As the 2023 budget looms, the IMF program BERT 2.0 specially focuses on SOE reform. Is it a coincidence that most SOEs are crying broke? In the Sunday Sun , The general manager of the BWA made some earth shattering revelations in regards to the economic , financial and social survival of the island’s sole water management entity.
The financial state of the water utility company has been hampering its ability to fully tackle water woes in Barbados due to mismanagement of its resources and other structural problems such as cost/price imbalances. Currently the due for disconnection stamps are coming in on water bills for amounts as little as $80. Letters from BWA to collect arrears are destabilizing many households who just can’t afford to clear their BWA arrears.
There’s all justification now for the government to cut the GSC tax on water bills as GM Keithroy Halliday pointed out that the BWA had sought permission to borrow from the Garbage & Sewage Contribution as it was unable to meet its “financial obligations”. The fact that this tax which earned over $344M is being collected directly by the BWA was never transparent.
The financial statements of BWA since last we were informed by Minister Ryan Straughn, are not up to date which is in contravention of the new public financial management act, if found to be so. However the public hardly ever sees financial statements of an entity like BWA so where was it ever transparent ?
Not only should ICAB and the Bar association comment on the legality and transparency? But this action by BWA financially deprived the Sanitation Service Authority of their legally entitled share of their GSC. The NUPW general secretary can confirm that one of the reasons put forward for denial of hazard pay increase and other negotiated benefits is the fact that BWA has not been paying the garbage component to the SSA.
The transparent and traditional process is for the BRA whose mandate is tax collection to collect the $344M earnings of GSC. This allows for public and parliamentary vigilance. The absence of this $344M GSC tax revenue in the estimates and budgetary proposal further raises concerns.
The consolidated fund of government should be where all requests are made to borrow and disperse tax payer dollars which is usually made by the Minister/PS in charge. This request is called a transfer from the government. However to meet the IMF condition of cutting transfers from the government to SOE’s the government implemented a policy to divert the collection of the GSC from the consolidated fund directly to the BWA and took away parliamentary oversight of the funds collected. By using the consolidated fund BWA ,SSA and the government would be in a better financial position to tackle this issue.
The IMF BERT 2.0 focuses on SOE reforms and the economic conditions of CBC, Transport Board, GAIA , BWA and SSA represents conditions based on IMF recommendations, are ripe for privatization.
Frequent changes at the management level paint an unstable work environment at the BWA hence why the government sought to enter public private partnerships to improve the operations of the entity Former Water Resource Minister Charles Griffith revealed and introduced that PPP’s will be a heavy focus moving forward. The Government had established a 20-member National Advisory Committee on Water to advise the administration on matters related to the precious commodity.
On the committee is Dr Clyde Mascoll who is government’s special advisor on public financial issues, Ian Carrington, Director of Finance and Economic Affairs, BWU leader Toni Moore, along with major business moguls suggests a major overhaul and correction is planned for the water authority in terms of restructuring its business and management model.
In this depressed environment and to live up to its initial agreement with the IMF to cut money transfers to SOEs, the government is finding it difficult to continue to subsidize water rates , and difficulty in offering direct financial relief to BWA and to households and businesses. The only option according to actions taken by other countries under IMF programs, is to cut further spending to the water authority and forge private outsourcing of the entity’s operations. The formation and characteristics of the committee , the financial state of BWA & IMF conditions affirm that the BWA is trending in the direction of privatization
While debating Dr Clyde Mascoll on VOB down to brass tacks when he was questioned about the privatization & price increases of BWA, he said that his government is seeking the right price of water. His view is in lockstep with the IMF as since 2007 the IMF recommended that to achieve savings, adjustment of the prices of utilities and public services to reduce the budgetary impact of across-the-board subsidies and costly price imbalances were necessary.
Government should be cautioned that Automatic adjustments upward in regulated prices in water will be a point of contention for the public under any privatization plan. I predicted there will be an increase in the cost of water via implementation of a water levy
Traditional methods of transfer of water services to private hands will see the establishment of a private water company or statutory board with the signature and transfer of management rights over to these new institutions. This will see the rise in the cost of water to recover the cost of the investment that will be spent to carry out works on projects and a permanent increase to recover the loss of financial input and subsidy from the government.
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