W&SD losing approximately $22M annually- Finance Minister
“As we look at improving efficiency and effectiveness in public services, the WSD has been carrying significant deficits over the years,” the Finance Minister said during the 2022 budget presentation.
Hon Fahie said the department collects on average $5 million per annum in revenues from the sale of potable water, but it pays to the water suppliers approximately $27 million per annum, which results in a gross variance of some $22 million each year.
“We must stop that haemorrhaging. A major contributor to this inefficiency is the very old infrastructure which results in 60 per cent of water being lost after production,” he remarked.
Legislation to remedy situation coming
Meanwhile, Premier Fahie said legislation is already before the House of Assembly, “to transform the department into a statutory body, which will give it more autonomy to tackle some of these problems in ways that it cannot under the present arrangement.”
“Additionally, to curb the margin of loss, the installation of digital meters to replace analogue meters is continuing throughout the Virgin Islands,” he said.
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25 Responses to “W&SD losing approximately $22M annually- Finance Minister”
Stop playing mine games with the public.
So how will the Government get revenue when the tenants only use cistern water?
It's a shame...we should be given access to street water.
Moreover, the fix for debacle is not converting WSD from a department to a statutory body. That is just gymnastics, three card monte. The WSD needs an operational structural overhaul and a staffing overhaul. The first of business is to stop the massive and staggering 60% water loss. Leaks stopped, the whole system needs to be re-engineered.
If 60% of the water receive is list, is WSD meeting residents potable water needs? And if so something is wrong. Is WSD having to incur a 60% loss to meet a 100% of the need? A water utility is typically a fee based system, ie, users pay a commensurate rate based on usage to fund operations, maintenance, repair and capitalization. The rate structure needs to be examined.
Faced with an exploding population, the VI needed a quantitative and reliable potable water supply. Consequently, it leaned heavily on desalinated water suppliers. BI-Water, a build-operate-transfer (BOT) 16-year contract/contractor, was the largest of the suppliers. Bi-water was a politically divisive issue. The decibel level was high across several election cycles. BI-Water interest was supposedly transferred to Seven Seas. And some of the terms and conditions of the BI-Water contract may have been modified? The previous high decibel level on BI-Water is now barely audible.
Moreover, ground noise aside, a prudently and properly operated water utility absolutely has to be more than water production and treatment. It must also entail water transmission, storage, and distribution. The W&SD must have the capacity and capability to accept water from suppliers, transmit it, safely store it, and distribute it to customers. Additionally, the water utility infrastructure must be properly operated, maintained, repaired and capitalized. Minimizing water losses (60% is a staggering number) must be a top priority. The customer rate structure must be based on total operating cost (including overhead)+capitalization. The system is fee-based and self-supporting.
The fix to W&SD is not an administrative/organizational change from a department to a statutory body. From afar, W&SD ailment is structural. For starters, its transmission lines needs to fixed and extended, along with extending more storage capacity. Additionally, it must be adequately funded to provide a comprehensive and robust maintenance and repair programme. Moreover, the mammoth and staggering $22M annual los is flashing RED light that is a Quadrant 1 issue, ie, it is Urgent and Important. $22M deficit and 60% water losses are Day 1 issues. The department needs some physical structural adjustments.,
Moreover, there are no Pilates in this situation. Universally, there is a tendency to cast/heap blame on the person(s) who are currently in charge and may have inherited a mess. The reality is often that if we peek back we may unearthed the genesis and root cause of the problem. Too often too, lower level staff failing to get both support and resources from the top are used as scapegoats and get tagged as the cause of the failure. They are often fling under the bus and driven over and over. The W&SD issues spread across several administrations. The poor and long suffering consumers need the infrastructure fix for relief.
The article headline states the WSD is losing $22M annually. This is not the whole story, for the article didn’t outline how the budget is developed and structured. The fees paid by rate payers does not cover the full operating cost; the fees paid by customers only cover a fraction of the operational costs, ie, the WSD has a total costs of $27M with only $5M coming from fees. The other $22M is funded through either the government recurrent expenditure or consolidated fund. The reality is that if the rate structure was designed based on the total cost the rate for the average residential customer would be unaffordable. Consequently, the lion share of operational cost of the WSD is subsidized from other revenue streams.
The bottom is that the WSD needs to beorganizationally restructured to improve its operational efficiency and effectiveness. For example, the leading and managing of the department must come under the full purview of the Director. The current structure is inefficient and ineffective and dysfunctional. It permits customers who don’t want to follow the process to take an end run around the department and run to the minister. Further improvements are needed in maintenance, repair, transmission lines, storage tanks etc.