EDITORIAL - Privatise NWC

We can't but support the decision by the Government to impose water restrictions in the face of a continuing drought and seeming deepening evidence that Jamaica's rainfall patterns have altered in the face of global climate change.

But even as we empathise with Robert Pickersgill, the minister of water, that some of the challenges are matters beyond his immediate control, this newspaper insists that the crisis is deeper because of the policy failures on the part of Jamaican governments, especially during Mr Pickersgill's current tenure and previous stints in the portfolio.

It is our sense that while water is understood to be a vital resource, its management has largely been treated in the manner of social welfare rather than a critically strategic asset. The operation of the National Water Commission (NWC), the state-owned company that supplies potable water, underlines this failure.

On a strict accounting basis, NWC is insolvent, having J$1.4 billion in liabilities than assets. In the 2013-14 fiscal year, it lost an estimated J$6 billion and expects to bleed a further $3.5 billion in red ink this year. The company has long-term debt of J$17 billion.

INEFFICIENT, UNPROFITABLE SYSTEM

This state of affairs is understandable when you take into account that the company earns no revenue from 68 per cent of the water it produces. Or put another way, of the estimated 47 billion gallons of water the NWC filters and puts through its distribution pipes each year, it gets nothing for 32 billion gallons. Most of that is lost in old, leaky systems. Some is 'social' water distributed by the Government to communities. A fair bit of it is stolen.

Neither the company nor the Government has the resources to fix the problem. The NWC does not generate the surplus required for investment in the repairs and upgrade of distribution systems or to develop new water-storage capacity. And the country's debt crisis limits either's ability to borrow. Then there is the absence of political will to make the economically right decisions, especially with regard to the pricing of water.

At the $0.39 a gallon for domestic water, up to 3,000 gallons, to all consumers, regardless of ability to pay, the commodity, as the NWC's financials demonstrate, is heavily subsidised. Further, the absence of differential pricing takes no account the variation in costs, particularly energy, to deliver water to different regions, or of the possibility to use means tests to ensure that the commodity is available to the poorest people.

ENHANCED REGULATION

In the context of the situation that the NWC finds itself and the resources that will be required to rescue its operation, this newspaper believes, as we have proposed before, that the Government should privatise the NWC, but with enhanced regulation.

In the meantime, there are things to be done now that can help to ease the immediate crisis of water delivery, including the desilting of reservoirs, which Mr Pickersgill has proposed. The reopening of wells in residential communities, using new techniques to remove nitrate contamination, is also on the agenda.

These ideas should be supported by incentives for householders to invest in water-storage and -harvesting facilities. For the longer term, a broader water-management strategy, including how and where we plan communities and what they must include, is vital. Of this Mr Pickersgill has not talked enough, or with clarity.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.