by Sanka Price

THE BARBADOS WATER AUTHORITY (BWA) is leaking millions of dollars every month.

According to an internal report on the finances of the authority, the corporation spent an average of $3.1 million more than it received for the April 2006 to March 2007 period.

Since then the price of electricity has increased by almost 13 per cent – from 44.6 cents per kilowatt hour in the period April 2006 to March 2007, to 50.3 cents between April 2007 to March 2008 – while water rates have remained unchanged.

This additional cost without a concomitant rate hike would have led to greater leakage at the authority during the last financial year, April 2007 to March this year, if the status quo remained.

The document, Report On The Finances Of The Barbados Water Authority and The Operations Of The Finance Division, was compiled to provide the board with an overview of the authority's financial position up to March 2007, and to recommend strategies to improve the situation.

In its executive summary, the report noted that the ideal position in an enterprise is for cash receipts to exceed payments but, "In BWA's case, the payments outstrip the receipts. When this happens the term deposits are used to finance the difference.

"Once the term deposits are exhausted, BWA will be on the verge of bankruptcy. It is expected that they will be exhausted by the end of the first quarter of the 2007/2008 fiscal year. To avert this financial crisis, aggressive revenue collection strategies and aggressive cost cutting measures are a necessity for 2007/2008.

"In the medium to long term, the key to improving BWA's cash flow lies in making an application for a rate increase."

At that time, the report showed gross receivables – money owed by customers for water and sewerage rates, plumbing, and private developments – to be about $42 million.

"Over the years the management of the receivables has not had the attention it should because BWA has financed its cash deficits by taking out loans, rather than internally generating funds.

"Now that its debt capacity has been maximised and the proceeds from the loan are dwindling, we must now take a serious look at receivables management," the report further noted.

It is because of this critical haemorrhaging that the BWA, through a series of advertisements in the both the print and electronic media, has been notifying customers whose accounts are in arrears to come in and settle their debt before June 30.

They have warned that after this date, any settlement would be dealt with through their debt collection agency and the agent's fees for settling arrears may become the responsibility of the delinquent customer.

Along with this action, Government took a bill to the House of Assembly two weeks ago to place the rates for which water is charged under the ambit of the Fair Trading Commission (FTC), similar to what exists for the telephone and electricity services.

Therefore sooner rather than later, the BWA should be going to FTC for a rate increase, and Barbadians could have an additional hike in their cost of living.

sankaprice@nationnews.com