The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Water & Sewerage Corporation’s main supplier yesterday revealed that it had “received assurances from the highest level” of the Bahamian government that the multi-million sum owed to it will be brought current by “early 2023”.

Rick McTaggart, BISX-listed Consolidated Water’s chief executive, in a conference call with Wall Street analysts to discuss the company’s 2021 full-year results, said: “Our receivables balance in The Bahamas is still high but we’ve received assurance from the highest level of the Government in The Bahamas that balance will be brought current by early 2023.”

And David Sasnett, the water supplier’s chief financial officer, added: “We appreciate the Government’s renewed focus on paying Consolidated Water (Bahamas) receivables given the impact the pandemic has had on The Bahamas.” It is unclear whether the Consolidated Water executives were referring to Prime Minister Philip Davis QC, but bringing the Water & Sewerage Corporation’s debt current will require a collective $18.8m payment within one year.

Tribune Business revealed on Wednesday how the Government has pledged to bring the Water & Sewerage Corporation’s record $26.4m debt owed to its main BISX-listed supplier “current”.

Consolidated Water, which is the sole potable water supplier for the Corporation’s New Providence customers, disclosed it had been informed by the Ministry of Finance in late February 2022 that the Davis administration this year plans to steadily reduce the delinquent payments that make up more than 75 percent of the debts owed to it.

Of the $21.5m due to Consolidated Water at year-end 2021, some $16.34m - representing more than three-quarters of the total - was delinquent or more than 90 days past due for payment. And the total sum owed increased by almost $5m, or 22.8 percent, over the following two months to hit the record $26.4m at end-February 2022.

The latter figure has now been reduced by $7.6m, dropping the Water & Sewerage Corporation’s debt to around $18.8m, after the Government (Bahamian taxpayers) made a series of payments during the first three weeks of March. There was no explanation for why the water utility’s debt to Consolidated Water soared so high, although it likely reflects the COVID-19 pandemic’s devastating impact on the ability of customers to pay for the water they receive.

“In February 2022, we received correspondence from the Ministry of Finance of the Government of the Bahamas that set forth a payment schedule providing for the gradual reduction over the course of 2022 of the Consolidated Water (Bahamas) delinquent accounts receivable due from the Water & Sewerage Corporation,” Consolidated Water said in its 10-K annual report filing with the US Securities & Exchange Commission (SEC).

“Such correspondence also indicated that the Government intends to return all of Consolidated Water (Bahamas) accounts receivable from the Water & Sewerage Corporation to current status. As of February 28, 2022, Consolidated Water (Bahamas) accounts receivable from the Water & Sewerage Corporation totalled $26.4m. During the first three weeks of March 2022, we received $7.6m in payments on these accounts receivable.”

The Water & Sewerage Corporation last month revealed that it is owed some $50m by a combined 45,625 customers who are in arrears on their payments. This represented an increase on the $38m accounts receivables owed prior to COVID-19, which likely explains why the debts owed to Consolidated Water have also been steadily climbing especially as disconnections were suspended. Those were due to resume from Monday, March 28.

The Water & Sewerage delinquency has caused havoc for Consolidated Water’s cash flow and liquidity, and that of its Bahamian subsidiary. Its 10-K filing makes clear, though, why it has stuck with the contract. “A significant portion of our consolidated revenue is derived from our water supply agreements with the Water & Sewerage Corporation. The loss of the Water & Sewerage Corporation as a customer would adversely affect us,” Consolidated Water said.

“One bulk water customer, the Water & Sewerage Corporation, accounted for approximately 36 percent of our consolidated revenue for the year ended December 31, 2021. If, for financial or other reasons, the Water & Sewerage Corporation does not comply with the terms of our water supply agreements, our consolidated financial condition, results of operations, and cash flows could be materially adversely affected.”

Revealing that the latest talks over the Water & Sewerage Corporation’s debts took place on March 7, Consolidated Water said: “Consolidated Water (Bahamas) accounts receivable balance, which included accrued interest due from the Water & Sewerage Corporation, amounted to $21.5m as of December 31, 2021.

“Approximately 76 percent of the December 31, 2021, accounts receivable balance was delinquent as of that date. The delay in collecting these accounts receivable has adversely impacted the liquidity of this subsidiary. From time to time, including presently, Consolidated Water (Bahamas) has experienced delays in collecting its accounts receivable from the Water & Sewerage Corporation.

“When these delays occur, we hold 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. Our most recent such discussions occurred during the week of March 7, 2022,” the BISX-listed reverse osmosis supplier 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 receivables, despite the periodic accumulation of significant delinquent balances. As of December 31, 2021, we have not provided an allowance for doubtful accounts for Consolidated Water (Bahamas) accounts receivable from the Water & Sewerage Corporation.”

Consolidated Water said its two New Providence-based reverse osmosis plants, Blue Hills and Windsor, are capable of producing a combined 14.8m gallons of water per day. For the 2021 full-year, they supplied the Water & Sewerage Corporation’s customers with 4.4bn gallons compared to 4.2bn in 2020.