Huge debts have choked operations of State-owned utility provider Blantyre Water Board (BWB), leading to the immediate suspension of all outflows of non-essential items.
BWB has suspended items such as staff loans, travel and meeting allowances, conferences, furniture and general payment to creditors, among others, until its financial status improves.
An internal memorandum dated September 8 2017 from BWB acting chief executive Henri Bakuwa titled ‘Suspension of All Non-essential Cash Out-flows Due to Payment Demands from Escom’ to all members of staff, the board said BWB management succumbed to pressure from Escom (Electricity Supply Corporation of Malawi) to pay about K1.8 billion of its outstanding electricity bill to avoid disconnection.
Reads the communication in part: “The payments need to be paid as follows: K1 billion to be paid on 15 September 2017; K800 million to be paid on weekly instalments of about K200 million per week by 30 September, and thereafter as monthly instalments [up] to December 2017.
“Both of these are tall orders for the board to fulfil. We had no choice, but to accept to avoid the disconnection… We believe we can negotiate with government to help with the K1 billion payment which is falling due on 15 September 2017.”
Sources privy to the BWB and Escom issue said the water board owes Escom about K3.7 billion.
In the memo, Bakuwa also informed staff that the board paid K200 million to Old Mutual Malawi to reduce pension contribution arrears, adding that “further commitments towards full settlement of pension arrears will be made as cash flow improves”.
The communication is copied to all heads of technical services, distribution and commerce, human resources and chief accountant and president of the workers’ union.
Besides Escom debts, sources at BWB confided in The Nation that the board also owes other creditors, notably contractors and suppliers.
The board’s total debts hover around K10 billion, according to our source.
On August 30 2017, Escom disconnected power supply to the board’s offices before reconnecting following discussions for non-payment of the bills.
The development affected water supply in some parts of the commercial city as some residents endured dry taps and resorted to drawing water from unprotected sources, including shallow wells.
While declining to provide finer details on the issue last week, Escom public relations manager Kitty Chingota confirmed pouncing on its fellow public utility service provider for defaulting bills.
She said: “In respect of client confidentiality, we don’t disclose such information, but you can ask the client. They should be able to tell you.”
BWB public affairs officer Priscilla Mateyu refused to comment on the electricity disconnection incident last week, saying: “We won’t comment on the matter.”
But our source said after the disconnection from the Escom grid, BWB used a diesel-powered generator to pump and supply water, a development that resulted in low or no pressure due to restricted capacity.
The source said BWB collects about K800 million in water revenue monthly, but nearly half of the revenue goes towards settling of electricity bills, a situation that affects the board’s profitability and liquidity positions.
The 2017 Annual Economic Report produced by the Ministry of Finance, Economic Planning and Development also revealed that BWB’s continued poor performance was mainly due to high electricity bills that command a significant share of its operating expenses averaging 47.5 percent of the total.
On the other hand, BWB is also owed billions of kwacha by several private and public institutions, including government ministries, agencies and departments (MDAs).
In total, MDAs reportedly owed Escom, BWB and the country’s four other water boards—Lilongwe Water Board (LWB), Southern Region Water Board (SRWB), Northern Region Water Board (NRWB) and Central Region Water Board (CRWB)—in excess of K10 billion in unpaid bills.
According to the 2017 Annual Economic Report, between July 1 and December 31 2016, BWB also made a loss after tax of K1.2 billion.
Earlier this year, BWB pounced on bill defaulters, among them the Chileka Airport, Malawi Police Service (MPS) lines in Blantyre and Limbe and Malawi Government Regional Offices for the South. n