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16.02.2009 Business & Finance

Aqua Vitens generates GH¢20m for capital expenditure

By Daniel Nonor - Ghanaian Chronicle

Aqua Vitens Rand Limited (AVRL), operators of Ghana Water Company Limited (GWCL) has registered remarkable financial figures for 2008, including a 121 percent increase in net operating surplus over the past two years.

AVRL posted a net operating surplus of GH¢ 20 million last year compared to GH¢13.4million in 2006 and GH¢1.9 million in 2005, when the management contract was signed.

“The important issue here is that it allows us provide GWCL with surplus funds to spend on capital investments such as expansion of treatment plants and laying new pipes. This allows GWCL to increase access to treated water, which Ghanaians desperately need,” said AVRL Managing Director, Andrew Barber.

Under the management contract, GWCL has ceded its day-to-day operations to AVRL, whilst GWCL owns all the facilities and is responsible for the building of new assets.AVRL's mandate includes the production and distribution of water, billing and revenue collection on behalf of GWCL.

AVRL is a non-profit operation paid for from a World Bank grant. It has currently engaged four expatriate Directors working alongside 3000 Ghanaians seconded from GWCL.

AVRL was established as a Corporate Social Responsibility project by its Dutch and South African shareholders, both of whom are state owned. Their aim is to help Ghana achieve its water and sanitation targets under the Millennium Development Goals.

“We are mindful that last year, Government increased water tariffs by 60%. However, it only assisted in offsetting the significant increases in the cost of purchasing electricity and chemicals, which are two of our main expenditures. The impressive growth we are experiencing is, therefore, very real and not simply the effect of tariff increases,” said Mr.Barder.

Other key efficiency performance indicators support the success story, the collection ratio for 2008 was 93 percent compared to 79 percent in 2005.

The cost of treating water with chemicals has fallen by almost 50% over the last two years, while maintaining the water quality. Power consumption is down by 7 percent whiles labour productivity rates and training days per staff have all improved.

AVRL/GWCL's performance is borne by a report issued by an independent water and sanitation consultant, appointed as contract expert, in December 2008.

The report concluded: 'It seems likely that the benefits of the Private Sector Participation arrangement will become even more apparent during the remaining period of the contract.”