Bid to reduce overtime at WASA doubled the cost

FOR at least five years the Water and Sewerage Authority (WASA) spent $94 million annually on overtime, even after establishing a committee to reduce costs – including overtime.

In the sub-committee report on WASA, which was laid in Parliament on March 5, it was noted that a cost-saving exercise began in 2016 with a proposal to reduce overtime. The sub-committee was formed in August of last year to review WASA's operations.

The report stated WASA “mindful of the un-sustainability of its expenditure patterns” began reduction initiatives in January 2016 resulting in $64.7 million "saved" by the end of September 2019. Some of the measures undertaken by WASA then included bulk purchases; reduction in overtime with the implementation of a shift system and rotation of supervisors; use of technology to reduce printing and stationery costs for board meetings; limiting inter-island travel to same-day travel and re-negotiation of lease arrangements for vehicles and property. Even with these initiatives, WASA still managed to have an overtime bill of double the projected amount.

“The committee was particularly concerned about two areas identified for cost-savings and undertook a more detailed examination of WASA’s expenditures over the period to determine the extent to which the touted success had actually been achieved. Overtime related cost contributes to the Authority’s inability to fulfil its financial obligations on a monthly basis.”

The report added that five months after the cost-reduction initiative began, an overtime management committee was formed and based on their report dated February 3, 2017, the projected reduction turned into an actual inflation of overtime.

“The overtime committee agreed that for 2017 the overtime for monthly-paid staff (commuted) would be $25,471,365 while the overtime for daily-rated staff would be in the vicinity of $20,069,934. The actual figures presented a significantly different out turn than what was proposed, with overtime for daily-paid employees reaching $39.2 million and commuted overtime recording a high of $51. million. In both cases, the actual was approximately 100% more than projected.”

The report added: “Between 2016 and 2020, the Authority expended $207,469,234 on overtime for its daily-paid employees and $260,928,512 (commuted) for its monthly paid staff, for a total of $468,397,746 or an average of approximately $94 million, annually.”

This was not the only issue of projected reduction ballooning. While WASA was planning on reducing costs by re-negotiating lease agreements for vehicles, the committee found that the cost increased. There was a noted decline in rental costs of vehicles in 2017 to 2018 after 100 vehicles were returned. There was an uptick in rental costs in 2018 of 38.3 per cent increase with WASA saying that rental costs increased for pick-ups and three-tonne trucks.

The reduced fleet left WASA with 301 vehicles. At the end of 2016, when the cost-saving measures were implemented, vehicle rentals were approximately $36.7 million. The following year, with the return of 100 vehicles, rentals dropped to approximately $26.4 million and a further $2 million the following year. Without the introduction of new vehicles WASA’s rental increased to $25.6 million approximately in 2019 and last year ended with a $6 million increase costing the agency $31,483,074.

“Ongoing steps should be taken to control the costs for the leasing of vehicles as this has been trending upwards over the last two years. Further, the Authority should conduct a needs analysis of the current fleet of 301 vehicles.”

The report stated that in the past five years WASA survived mainly on Government subventions. To run the affairs of WASA given a significant reduction in subventions, WASA borrowed from one bank to repay a loan taken from another to fund its operations.

According to the report, WASA is insolvent and currently, without Government subvention is unable to service its debts. WASA’s subvention was cut almost in half from 2016 to 2020 from around $2 billion to $1 billion. The report stated that WASA’s current state is as a result of “decades of poor governance and inept management.”

“Further reductions in subventions are required during the next five years so as to wean the Authority off the government’s coffers and make the organisation more self-sufficient,” the report stated, adding that the audited financial reports for 2017 to 2020 should be completed as a matter of urgency to ascertain the financial viability of WASA.

Collecting what is owed

The report showed an increase in revenue from customers between 2016 to 2020 with WASA beginning with $328,604,566 collected in 2016 to $467,200,833 in 2020. Four government ministries and one agency owe collectively $99 million for the same period.

“It took an average of about 80 days to collect amounts billed to customers, with several taking well over 100 days. In the case of WASA, it took 188 days to collect amounts billed to customers.”

The Housing Development Corporation (HDC), who owes WASA $33 million said they will continue their collection drive in order to pay WASA, while the Ministry of Education, who owe WASA $13 million said they will have to be financed by the Ministry of Finance to offset their debt.

The report said WASA’s failure to collect on their debts were two-fold – lack of proper monitoring owing to a lack of metering system and outdated customer information. WASA said they planned to rectify these concerns by enforcement and encouragement.

Using enforcement, WASA was able to recoup some $38 million out of $50.5 m owed for the period 2016 to 2020. The authority also took legal action to collect some $1.3 million from errant customers. On the side of encouragement, WASA said they have been conducting regular meetings with CEOs, permanent secretaries and heads of state enterprises to collect their debts.

Another cabinet sub-committee led by Housing and Urban Development Minister Penelope Beckles, was appointed to oversee the transformation of WASA. Beckles, at a media conference last week after a tour of WASA’s Caroni Water Treatment Plant said WASA’s outstanding debts “requires attention urgently.”

"Traditionally, some ministries take the position that it is the same government, and people take the decision that when debts are to be paid that agencies like WASA suffer,” she said.

"We intend to address this matter seriously. We intend to ask all the ministries who have not been paying WASA to pay. It will be a priority for us. We will be meeting with respective ministries and we will be looking closely at those who have not been paying for years – and there are a number of them.”

Beckles, is responsible for HDC, who, of all the Government agencies, owes WASA the most.

While WASA hopes to recoup $99 million, the report also stated that it owes the TT Electricity Commission $84,344,282.90. This figure is at October 2020 and does not specify the period tabulated.