BWB targets solvency, profitability by 2027
The high cost of electricity, non-revenue water losses and selling water below the cost of production continue to undermine the performance of the State-run Blantyre Water Board (BWB).
However, the parastatal is optimistic that its ongoing reforms will get it back on track.
BWB chief executive officer Engineer Robert Hanjahanja told the Budget and Finance Committee of Parliament on Tuesday in Lilongwe that its financial position and operations have deteriorated in the past five years, with losses rising by 237.4 percent from K7.4 billion in the 2021/22 financial year to K25 billion in 2022/23 fiscal year.
To put it into perspective, the Central Region Water Board posted a profit of K1.95 billion, Lilongwe Water Board registered a profit of K1.1 billion while the Northern Region Water Board posted a loss of K7.4 billion over the same period.
Hanjahanja attributed the losses to high electricity tariffs, with the parastatal spending about 60 percent of its sales revenue on energy bills.
On the cost-reflective tariffs, he said: “The board has been selling the water below the actual cost of service.
“The gap between water tariffs and the actual cost of service increased from 6.7 percent in 2015 to 147 percent in 2024.”
Ultimately, the challenges have left BWB, one of the country’s oldest State-Owned Enterprises (SOEs), with total current liabilities worth K42.8 billion against total current assets of K19.7 billion.
This means BWB has a current ratio of about 0.46, far below the recommended 1:1 ratio.
However, Hanjahanja expressed optimism that the turnaround strategy his organisation has adopted will get the company back on track and allow it to break even by 2027 at the latest.
“We could have broken even by the end of this year if it was not for the devaluation,” he said, referring to the 44 percent kwacha devaluation effected in November 2023 as part of government reforms to restore donor confidence.
BWB has secured $145 million (about K253 billion)financial support from the World Bank to fix the outdated distribution systems, including worn-out pipes and tanks which led to high non-revenue water and inefficient meter systems, among other factors.
The support, disbursed through the series of projects, will focus on investments in water production, network stabilisation, leak reduction, renewable energy sources, and water network expansion to unserved areas, according to a World Bank statement released in March.
Reacting to the developments, Budget and Finance Committee of Parliament deputy chairperson Ishmael Mkumba said the committee was satisfied with the progress made by BWB to fix the problems that limited its capacity to generate a profit and remit dividends to the government.
He said: “While BWB has posted losses in the past three years, we are confident that the turnaround strategy will restore stability.
“So far, the institution has not requested a bailout which is a positive step.”
Historically, the financial underperformance of the BWB has put a strain on government resources, reducing government revenue and increasing expenditure when SOEs request bailouts.
