Minister of Agriculture and Water Resource Management Dr David Estwick has made it clear the Democratic Labour Party (DLP) Government is not considering raising water rates, contradicting General Manager of the Barbados Water Authority (BWA) Keithroy Halliday who said yesterday the BWA was considering a rate hike to help cope with mounting financial problems.
Estwick said he had no idea what Halliday “was talking about”, adding that the matter had not come up for discussion in his ministry, which has oversight of the water company.
Halliday had said yesterday that due to the burdensome financial challenges, including $500 million in loans it cannot service, an increase in the rates was being considered to help the utility company cope.
He did not say how steep the increase was expected to be or when it would become effective, explaining this would be left to the regulatory agency, the Fair Trading Commission (FTC), to decide.
Halliday told a press conference the company’s current financing model was not sustainable and it “does not work and sometime over the next while, we have to take some hard decisions to how we can move towards getting a model that is a little more relevant to our needs”.
However, Estwick this morning argued that some the BWA’s debts were in fact investments that would eventually pay for themselves. He therefore advised there was no need to push the panic button in the absence of a full evaluation of the debt profile of the state-owned entity.
“I don’t know what he is talking about and the reason I don’t know is very simple. You have to interpret your loans in regards to what investments are there and as a result what investments the loans are going to be dealing with. You have to determine which ones are revenue generating and which ones are not.
“So you just can’t simply speak of $500 million. It may sound nuff, but it may not mean anything once the investments pay for themselves. Keithroy is a banker. I am not much of a banker but I know numbers,” Estwick told reporters after he and other members of the DLP had paid their $250 deposits into the Treasury this morning.
Asked if the BWA general manager had spoken out of turn, Estwick replied: “You should ask he that.”
The minister said any rate hike would be at the discretion of the FTC, but said there were no plans in the pipeline to approach the regulatory authority.
“An evaluation for a rate hike is a FTC determination, it is not determined by me . . . .The FTC now has responsibility for tariff setting and service setting. We have worked with the FTC and we are working through the service setting to determine the service parameters that we are able to execute to bring us up to international levels. So we are trying to put things in place administratively, but we have not engaged the FTC at any stage in regards to a rate increase. So it can’t be a consideration,” Estwick stressed.
While Halliday had made it clear it would be some time before consumers were asked to pay more for water because no request had been made to the FTC, he also seemed to suggest it was inevitable.
“A discussion has to be had at some point in time as to the relevance of the current tariff regime and whether or not it makes sense. This is not a discussion that can be had in isolation; this is a discussion that requires the input of a number of stakeholders. This is not a discussion that we can make solely on our own, simply because we fall now under the oversight of the Fair Trading Commission. They and they alone will arbitrate and determine the extent of how and what figure, if at all, we pursue,” the general manager said.
“It would be silly of me to say we wouldn’t look at it, but I can say in the immediate term, there is still a lot of work to do before we can make that presentation or consider such a presentation,” the BWA boss stressed.
The water company last raised rates in July 2009, a 60 per cent hike which then Acting Minister of the Environment, Water Resources and Drainage Haynesley Benn had said was meant to encourage Barbadians to conserve the precious commodity.