Guyana Water Inc’s (GWI) failure to take a series of actions including increasing tariffs has resulted in the loss of millions in potential revenue, according to an audit of the utility, even as it continues to operate at a loss and water wastage remains extremely high.
Released by the Ministry of Finance yesterday, the audit report which focused on the period January, 2012 to May 2015, revealed that GWI made a net operating loss of $3.1 billion in 2014 while in 2013 and 2012, the losses were $3.5 billion and $3.9 billion respectively. Accumulated net operating losses over the last three years amounted to $10.5 billion whereas total reported income from water revenue for the same period was $10.1B.
Moreover, water loss remains extremely high. The report said that currently, there is no specific data to show to what extent Non-Revenue Water (NRW) has been reduced but based on studies now being done by the Coordinator-NRW, the situation could still be close to 70% of production based on analysis using billing information for 2013 from ‘Hi-Affinity’ software. Currently, the loss averages about 65%, it said and urged that action be taken to bring it down.
The report noted that the Public Utilities Commission (PUC), after approving increased water tariffs in 2013, had ruled that GWI’s consumer database be sanitized to reflect legitimate debtors, meters should be read once per quarter and estimated billings would cease while collection rates should increase incrementally each year to 2016. Other conditions include that non-revenue water be reduced by 3-4 percentage points annually to 2016, while GWI by 2016 will maintain the level of at least 95% of services having functioning meters and all disconnected consumers that have not been legitimately connected should be revisited within 60 days of being disconnected and outstanding balances should be pursued to the full extent of the law.
“Based on discussions with the Director of Finance (DF), the Management Accountant (MA), Customers Services Manager (CSM) and Billing Manager (BM), none of the foregoing conditions have been met or in some cases not implemented particularly the new tariffs effective from July 1, 2013,” the report said.
It urged that the Board of Directors urgently address the non-compliance with the requirements or if they feel that the conditions approved are not practical to implement at this point, they must inform the PUC with a view to amend the conditions. “Failure to implement the increased tariffs means loss of revenue to the company which it cannot afford at the present time as it depends heavily on Government subvention to offset electricity costs,” the report observed. It said that GWI has the potential to increase revenue but it must quickly improve its billing systems, significantly reduce unmetered consumers, and reduce line inefficiencies.
The report highlighted that GWI never implemented the approved tariffs issued in 2013 by the PUC. “Had management implemented these tariffs, revenue would have been significantly higher and would have certainly impacted on the company’s overall performance. This is a clear case that the revenue base of the company was not a priority whilst management continues to apply for and receive significant subvention from the Government to offset electricity cost. Had management implemented the new tariffs, perhaps the subvention may have been much less or not needed,” it said. According to the report, had the increases been applied over the last three years, additional revenue of $5,157,992,468 would have more than compensated for the Government subvention of $5,009,260,085 by $148,732,383.
Meantime, the report also accused former GWI Chief Executive Officer Shaik Baksh in relation to financial irregularities and urged disciplinary action against him.
It said that for the period January 2014 – May 2015 a total of $3.9 million was issued to Baksh and employees performing duties as his Executive Assistant to facilitate official field trips. “The legitimacy of expenses and field trips could not have been verified since bills produced did not provide any contact information for the persons issuing same; no other official from GWI was stated accompanying the Chief Executive on the claimed official visits; and the purpose of the visits were not stated,” the report said.
It also highlighted several observations from bills presented to substantiate expenses incurred including similar hand writings and formation of letters on bills “supposedly” issued by different individuals, bills issued from different persons in different locations which showed signs of being from the same book, and individuals who “supposedly” issued the receipts from one location issued another at a different location.
Among other things, the report also highlighted that bills dated December 4, 2014 totaling $200,000 were proven to be fictitious as security logs showed that Baksh was at head office instead of the locations claimed.
Further, the report said that Baksh’s employment contract dated September 17, 2012 does not provide for compensation for medical expenses. However, an instance was noted where monies were reimbursed for a “claimed” on the job accident. This accident was never reported to the Occupational Health and Safety Officer or the Human Resources Depart-ment nor was there any accident report prepared to justify payments. The total value amounted to $29,000. There were three other claims for medical treatments, the report said.
“Disciplinary action should be taken against the Chief Executive and other officers where applicable in accordance to GWI policy and procedures,” the report said.
