Savings plan . . . Abrahams scraps DLP desal contracts

The Barbados Water Authority (BWA) stands to save in excess of BDS$20 million over the next three years after brokering a deal with the Innotech Group of Companies a week ago.

Furthermore, its decision to scrap what Minister of Energy and Water Resources Wilfred Abrahams described as “egregious contracts” for portable desal (desalination) plants authorized by the Freundel Stuart administration, has saved the authority BDS$100 million per year.

Abrahams, flanked by BWA officials including General Manager Keithroy Halliday and Director of Engineering Charles Leslie, unveiled aspects of the deal, covering 17 outstanding issues, 13 of which were negotiated by his predecessor Dr David Estwick.

“Things like compensation were factored into the overall arrangement…as far as we are concerned this is our arrangement with Innotech signed, sealed and delivered, “ the Minister told a press conference held at his Country Road, St Michael office.

Charging that a number of the agreements were  “oppressive and ill-advised”, the Minister first highlighted that they were able to transform the $65 million headquarters agreement, described as the single largest deal, to realise major savings and benefits to the BWA.

Under the deal, the authority had not only slashed its interest rate by half, moving from 8.25 per cent to four per cent, but its principle repayments have been lengthened to enable its monthly payments to fall by 46 per cent.

The authority’s right to own the building when the debt has been paid has been maintained and it will have the option of extending the payment period by five years.

Abrahams also announced that the new arrangement has also brought an end to the financing, leasing and maintenance arrangements which significantly added to the cost of contracts and infrastructure.

“Instead the BWA has purchased certain equipment outright or agreed to a transparent pay-as-you-go arrangements for works necessary to be performed by Innotech,” he disclosed.

Abrahams also explained that the BWA will take up “immediate and outright ownership” of a variety of critical equipment including portable desalination units, personal tanks, community tanks, water tanker trucks and (functioning smart meters).

He said: “All those assets that had belonged to Innotech that we were unable to use or exploit even in the dire circumstances, now belong to the Barbados Water Authority so that we can deploy the community tanks more effectively.

“We have now sealed those arrangements so all of the infrastructure – what I call assets – are now available to the water authority to deploy as it sees fit in the best interest of the people of Barbados.”

The Water Resources Minister then turned his attention to controversial contracts for desalination plants that involved Innotech and a number of other unnamed companies.

While insisting that Government was still looking at desalination as an option to boost local water supply, he was adamant that the agreements could not be considered because the costs were  “unjustified” and would have caused the BWA’s debts to spiral.

“Had we entered the desal contracts that were authorized by the last government, that 100 million … was going to be a recurring cost of 100 million dollars per year, for the life of the asset, ” he explained.

Abrahams said as a result the BWA was investigating all its contracts “to determine the nature of the unfairness, what informed it, and if action needs to be taken in any event.

“The auditor general is completing his report on the BWA, our practices, our procedures, our Government structures, our contracts that we have entered into, so we are awaiting the outcome of the auditor general’s report. Based on that report we then decide the next steps in terms of dealing more directly with some people, with some companies or if the auditor general reports the need for criminal action we will pursue it,” he added.

Abrahams was however at pains to point out that the massive savings will not take the BWA out of the red but simply lowers its debts over the next three years.

“We still operate at a loss and until we get our ship in order, replace the mains and manage the proper distribution of water and sort out the other stuff, we are still going to operate at a loss. “ he said.
sandydeane@barbadostoday.bb