The state-owned Barbados Water Authority has paid some $19 million for water it did not receive.
This was one of the findings of a Special Audit which was commissioned by Minister of Finance Christopher Sinckler and tabled in Parliament yesterday.
In 1998, the BWA entered into a build-own-operate agreement with Ionics Incorporated, an American based company with an affiliate in Barbados, Ionics Fresh Water Ltd. The agreement at the time was for the construction of a reverse osmosis desalination facility at Spring Garden, St. Michael.
However, the audit found significant breaches in the agreement and flaws in the operation of the BWA, amounting to millions annually.
“Since inception, the desalination plant has not supplied the 27,000 cubic metres of water per day as stated in the agreement. One of the reasons is that the authority does not have the capacity to receive this contracted amount.
“This impacts on the payment the authority makes to Ionics for water since the authority not only pays for the water supplied, it also pays a standby charge for the water not delivered under the contract. The charge for production is computed on the basis of a production cost for each cubic metre of water supplied.
“This cost, which fluctuates in response to a number of factors, was approximately $1.50 per cubic metre at the time of the audit, while the rate for the standby charge was approximately $0.75 per cubic metre,” the audit stated, pointing to some $1.9 million annually in standby charges.
It was also highlighted that the desalination plant, which has never run at its full capacity, was constructed at a cost of $24,180,888 and additional money was spent on modifications for the effective introduction of desalinated water into the distribution system.
However, the desalination plant is used to extract brackish water from wells and the reverse osmosis process produces fresh water from this brackish variety, which has a low salt content and this is then transferred to a BWA reservoir for distribution.
Also of concern was the absence of documentation indicating that adequate testing was done in the supplying wells which would have resulted in the authority paying considerably less for the water supplied, as more favourable terms could have been negotiated.
It was also pointed out that it was also agreed that an engineer from the BWA would be stationed at the desalination plant from March to September 2000 to monitor and observe the operations and this has not been done since.
“Officers of the BWA are not gaining enough knowledge about the procedures required for the operations and the maintenance of the plant. This would be a cause of significant problems if the authority exercised its option to acquire the plant since it would not have officers who are familiar with its operations,” the audit stated.
It also made reference to the 2004 West Coast Main Project which was undertaken for the purpose of taking desalinated water to the north of the island after the BWA recognised that an increase in demand for water in the north was imminent due to economic development as well as the need to improve service to existing customers.
“This main is not functioning due to the failure of pressure tests. This problem has hindered the authority’s ability to distribute the contracted capacity of desalinated water,” the auditor reported. (DB)