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Friday 24 May 2019
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How water reform and $13 billion can boost our recovery

Kiran Mathur Mohammed
Kiran Mathur Mohammed

KIRAN MATHUR MOHAMMED

kmmpub@gmail.com

What if there was a natural resource underground that could boost our economy and restore thousands of jobs?

I don’t mean gas. The answer is water.

This might seem surprising to many, particularly during the current drought. How could the Water and Sewerage Authority (WASA) be a source of growth?

Indeed, WASA is subsidised to the tune of $1.8 billion annually. Its total wage bill alone is more than $1.1 billion. With temporary and contract workers and some 5,150 permanent staff, Parliament’s Public Accounts Committee says WASA is “overstaffed” by 2,000. Even that may understate the situation. According to the Caribbean Development Bank, the best run water utilities employ two to three people per thousand connections. We employ 14. By that standard, WASA is overstaffed by more than 4000 people, all subsidised by the government.

Government numbers are alarming. WASA is owed more than $630 million in unpaid receivables. Ninety-seven per cent of residential customers and 20 per cent of commercial customers go unmetered. It will cost $1.2 billion to install water meters in homes.

WASA could owe as much as $575 million to suppliers. Some bills have been ageing for years and have brought down whole companies.

WASA’s pipelines and infrastructure are so decrepit that replacing 7,200 kilometres of pipes and other works will cost another $11.5 billion. Currently there are some 1,500 leaks.

The average household pays $3 a day for water. That is a quarter of Singapore’s rate. Little wonder that the average person uses 90 gallons a day, almost twice the international standard of 44 gallons. Richer families and larger companies use relatively more water than worse-off ones, disproportionally benefiting from the subsidy.

The human cost falls on the most vulnerable. As of 2015, the Regulated Industries Commission (RIC) reported that 46.5 per cent still don’t have access to a 24/7 supply of pipe-borne water.

The authority needs to raise $13.3 billion to restore its infrastructure and ensure the country has simple access to a regular water supply.

Yet this dire situation brings quiet promise. WASA, far from being a burden or cause for despair, can propel the turbines of growth.

That’s where the $13.3 billion comes in. An infrastructure programme of this size could create thousands of direct and indirect jobs. UNESCO has estimated that every US$1 million invested in water efficiency and conservation could create between 12 to 22 jobs.

That infrastructure spending, together with international expertise, can serve as a catalyst for local private sector growth.

It is possible for WASA to borrow without a sovereign guarantee that raises our public debt. The government already knows the playbook. But there’s a catch. This would only be possible if the authority was subject to a major overhaul.

WASA would have to crack down on unpaid water bills. It must then restructure its processes and its management, demanding transparency, accountability and efficiency. These are the easy ones.

The real pain will come through the restructuring of the 2,000-4,000 staff. Whilst some might be retrained to do work currently being done by external contractors, as government has suggested, not all can be.

The first money to be spent is $1.2 billion on water meters. Even then, water rates must be raised: to a level that (once new cost savings are taken into account) will allow WASA to meet its new interest and debt payments.

How could this pain be immediately salved and offset? What makes this different is that new jobs created by the huge new infrastructure programme will more than offset those lost.

In many cases WASA’s employees are highly qualified and intelligent, just placed in wrong positions – as many privately say.

And to many people an increased cost of rates will be more than worth it if they are connected to a reliable source of water; and no longer need to pay for water tanks or pay for deliveries from private contractors.

If tap water were safe and reliable, people would not have to spend hundreds and even thousands on bottled water, piling up thousands of tons of plastic waste along the way.

The government has shown it can make tough decisions and restore state-owned enterprises, as it has done with Petrotrin and Caribbean Airlines, both profitable for the first time in years. It can do the same with WASA: and open the sluices of growth.

Kiran Mathur Mohammed is a social entrepreneur, economist and businessman. He is a former banker, and a graduate of the University of Edinburgh

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