Published On: Mon, Sep 16th, 2013

VBC: ‘Water and electricity supply in danger’

AqualectraWILLEMSTAD - The Curacao Business Association (VBC) has taken note of the alarming reports of the utility company Aqualectras which stated that the supply of water and electricity are endangered if the expansion at the Dokweg plant does not proceed.

The main reason why the expansion would stagnate is that lenders / investors have little confidence in Aqualectra to proceed with the investments needed to for this project.

The lack of confidence is due to the increased political involvement, which has taken place at this company in the past year.

Many, including the VBC, have been warning for years that direct political interference in public enterprises in general and Aqualectra in particular are undesirable because it will have negative implications on the society. Many have advocated separating these entities from politics. Public enterprises should be run on business and prudential sound principles and not on political principles.

Setting up a politically independent regulatory board, could be an effective instrument.

This well-intentioned advice is completely ignored by Aqualectra. There is politics at its best applied by sitting on the chair of the board and take purely political decisions such as the reduction of tariffs without any financial means, give temporary workers permanent employment, deprive managers of their authority to make decision or to sign checks, dismiss members of the management board, send Agreko back, etc.

The consequences of these totally irresponsible actions are not being felt in in full force: huge deficits of more than 125 million guilders jointly in 2011 and 2012, serious deterioration of the solvency position and mistrust among financiers and investors.

Now the Curacao society will carry the burden of this unlined business accounting policy; no reliable supply of electricity and water as well as high rates.

This development will be fatal for the economy; no reliable supply of utility products, no sustainable economic development, as simple as that.

The society and the current Government are now carrying the burden. They will have to find a solution to these very serious problems quickly. For the Curaçao society in general and the economy in particular, it is vital that reliable supply of water and electricity is guaranteed at affordable rates.

In the very short term, the confidence of financiers and investors in Aqualectra must be restored by executing the pending proposals on the table without further delay and to ensure that management is based on business and economically sound principles.

An independent regulatory board must be set up in a medium to long term to separate the utility company from politics. This entity will be responsible, among other, for pricing and assessment against internationally accepted efficiency and product quality.

The VBC calls on the Government to show decisiveness on very important issue of reliable supply of water and electricity and to structurally solve this issue once and for all.

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