NWC cost soar under questionable circumstances

$8-M Bill shoots to $32-M

BY VERNON DAVIDSON Executive Editor - Publications

Sunday, December 15, 2013    

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A contract to change two sewer pipes ended up costing taxpayers almost four times the $8.8 million that the cash-strapped National Water Commission (NWC) approved for the job, documents obtained by the Sunday Observer have shown.

One of the documents — an NWC service order — instructs the contractors to provide material, labour and equipment to remove and replace a 71-ft 10-inch diameter sewer pipe leading to a pumping station in a Corporate Area community.

The commission also asked the contractors to do the same with a 140-ft 10-inch diameter sewer pipe along another road in the

same community.

The NWC service order was dated March 11, 2013. However, the contractors, in a five-page report on what they described as "emergency works", pointed out that numerous problems on the site resulted in the scope of works being changed significantly from the original scope.

The contractors explained that they used their equipment and workers to carry out repairs to damaged sections of pipelines on February 29, 2013 because "raw sewage was overflowing on separate roadways in the community".

That, the contractors said, resulted in the work being put on a 24-hour schedule.

Another four-page report from the contractors, bearing the company seal, detailed the work done, the equipment used and the cost of each task performed.

That report, dated February 14, 2013, gave the total cost of the job as $32.4 million.

In another document dated April 24, 2013, the contractors named an NWC representative whom they alleged, was notified of the conditions they were experiencing on the job and was told of the costs they were incurring.

The company, representatives of which said that they were available for clarification of the costing and how the jobs were done, alleged that when they submitted their invoice, the NWC representative told them to divide the invoice into two sections representing the original estimate and the variance in the cost.

"We refused to do this breakdown, as based on previous experience we wanted the bill to be assessed in its entirety, whether or not payments would be made in part," the company said, adding that they submitted the report "to clarify the works executed and the basis of the change in costing".

The Sunday Observer was unable to contact the company, or the NWC, or the named representative for comment. However, a highly placed source with knowledge of the NWC's operations described the water company's handling of contracts as "vulgar".

According to the source, who spoke on condition of anonymity, the NWC has approved other contracts for vast sums that have not been justified.

"They (NWC) described these contracts as emergency works," the source said, then asked, "how can a company that is losing money spend so much on these contracts?"

On October 30 this year, NWC officials told a parliamentary oversight committee that between April and September 2013 the water agency lost $3.5 billion. Of that amount, $920 million was recorded in September.

At the time, the NWC was also showing a year-to-date bad debt of $13.8 billion.

That revelation came three weeks after the Office of Utilities Regulation (OUR) disclosed that it had granted the NWC increases of 18 per cent on potable water and 13 per cent on sewage water provided by the commission. The new rates became effective October 3.

The regulator said the new tariff regime will remain in effect until 2018. Water rates were last increased by 23 per cent in 2008.

According to the OUR, the increases were in response to a request from the NWC for a 19 per cent increase. However, the NWC had requested only a 12 per cent increase on its basic rate, although it also sought adjustments to its X-Factor efficiency gains calculations.

The X-Factor calculations are based on increased efficiency by the NWC after implementing projects financed by the K-Factor.

The K-Factor is a charge on customers' bills to finance projects to improve efficiency, including reducing the NWC's 68 per cent loss from non-revenue water.

In June this year, Water Minister Robert Pickersgill told Parliament that non-revenue water or losses consisting of leaks, overflowing tanks, meter under-registration and water theft continued to plague the entity.

"The National Water Commission is presently pursuing several initiatives which are designed to stop this haemorrhaging. These include mains replacement, network management, water supply management and mass replacement of old defective revenue meters," Pickersgill told the House. He said the NWC would be replacing 100,000 domestic meters and 3,000 large commercial/industrial customer meters, starting in September this year.

See related story "NWC travelling officer paid $1.7m in mileage over 14 months"





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