Friday, February 14, 2014

Local councils owing NAWEC over D159 million failed to honor payment plan

On the contrary, the company has not paid corporate taxes of D158 million

The Gambia’s sole producer, transmitter and distributor of electricity, water and sewage, says it has been faced with a legacy of arrears for many years.
Ebrima Sanyang, Managing Director of National Water and Electricity Company (NAWEC), has said local government councils owing NAWEC over D159 million has failed to honor a payment plan agreement. 

 “Previous payment plan never worked as the Councils fail to honor the agreement. We believe this is a deliberate attempt by the Councils,” Sanyang told a Joint Session of the Public Accounts and Public Enterprises committees (PAC/PEC) of the National Assembly on February 12.

A 2012 report of NAWEC indicated that the Banjul City Council is owing D23, 269, 162.92, Kanifing Municipal Council D42,716,399.02, Brikama Area Council D61, 209,586.54, Kerewan Area Council D12,736,466.53, Mansakonko Area Council D6, 196,777.04 and Basse Area Council D159,437,912.11. 

The total local council debts are D159, 437, 912.11, the report stated.

“The worrying part is the escalation of rates, royalties, licences and operational fees to levy to NAWEC to upset the bills,” says Sanyang. Recovery of arrears continues to be a big challenge.

He warns that if this persists, NAWEC will recommend that local government authorities “start contributing towards expanding electricity and water facilities to tax payers” as it pertains in other countries.

The NAWEC boss also noted that the Gambia Radio and Television Service (GRTS) and the Gambia telecommunication company, GAMTEL, jointly owe NAWEC up to D50 million.

Legacy of arrears 

The Gambia’s sole producer, transmitter and distributor of electricity, water and sewage, says it has been faced with a legacy of arrears for many years.

It said outstanding arrears for the central government has dropped significantly but the challenge still remains with local government authorities.

In June 2011 the company published names of government institutions owing it voluminous sums of money. It said the Office of the President, government ministries, area councils, public institutions, the president’s personal businesses, a few private companies and individuals, jointly owe NAWEC over D2 billion.
NAWEC has been faced with several other challenges in recent years including use of obsolete machinery and reliance on expensive fuel whose prices are considered “highly volatile” to run generators.

The company spends up to 70 per cent of its budget on fuel, according to officials. 

But there are more challenges. There are faulty meters resulting in dispute with customers, loss of revenue and network failures resulting in long queues at cash power outlets. The company also finds it difficult to maintain professional experts due to incentives or package issues.

Sanyang said NAWEC faces mobility constraints due to cash flow problem, expensive rental charges for office outlets, exorbitant rates for royalties and license fees levied to NAWEC such as borehole royalties.
He said theft through meter tampering and illegal connection, inadequate tariff to cover cost of operation and nonpayment of bills are among a number of challenges they face.

Sanyang recommends the replacement of all faulty meters, harmonization of the rates, royalties and licenses, charges on boreholes and water tariff and easy access to land for outlets – as a way to curb.

He also suggested for indexing of fuel and spare parts prices to the user tariff as in the case of fuel pump prices, ensure line ministries adequately budget for utility bills, municipalities and councils to be compelled to pay bills and tougher penalties for theft.

Longstanding electricity problem 

Meanwhile, a Subject Matter Specialist has warned NAWEC that the high dependence on fuel to power the country is “not sustainable”.

Alhagie TSA Njie said water and electricity are essential part of development but this present scenario of using fuel is not sustainable. He has suggested a shift to solar energy or look into other sustainable methods of electricity and water supply.

“We cannot rely on tariff increment alone. If tariffs keep increasing, it becomes a matter of choice as people will prefer to shut down their meters,” he warned.

“NAWEC alone cannot solve this problem. The PAC/PEC and NAWEC should meet to see how to solve this longstanding electricity problem in The Gambia,” he said.

Mr Njie also warned that “the country cannot attract investors” unless there is a long term solution, for instance, a ten year plan which the PAC/PEC can recommend to the Government of The Gambia. 

A Chairperson of NAWEC’s Board of Directors, Mustapha Colley, agreed. He admitted that the current trend of using fuel is not sustainable. He said 70 per cent of the company’s budget goes into fuel. “Plans are on the way to hold a retreat to come-up with a sustainable way in terms of renewable energy,” he said.

‘Killing one another’ 

The National Assembly has expressed concerns over the millions of dalasi owed to NAWEC.
Its Minority Leader and Member for Niamina Dankunku, Hon. Samba Jallow, said institutions are “killing one another.” “This is not the proper way of management. If institutions are going like this, I don’t think we can achieve our goals,” he said.

Hon. Sulayman Joof, member for Serekunda East, said the National Assembly cannot sit back and watch government institutions kill each other [financially]. He suggested that the National Assembly come to NAWEC’s aid and call on local government authorities to repay these debts.

“We cannot sit back while government institutions are killing each other,” he said. “Let us help NAWEC so that it can recover these debts.”

Hon. Kaniji Jawla, Member for Sandu, also agreed. He said the National Assembly should critically look into the problem and “strongly recommend” a bailout for NAWEC.

‘Position of dying’ 

The Member for Upper Saloum, Hon. Sainey Mbye, said NAWEC is in a position of dying.
“We should not allow NAWEC to die. Everybody is talking about clean drinking water and electricity, so those who are providing that are critically in a position of dying,” he said.

He told NAWEC to keep the PAC/PEC updated on its debtors so that they can take it up with them.
Hon. Mam Cherno Jallow, member for Upper Niumi, suggested that the PAC/PEC task the [National Assembly] Committee on lands and regional governments to discuss with the councils about the issue.

National Assembly Speaker Hon. Abdoulie Bojang said PAC/PEC is seriously concerned about the issue of the debts owed to NAWEC by local councils and some other institutions.

“We will call them and ask which one is better for them, whether to cut them off, but even if they are cut off they are going to repay the debts,” he said. There is no sector in the country that can go without electricity.  
Nonpayment of corporate tax

Ironically, NAWEC have not been paying corporation taxes for the past years, according to external auditor Augustus Prom Jnr.

It has accumulated corporation tax liability of D158 million as at end 2012, more than half of the over D209 million it has been owed by local councils and other state institutions. 

Prom, who said there is no arrangement with tax authorities on how the corporate tax would be paid and when, said NAWEC violated the Income and Value Added Tax Act 2012 and it could result in fines and penalties imposed on the company.

NAWEC’s Director of Finance, Alhagie Jallow, has said it would be very difficult for NAWEC to settle the yearly corporation taxes, even though it is legally required to do so, given the liquidity situation of the company as a consequence of inadequate end-user tariffs, increasing fuel costs and unpaid customers arrears.

NAWEC’s activity and financial report 2012 was adopted by PAC/PEC.

Written by Modou S. Joof

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