�Chewed but not swallowed�
Mbongeni Mguni | Friday December 12, 2014 13:14
As told traditionally, a forgetful pastor tells his congregation that Jonah swallowed a whale, to which a watchful congregant points out that, actually, the whale swallowed Jonah. The pastor, in turn, mumbles that all he remembers is that ‘something swallowed something else’.
In 2009, the corporation began an ambitious Water Sector Reforms Programme (WSRP) under which it would take over the supply of water to all urban centres and villages. The programme was informed by a study suggesting that Botswana needed to rationalise its water sector and ensure uniform service levels for all.
The move resulted in the WUC taking over from the Department of Water Affairs, which had previously managed supply for villages.
Prior to the programme, the corporation’s mandate was limited to urban centres and it regularly posted surpluses, indicating that it was able to meet its operational needs from its own revenues.
In 2010, the corporation posted a surplus of P161.4 million, which narrowed to P21.8 million in 2011, before the tide turned and a loss of P541.6 million was recorded in 2012, followed by another of P191.1 million in 2013.
For 2014, the corporation reported a loss of P346.6 million.
‘Something swallowed something else’ going by the classic anecdote.
Trend analysis of the figures indicate that as the corporation has taken more villages on board under the WSRP each year, the growth in its operating expenses has heavily outstripped revenue growth from higher water sales.
Between 2010 and 2014, the corporation’s water sales grew 63 percent, while operating expenses rose threefold.
WUC board chairman, Matome Malema, explains the underlying causes in the latest financial report.
“The main objective of the WSRP was to level service for all water users in the country through the provision of quality water and wastewater services as has been for years in towns and urban centres,” he says.
“However, the water authorities that WUC took over established tariffs independently hence the various tariffs that WUC inherited from area to area.
“Due to these varying tariffs, some customers pay up to 300 percent more than other customers for the same amount of consumption and quality of water.”
The revelations suggest that consumers in urban areas could be subsidising water costs for those in rural areas, due to the lack of uniform tariffs. While government has committed to a uniform water tariff, under the Water Policy, this is yet to be thrashed out.
Malema continues: “It is of utmost importance that WUC is established on a financial sustainable basis, but at the same time, water tariffs should be affordable to all.
“During the year, it became apparent that the WSRP had taken its toll on the various aspects of the Corporation’s operations, financially and even service levels that WUC was once famed for.”
Former WUC CEO, Godfrey Mudanga, is even more outspoken in the commentaries accompanying the latest financials.
According to him, the corporation’s coffers ran threadbare after “years of financing the WSRP”. “Staff morale hit an all-time low as staff got burnt out from the long hours, increased workloads and extended areas of jurisdiction that came with the reforms,” he notes.
“High customer expectations in the newly taken over areas also increased the pressure under which the corporation operated.”
The former CEO reveals that prior to the WSRP, the corporation and its sole shareholder, government, had agreed on a funding model precisely to avoid the doldrums the WUC finds itself in now.
Failure to implement the funding model for the WSRP as had been agreed resulted in the corporation’s balance sheet going down drastically as it funded the reforms,” he says.
“This rendered the once financially stable WUC, a financially struggling organisation.
“This poor financial situation had an adverse impact on the corporation’s operations and affected some water supply projects, which had been planned as the funds originally budgeted were diverted to finance the WSRP.”
The perception by some members of the public that water should be free, has also added to the WUC’s woes, as it currently carries a debt book of P300 million.
The financial losses add to the corporation’s headaches as it confronts the drying up of Gaborone Dam and the implementation of various relief measures.
Short of a tariff review, the corporation will be hoping its shareholder pumps an operational subsidy in the order of those enjoyed by the Botswana Power Corporation, for 2015.