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22.02.2005 General News

PURC reviews performance of GWCL

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Accra, Feb. 22, GNA - Government remained the lead culprit in non-payment of water tariff for the period 1998 to 2003, a five-year performance review of the Ghana Water Company Limited (GWCL) has revealed.

A document, titled "Headline Efficiency" made public in Accra on Tuesday said generally, the proportion of bills collected had not improved and identified poor Government payments as the chief reason for low revenue collection.

"The proportion of bills collected has not improved over the review period. The chief reason for this has been reduction in governmental payments from 2002."

The document said although Government now made payments through an offset mechanism, it would be preferable if it paid bills on time. The Public Utilities Regulatory Commission (PURC) undertook the review in collaboration with the GWCL and a UK-based Consultant as part of the functions of PURC to monitor standards of performance for provision of services.

The PURC also has the function to initiate and conduct investigations into standards of quality of service given to customers and conduct studies relating to the economy and efficiency of public utilities.

Before the review, the PURC had projected that GWCL could over a five-year period reduce losses from leakages and illegal connections from 50 per cent to 40 per cent of water produced and increase the collection of money from 77 per cent to 95 per cent of charges billed. It also projected that had the Private Sector Participation taken place in the form of enhanced lease contracts, losses from leakages and illegal connections could have been reduced to 25 per cent of water produced.

Mr Stephen Adu, Executive Secretary of PURC, who presented highlights of the findings, said 75.8 per cent of bills issued were collected in 1998 and although this improved to 87.8 per cent in 2000, it again declined to 75.5 per cent in 2003

He said the collection of bills for non-governmental customers dropped sharply after the tariff increase in 2002 but this had now recovered to a level close to the 2001 performance of 93 per cent. "This means that the headline efficiency of GWCL expressed as the percentage of water produced which is converted into income collected reduced from 37.8 per cent in 1998 to 32.4 per cent in 2003, with a low point in 2002 of 30 per cent," he said.

The best performance of 42.7 per cent in this area was recorded in 2000.

Mr Adu said the volume of water produced during the period had increased by 21.6 million cubic metres or 11.8 per cent from 183.6 million cubic metres in 1998 to 205.2 million cubic metres in 2003. He said the volume of water sold remained at best static and sales had declined from 91.53 million cubic metres, which was 49.85 per cent of production in 1998 to 88.13 million cubic metres, which was 42.95 per cent of production in 2003.

This was in spite of an increase in capacity due to the Weija expansion in late 2001.

Mr Adu said this indicated that the main priorities for investment should be channelled into leakage control and the repair of infrastructure and not further water production.

GWCL recorded an increase in loss of water at 25 million cubic metres from 92.07 million cubic meters to 117.07 million cubic metres between its source and the tap of consumers.

Mr Adu said the 21.6 million cubic metres of extra water produced had been more than taken up by higher losses of the 25 million cubic meters.

He said over the period, average tariff charges had increased in real terms from 2,285 cedis per cubic metre to 4,813 cedis per cubic metre.

This was based on end 2003 prices that indicated that average tariff had doubled.

"The surprising feature of the data is that headline efficiency peaked in 2000, the same year that the real terms average tariff was at its lowest," Mr Adu said and added, "it is clear that these tariff increases have not resulted in higher efficiency".

He said the real increase in average tariff was the result of the determination of the Commission to place the Ghana Water Company on a firm financial base.

The Commission's policy is to fully recover in the water tariff the efficient costs of operating and maintaining the assets of GWCL. The Company undertook to make a significant progress towards achieving the operational targets of 60 per cent of water produced to be delivered to consumers and billed and also collect 95 per cent of bills as income.

Mr Adu said the GWCL could have improved its headline efficiency to 57 per cent with a resultant significant increase in income if it had fulfilled its performance improvement undertaking.

The GWCL says it is currently charging about 57 cents to 58 cents per cubic metre for water transmitted but its economic rate should be 60 cents to 70 cents per cubic meters.

Mr Cobbie Kessie Jnr, Deputy Managing Director (Finance and Administration) of GWCL, enumerated a number of factors militating against efficient performance of the Company to include inadequate and delay in release of funds to carry out development projects, illegal connections and inadequate housing planning.

He urged consumers to pay their bills on time to enable GWCL to improve on water delivery, saying "once we get the money from consumers, we can improve the quality of water produced".

He also urged the media to assist the GWCL to educate the public on the need to pay their bills and also to check illegal connections. Mr Kwame Pianim, Chairman of the PURC, said this was the first report the Commission had made on water utility.

He said the purpose was first to help identify major operating constraints on the Company and work with GWCL to improve its performance and operational efficiency.

"The collaborative effort is also to help the Company to prioritise its investments in ways that will generate optimum benefits to its stakeholders, especially consumers."

Mr Pianim said the review covered a five-year period to provide a longer-term trend and perspective of developments in the sector. In future, PURC plans to review the Company's performance annually, he said.