Crippling P1bn Debt Owed to Water Utilities

• WUC struggling to recover the money since 2020
• Mzwinila worried WUC could go bankrupt
• Water disconnection strategy is bearing little fruit

WUC – which provides water and wastewater management services to households, public instaltions and businesses across Botswana – is struggling to recover the debt from its customers. Addressing the media on developments in land and water-sector issues in Gaborone recently , Minister Mzwinila said WUC debt is worrying. “This is lot of money,” he said. “The debt has a negative impact on operations of WUC.” Mzwinila disclosed that WUC can barely meet its operational costs due to its financial constraints emanating from the huge debt and emphasised that the government cannot provide water for free nevertheless.

“Water sector is very expensive in nature,” he said. “Connection and distribution come with high costs to the government, given that we have to construct water connection infrastructure which is expensive.” Also speaking at the press briefing, the CEO of WUC, Gaselemogwe Senai, agreed with the minister that the parastatal in under serious financial stress because of the enormous debt.

Senai explained that as part of recovering the debt, WUC disconnected water to domestic households, businesses and government departments affected.

He disclosed that government departments, which includes ministries and parastatals, owe WUC P100 million. WUC accrued the debt during the peak of COVID-19 after it was instructed not disconnect water to households and businesses in the course of a State of Emergency (SOE) in force to tackle the pandemic. Senai said although some money is being recovered, progress is slow and low. He appealed to defaulters to pay their water bills to enable WUC to carry out its mandate.

Losses

In 2021, the parastatal realised a significant decline in its financial performance for the year ended March 2021 with its losses amounting to P166 million from P49.9 million in March 2020. The losses were also attributed to arrears in water bills during COVID-19. According to WUC, the losses that went up by 32 percent were underpinned by the effects of COVID-19, in particular eroded household incomes that affected in ability to pay water bills.

In 2021, WUC revenue from contracts with customers dropped to P1.811 billion from P1.825 billion.  WUC’s total expenses also rose from P1.988 billion to P2.307 billion, resulting in an operating loss before tariff subsidies and grants of P465.9 million, significantly up from P138.8 million recorded in the previous year that ended 31^st March 2020. WUC is also expected to post more losses for the 2022/23 financial year due due mainly to its poor debt recovery.