Friday, July 19, 2024

WUC in financial crisis

The Water Utilities Corporation (WUC) is tottering on the brink of collapse and financial ruin as its coffers are running dry while customers are refusing to pay millions of Pulas in outstanding water bills. Sunday Standard investigations have revealed that WUC is living on borrowed time, as its financial woes could render the corporation incapable of delivering on its key mandate of providing Batswana with clean, fresh water.

It has also emerged that WUC’s financial situation has been on the decline over the past few years and its reserves have since dried up. So serious is the situation that the Corporation has reportedly resorted to shutting down water meters in critical areas like health facilities without batting an eye-lid, as a way of arm-wrestling clients into paying their outstanding water bills.

WUC Communications Manager Matida Mmipi confirmed that the Corporation’s reserves have dried up over the past few years, as they had to finance the country’s Water Sector Reforms project. Apart from the high capital injection into the Water Sector Reforms, Mmipi said WUC’s financial woes were also worsened by some clients’ failure and refusal to pay their water bills.

“The failure and apparent unwillingness by some customers to pay for their water consumption is also affecting the Corporation’s financial situation. The harmonization and review of tariffs, together with intensified debt collection, which the Corporation is currently undertaking, are expected to address the problem,” she said.

But sources within the Corporation say there is very limited time to address the problem as WUC may soon find itself unable to pay salaries. While she agreed that it is their policy to disconnect water from customers who do not pay their bills, Mmipi denied that WUC has ever disconnected water supplies to critical facilities like hospitals and clinics. “It is WUC policy to disconnect customers for non-payment of bills. However, the Corporation never disconnects health facilities even though they owe. The headquarters of such health facilities are disconnected instead,” she said.

However, WUC employees believe the Corporation’s precarious financial situation is also worsened by poor management. They accused the corporation’s management of awarding themselves hefty salaries and allowances while failing to formulate a working corporate strategy that will deliver WUC from its financial woes. WUC is currently operating without a CEO after the former CEO, Godfrey Mudanga and three of his directors were recently expelled by Minister of Minerals, Energy and Water Resources, Kitso Mokaila. Mudanga and his lieutenants are reported to have fared badly in a performance appraisal conducted by the board.

WUC recorded operating losses for the third consecutive year, which it attributed to higher rates of increasing costs relative to revenue.

According to the 2013 annual report, WUC revenues increased to P790.8million from P579.7million in 2012, which was attributed to the revised tariffs that were implemented in May 2012 and an increased number of connections as an effect of the takeover of villages. However, the Corporation recorded operating expenses of P1.2 billion compared to P1.1billion in 2012. These villages were previously serviced by the Department of Water Affairs and District Councils.

It was expected that WUC’s takeover of all portable water service delivery as well as wastewater management in Botswana would be done in seven phases and completed by 2014. WUC’s financial doldrums put it in the same league with four other parastatals; Botswana Power Corporation (BPC), Air Botswana (AB), Botswana Meat Commission (BMC) and Botswana Postal Services, which are also technically insolvent after years of mounting operating losses and government bail-outs. The latest Auditor General report revealed that the four cash strapped parastatals have a combined cash shortfall of about P3, 5 billion and warned that the growing cash crisis raises doubt about their going concern status.


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