2017!! Give them five decades or so!

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JohnQ 1 year, 2 months ago

This is not hard too hard to understand. Contract language places responsibility and obligations on the all of the contract participants. Default on the T&C's matter. Legal action may eventually resolve the contractual issues, but force majeure allows a party to suspend or terminate the performance of its obligations when certain circumstances beyond their control arise, making performance inadvisable, commercially impracticable, illegal, or impossible.

Unfortunately, the Bahamian government appears to have allowed itself to be placed in a strategic disadvantage.

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DDK 1 year, 2 months ago

You are quite incorrigible, mtribanon. The black triangle is awesome, as is the very thin white stripe running from top to bottom on the far left🤣

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Bonefishpete 1 year, 2 months ago

Pray for rain and set out the rain barrels.

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KapunkleUp 1 year, 2 months ago

This is what you get when you have decades of moronic leadership. In my opinion this is just the beginning. Our country's infrastructure has been on a steady decline and things are just going to get worse. WSC, BPL, etc... they are all companies with a monopoly on what they do but still they cannot make money or even break even. Next election we have the choice of re-electing Minnis who has shown he has no clue what he's doing or Davis who just waiting for his turn to fill his pockets. The future looks bleak.

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sheeprunner12 1 year, 2 months ago

Who made the switch from ground water & rusty metal pipes (aka red water) ...... to RO plants and plastic pipes???? ........ was it the PLP or FNM??? ........ At least they got half of it right

But, like everything else, when these foreign RO plants were given the contracts, did politicians get kickbacks???? ................ Can the WSC former GMs and Chairmen answer that??????

At least WSC & Gibson is trying to make the RO & piping process all locally owned by WSC ...... give him credit for that ......... This story looks like foreign sour grapes and PLP political mischief

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