Tony Vieira's Comments
22 October 2017

Updates!

Receive email notices when a commentary is uploaded. Join our mailing list.

E-Mail Address:

View Article

Severn Trent Water
(Aired 12 March 2003)

   We have done it again! This country has made a deal with a British company to manage our water, without informing the Guyanese people as to what exactly all of the conditions of the contract are.

   The United Kingdom today is one of the strongest economies in the European Union; only 3 other western European nations have trillion dollar economies like the UK.

    Against the background of the high value of the sterling currency, British manufacturing and industry has been declining due to the very expensive cost of British goods.

    Today Britain is not as highly an industrialised nation as it was in the past; it has evolved as a leading trading power and financial centre. The GDP of the UK today, composed by sector, is 1.7% agriculture, 24.9% industrial and 73.4% services. While industry continues to decline in importance, insurance, Banking and business services account for by far the largest proportion of the UK's GDP.

     So here is a country which has evolved from an industrialised nation in the 40's and 50's to a country whose products are too expensive for it to compete with the other industrialised nations on the planet today.      

    British companies therefore have looked to the poorer countries of the world to sell their expensive goods. Anyone with one functioning brain cell will say that it is totally ridiculous, how can it make sense for the most expensive goods to be channelled to the poorest countries in the world.

    Tonight I will tell you, by an actual example in this country, how it is done.

    Late in November 2002 our Minister of Water announced that we had obtained a grant of 3.2 million pounds sterling [5.1 million US] from the British Government to execute a 38 million US dollar loan from the IDB to rehabilitate our water system. Two British companies bid on the rehabilitation of our water system but the company that bid 3.5 million US were not given the contract, it was awarded to Severn Trent Water International for 5.1 million US.

   Amid much fanfare Mr. Baksh announced that there will be stiff penalties for any poor performance by this company, if they do not deliver on the conditions of their contract.

   The main targets of the operation will be to reduce the non revenue water [water that is delivered but does not earn revenue] since at the present time, Guyana Water Inc. is [1] only capable of collecting 62% of its revenue. So over the next five years Severn Trent must increase this 62% to 90%. And [2] 75 % of all water delivered is unaccounted for due to losses, theft etc., Trent is supposed to reduce this amount to 25% in the five years. 

These short falls are currently met from the consolidated fund.

    Trent must also ensure that water is available 24 hours a day. This 5.128 Million US dollars will be used to pay five persons to occupy the most senior positions in Guyana Water Inc. the Managing Director, the Operations Director, the Customer Services Director, the Hinterland Manager and the Corporate Planning Director. Eight support staffers from Trent will come in from time to time to work for short stints.

    Baksh keeps telling us that we will not have to find this 5 million US dollars over the next 5 years to pay Trent, but he is not being exactly truthful; we will have to find 5 million US to, say, rehabilitate roads from our own resources since the British will not give us another 5 million to do that. Grant aid is not infinite and it is dishonest to be telling the public that it will not cost us anything; this grant aid money could have been used for other things rather than to try to deliver water at an economical cost, an impossible dream when Power and Light is taking almost 67% of the total cost of delivering our water.  

   Baksh also told us that metering will be an important aspect of the operation since metering will lead to conservation. So Trent's mandate is to get meters to 85% of the consumers over the next 5 years.

   All of this is OK so far, even though there are some flaws, the cost of electricity  being the main one [how is Trent supposed to get GP&L to drop the current oppressive electrical rates] and paying 5 men from Trent one million US Guyana dollars a year, whilst the rest of the Guyanese are starving is another, but the IDB loan for 38 Million US dollars 7.22 Billion G dollars, recognises that competent British technocrats will be administering this 38 million US loan for this rehabilitation of the water system to be done by Trent, so guess where most of the materials including pipes, joints, meters, pumps, filtration systems, overhead tanks [if they have any sense] etc will come from?

   So that's the scam, they give you a grant for 5.128 million US but we will end up buying 38 million US dollars in British pipes, meters, pumps etc, the most expensive in the world, to do the work. Current estimates tell us that British goods can be as much as 35-40% higher than other countries. As I have told you no one has seen the entire contract, so we don't exactly know how much we will have to buy from the British for the rehabilitation of the water system. That is the part of the equation that did not, nor will not, see the light of day.

   This brings me back to my original statement; the poorest countries are being forced to buy the most expensive goods.

   The local representative of Severn Trent is Cemco a company which has strong ties to the PPP and Severn Trent is a private British company operating in the international arena, and they know how these things work.

   Severn Trent Water is one of the largest water undertakers in the UK with customers totalling 9 million. This is a company which is very profit oriented, in December 2001 they called for a shake up in the regulation of water prices after reporting reduced profits, the chairman of the company is reported to have said that the British waterundertakers' profits are being undermined by the low return on capital the company is allowed to make, if it complies with the regulators capital targets, since it reduced their profits from 114 million to 104 million sterling. In December 1999 this company cut its workforce by 1100 people blaming regulators for forcing a 14 percent reduction in water rates. In 1995 this company was taken to court, the first time in the history of British jurisprudence, for supplying water unfit for human consumption. In 2001 they were again in court for dumping sewage waste on a farm and in waterways in the UK.

   In December 2002 a water main belonging to Severn Trent burst and led to the disconnection of 1800 households from their gas supply, MP Mr. VAZ told the British Parliament there, that the gas supplier National Grid Transco PLC had to pay 250,000 sterling in statutory damages to their customers and 200,000 sterling pumping the water out of their gas mains, but Trent had refused to pay one penny in compensation notwithstanding that their profits were 357.4 Million Sterling and that the leak was their fault. Additionally it took them several hours to turn off the water main which was leaking into the gas supply. This was December 2002 the middle of winter and resulted in al lot of freezing Brits. Trent has still refused to pay compensation.

 So ladies and gentlemen we are dealing with a company which is not noted for its philanthropic agenda, this is a highly motivated, highly profit oriented company and we must watch them carefully.

   We entered this contract with Severn Trent even though they bid 5 million US and we turned down another UK company with exactly the same bona fides who would have done the same job for 3.5 million US. But as I told you Trent knows how to play the game and their local representatives Cemco have the political connections to let them do it.

   What we do know is that Trent will raise the price of water delivery before they even sit in their offices; they have already announced it, without apparently being accountable to do so by the public Utilities commission. Begging the question as to whether Guyana Water Inc. will ever be regulated by the PUC.

   Mr. Baksh must understand that the Guyanese people are very poor now after years of economic privation; he is judging their ability to pay based on his obviously inflated income, but not everyone has access to the treasury as Mr. Baksh does, so he will have to modify his thinking.

   Dr. Jagan was very explicit on this question, fix the water system first and when everything is regularised, you then calculate your costs of delivery and set water rates to recover those costs.

   Of course Dr. Jagan was talking about GEC but his point was well made, increasing rates now when losses are as high as 75% and collections are as low as 62% is patent nonsense, since a few will be paying for the water of all. Surely this cannot be right or just.

   The entire contract and the conditions of the loan must be made available to the Public this is not Baksh's country, it is ours, yours and mine, and we want to see it, have we learnt nothing from ESBI?