Business

WSC facing payroll, supplier payments challenges

The Water and Sewerage Corporation (WSC) is concerned about meeting payroll and supplier payments, as it suffers severe cash flow shortfalls due to the inability to carry out disconnections in the face of the COVID-19 pandemic and the loss of revenue from Abaco, its second biggest cash source, the corporation’s Executive Chairman Adrian Gibson told Guardian Business, adding that the company has faced a 31 percent decline in cash collection to date as compared to last year and will seek additional funding from the government.

Gibson said there has been an 89 percent decrease in Abaco collections, from $2.1 million in 2019, to $225,000 for the same period year-to-date.

“Right now, we are facing unprecedented challenges due to a combination of circumstances, including reduced subvention for the 2020/2021 budget year,” Gibson said.

He explained that WSC’s subvention was reduced from $25 million in the 2019/2020 budget to $20 million in the 2020/2021 budget, while “our fixed costs remain the same”.

He said the corporation is seeking to recoup $9 million in losses from the government as a result of not being able to carry out disconnections, while also seeking permission from the government to recommence disconnection exercises.

“These challenges have resulted in a backlog of supplier payments that are steadily growing and there is concern about monthly payroll payments for the balance of 2020,” Gibson said.

“WSC’s current operational cash flow cannot sustain monthly payments for vendors and payroll, as such the corporation will be seeking additional government funding. More importantly, we’re looking to commence disconnection exercises for unpaid customer accounts.

“I personally will be issuing communications to my colleagues in government as of tomorrow. At present, I can tell you that because of Hurricane Dorian, WSC has lost its second highest revenue generator, which has greatly impacted our cash flow.”

Gibson said from January to September there has been a decrease in cash collection of $15 million.

He added that WSC has commitments to several credit facilities, including a National Insurance Board loan, two Inter-American Development Bank loans with the government and a loan with the Caribbean Development Bank. 

“Those require substantial payments,” Gibson said. 

He said WSC receivables from the government currently stand at almost $8 million, after the government made a payment of $5 million in March.  

These challenges, Gibson said, have resulted in a backlog of supplier payments of $30.8 million as of August.

Gibson said in September the corporation collected $3.2 million, an 11 percent decline compared to 2019. 

He said on San Salvador for the month of September, there was a 92 percent revenue fall-off, with WSC collecting only $8,595 compared to $103,887 in 2019.

On Bimini, there was a 70 percent fall-off in payments; 65 percent in North Andros; and 88 percent in South Andros, Gibson said.

“I encourage people to continue to come into the corporation and make payments because, frankly, the bills will still be there,” he said.

“Payment lends to us having a better financial standing and being able to meet some of these payments, including payments to water and other suppliers that we must pay.

“We are in dire straits and WSC payroll for the next three months, we’re looking at a little over $2 million per month and if we are collecting about $3 million you could see the challenge that poses. That’s not even counting the vendor payments we must make.”

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Chester Robards

Chester Robards rejoined The Nassau Guardian in November 2017 as a senior business reporter. He has covered myriad topics and events for The Nassau Guardian. Education: Florida International University, BS in Journalism

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