Govt�s unpaid water bill sails past P200m
Mbongeni Mguni | Wednesday September 14, 2016 18:00
On Monday, before the ongoing Parliamentary Committee on Statutory Bodies, WUC acting CEO, Mmetla Masire said the Corporation’s finances were weighed down by significant debt, led by government.
He said efforts to recover the debt were hampered by a directive that government ministries and departments should not be disconnected for non-payment. “When we were allowed to cut, we were recovering monies. The policy used to work because we got responses.
“We did not cut critical areas like hospitals, clinics and schools; we mostly targeted the headquarters. “Since we were told to stop cutting them off, we are now sitting on P211 million,” Masire said.
He said the outstanding debt was weighing on the WUC’s stability, as the organisation was now reliant on government’s annual subsidies to remain afloat. Masire said the situation had been worsened by last year’s drought, which had resulted in lower sales, while the interventions to cope had increased costs.
He explained that while government usually funds the bigger projects, the WUC is expected to finance smaller interventions. The situation was exacerbated by historical challenges the WUC has been facing in recent years, which include the costs of the Water Sector Reform Programme and the difficulties of non-reflective tariffs, particularly where supply is required in remote areas.
“We were unable to meet some of our obligations towards the end of the financial year,” he told the committee. “When we took over the local authorities, we also took over the tariffs, which are at highly subsidised rates.
“Our operating costs are about P1.5 billion and we need tariff subsidy of P350 million every year.” According to the acting CEO, of the 16 management areas the WUC has, only six are able to produce a surplus in terms of operations, while a few others could break even. The majority are entirely dependent on tariff subsidies.
The latest revelations continue the Corporation’s fall from grace, which started in 2009 when it began the ambitious Water Sector Reforms Programme under which it took over the supply of water to all urban centres and villages.
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.
The last published results, for 2014, indicate that the WUC reported a loss of P346.6 million.
Masire said besides recovering debts, the WUC hopes a review of either tariffs in certain areas or a review of the responsibility for those areas, will help return the Corporation to health. At present, government’s subsidy is built into the WUC operations as opposed to the subsidy being provided to the areas of need.
The WUC is also planning to conduct a restructuring exercise as the existing structure “lends itself to certain weaknesses”.
“We inherited a lot of staff who were not matched to the job and we have a situation where a number of people are not suitable. The restructuring will go a long way to addressing this,” he said.
Masire also hoped the completion of several high capital projects will reduce costs, particularly those associated with interventions such as boreholes that the WUC had put in place to stabilise supply during the drought.