Barbados: water authority bankrupcy forces water rates increase

The July 1st [2009] increase in water rates is necessary because the Barbados Water Authority (BWA), has been rendered “technically bankrupt”, due to losses in each of the past 13 years, except for 2005/06.

Prime Minister David Thompson [...] pointed out that successive losses had forced the BWA to borrow to sustain its operations and its current finances were inadequate to meet debt-service charges. “Government has had to assist. In the past the BWA has sought to halt the slide through measures aimed at improving revenues, with some success, but efforts to contain costs were not successful,” he said.

Mr. Thompson noted that as the gap between expenses and revenues widened, it had become impossible to honour obligations to suppliers on a timely basis, and this had negatively impacted the BWA’s operations.

“The only viable option is to grant a rate increase at this time to permit the conduct of orderly operations, while giving some breathing space for modernising the organisation and commencing a number of projects critical to the development of the water and wastewater sector,” he indicated.

[W]ith respect to bill payments, Mr. Thompson observed that although water was the smallest utility bill for most households, it was often unpaid. He said: “A survey has revealed that residential customers view the BWA as the number two utility and they all agree that water is the most valuable of the utility services.

“However, this has not translated into willingness to pay, since residential customers account for about 60 per cent of the $26 million in arrears owed to the Authority. Some delinquents claim that their reason for not paying is that the other utilities are more aggressive in terminating for non-payment, or that there is no reward for early payment at the BWA.”

The Prime Minister stressed that whatever the true reason, the number of services due for disconnection was about 10,000 per month, which represented a huge disconnection challenge, given the fact that BWA personnel must go on site to perform this service.

Source: Gillian Applewhaite, BGIS, 18 Jun 2009