NAWEC loses over D761M in three years

By Lamin Jahateh,  Banjul The National Water and Electricity Company Limited (NAWEC) has incurred an operational lost of more than seven hundred and sixty-one million dalasis (D761 million) from 2008 to 2010, which impeded the revenue base of the company and affects its operational obligations. In 2008, the company registered over D363 million losses and in 2009 the losses reduced to D68million. “This only shows how the vagaries in the prices of oil impact on the finances of NAWEC,” said Alhagie Jallow, Finance Director of the sole company that provides electricity, water and sewerage services in The Gambia. Pic: Mr. Jallow, Managing Director, NAWEC Justifying this loss, Mr Jallow said: “It was in 2008 we witnessed the global financial and economic crisis and many institutions, the world over, sought for assistance from their governments and they got a bailout package. Unfortunately for NAWEC we have not got any bailout package. Nonetheless we have a responsibility to ensure that our key institutions are protected and sustained if we are to forge ahead in developing this country. In 2009 as the prices of oil started going down, our losses also decreased from D363 in 2008 to D68 million in 2009. “We expect that our 2010 losses will increase to D330 million and that is precisely because the prices of oil in the international market started to increase from 2009 going to 2010 and still going further into 2011.” Due to these huge losses, NAWEC is encountering difficulties to pay its suppliers. In 2008 and 2010 the company owed its major suppliers over D378 million and D830 million respectively. The company’s Finance Director has therefore pleaded with the people to approve NAWEC’s proposed tariffs in order to remedy this situation. “If our tariffs remain the same couple with the vagaries in the prices of oil and volatility in exchange rates, then we will have a problem and that problem would only be resolved if the related cost can be passed to consumers,” he said. He continued:  “Though we all know that not all cost can be passed to consumers, those that can be passed to consumers will be defined and passed to them to ensure the sustainability of the company. “Those cost which could not be passed to consumers should obviously be paid for. Who should pay for them also should be identified, but if we don’t it means somehow, somewhere somebody will be taking it up and NAWEC is most of the time owing the suppliers but the suppliers also can go to a certain extent and there will come a time they will say ‘enough is enough’ and they will close their taps, then everybody will sit down and say ‘NAWEC amut oil’  (NAWEC has no oil), then all the lights will be off and everybody will be in darkness and then who knows what follows. We don’t want to get to that point.” While trying to convince people that NAWEC should increased its tariffs for the services they provided, Mr Jallow said the ever-increasing prices of oil coupled with the stagnant tariffs has negatively impacted on the finances of NAWEC. “To give you a background of how the increasing prices of oil has impacted on the finances of NAWEC,” he explained,  “the minimum price per barrel for crude oil between November 12th 2010 and February 4th 2011 was $81.70 and that picked up to $95.71 and, as we speak, the cost has increased further to $100 plus.  This is the situation that we have been facing over the last few years.  Under normal circumstances, if such situation occurs some cost should be past to consumers, any excess amount that should be past to consumers should normally be subsidized for.” NAWEC is proposing to increase tariffs of the different services they provide. “Our tariffs had been virtually stagnant over the period since January 2009 through to December 2010, whereas the heavy fuel that we use at the Kotu Power Station picked up from July 2009 increasing right through to December 2010 and this is continuing,” he said. “The same thing goes for the light fuel, which we mainly use in the provinces to generate electricity.  The price per litre of light fuel is well over D30 as we speak.” Provincial operations are not profitable The Managing of NAWEC, Mr Momodou Jallow says electricity generation in the provinces is not profitable. “The provincial operations are most of the time not profitable - this is not specific to The Gambia,” he added. “Nonetheless, NAWEC has a responsibility to provide social services, including electricity, not only in the Greater Banjul Area but also in the provinces and of course given that the generators there use light fuel, which is more expensive to generate electricity, makes it profitable to generate electricity in the provinces.”