No justification for NWC rate hike

Friday, May 10, 2013

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IT'S hardly likely that National Water Commission (NWC) officials believe that the series of islandwide public consultations being held jointly with the Office of Utilities Regulation (OUR) will win support for the NWC's 19 per cent rate increase application.

After all, the NWC's operational inefficiency, and its inability to provide water to many communities, over many years, far outweigh the company's positive achievements. As such, the NWC is not viewed in a very favourable light by consumers.

Even as we acknowledge that the NWC needs a large injection of capital to improve its operations — given that water rates are low in Jamaica and it is expensive to produce and distribute the commodity — it's difficult to oppose the public's position on the rate increase application.

Let's start with a most ridiculous and callous decision by the NWC to pay a foreign firm $26 million to guide the preparation of its rate increase submission to the OUR.

That's not the kind of money that a cash-strapped, State-owned company simply spends on the preparation of a presentation, especially in this tough economic environment in which the Government is asking Jamaicans to make a sacrifice.

Had the NWC been a privately-run entity in the same financial state in which it now sits, the person or persons who made and implemented that decision would most likely have been cashiered.

We still share the position advanced by Dr Horace Chang, the Opposition spokesman on water, that the $26 million would have been better spent on improving the NWC's procurement and implementation capacity and to speed up K-factor-funded projects.

For those who may have missed it, the K-factor is a programme that the NWC had pledged to use to generate funds to finance specific types of projects, such as reducing the level of non-revenue water; rehabilitating/retiring selected waste water treatment plants; and expanding the sewer collection network in Kingston and St Andrew.

Let's also consider the fact that the NWC has told the country that it is losing billions of dollars annually to theft and fraud. We recall that last year, NWC officials appeared before Parliament's Public Administration and Appropriations Committee and revealed that only 32 per cent of the water the company distributes is paid for. The other 68 per cent is shared between water lost to leaks and the quantity that is stolen.

We see that the NWC is now trying to deal decisively with the theft issue with increased activity by its revenue enhancement and recovery machinery.

Just this week we reported that 195 illegal connections were removed from the NWC's network in sections of St Elizabeth and the company had three farmers arrested and charged with illegal abstraction of water and trespassing on the works of the commission.

In addition, the NWC reported that several communities in the parish that did not have regular piped water for several months are now reporting significant improvements in their water supply.

More of that, we hold, is what the NWC needs to do. For, as we have said in this space before, we would not be surprised if the NWC, after tightening its operations, experienced some form of liquidity.

Until the NWC can demonstrate that it has improved on efficiency, the OUR should reject its rate increase application.




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