Aqualectra takes Executive Council (BC) to court

September 24, 2008 7:52 AM

Commissioner Humphrey Davelaar (Energy, PNP) is of the opinion that Aqualectra is too hasty in wanting to go to court to force an increase of the water tariff. “But they have the right to, just like the government also has the right to long for her public enterprises to work effectively and efficiently.”

Ad interim Chairman of the Board of Aqualectra Anton Casperson indicated during the presentation of the annual figures of 2007 that Aqualectra has commissioned her lawyer to prepare a lawsuit this week against the Executive Council (BC) to force an increase of the water tariff with 7.54 percent. The current water tariff is based on an oil price of 55 dollars per barrel – significantly lower than what the real price is for more than a year-and-a-half already.

The production of water and electricity will be at risk if Aqualectra is not allowed to ask more money for these soon, said Casperson. According to him, there is very little flexibility in delivering products for a price that is lower than the cost price. Davelaar is not convinced that driving back the leakage-loss ‘does not make much difference’ on the price of water. “I want to see a good calculation on what exactly will be the difference, if all households no longer have to ‘subsidize’ 7 percent of the water production of Aqualectra.” Davelaar refers to the difference between the current leakage-loss of about 27 percent and the 20 percent value the utility company is striving for.
“And let’s not forget that one of the issues in the matrix that was agreed upon with Aqualectra is the ‘cross-subsidy’: By, for example, increasing the price of electricity high enough, the marginal return from that covers a possibly deficit resulting from low water tariffs. Even decreasing the water tariffs was mentioned!”

Selling products under the cost price is also called ‘pre-financing’, because the hope is to recover the deficit some day. Aqualectra pre-financed for a total of 1.4 million guilders in 2007. This pressured the annual profit considerably: instead of the planned 41 million profits, it was 27 millions. The 14 million that the company missed out on profit is almost completely attributed to the pre-financing.

The pre-financing in 2008 takes a heavier toll. Aqualectra has pre-financed 32.4 guilders in the first two quarters of this year. The total pre-financing amount since the company started with this is 61.7 million guilders. “This means that Aqualectra produces water and electricity and has meanwhile charged 61.7 million guilders less that it has cost the company to make those products”, formulates Casperson the situation.
Aqualectra already has a loss of 19 million guilders for the first two quarters of 2008. The company anticipates that she will finish the year considerably in the red if the water tariff is not increased.

There are three ways in which Aqualectra wants to abandon the pre-financing and the losses that result from that and obstructs the necessary investments:

1. Increase the tariff of water
2. Approval of the BC to automatically adjust the tariffs as the oil
price fluctuates on the world market. Aqualectra considers
adjustment of the tariffs six times per year. The so-called component
of the tariff encloses variable costs that the company cannot control,
like the international oil price.
3. The company wants to introduce a new component in her tariffs to
catch up with the total pre-financing amount.

“We must follow these three routes. The reliability and the quality of our production are otherwise irrevocably in danger. That’s something we can not allow to happen”, says Casperson.

Aqualectra is very optimistic and continues to look forward to ‘a rational solution’. The company has compromised herself to invest in the diesel plant at the Dokweg, the BOO-plant, and the windmill park in Tera Kòrá and Playa Kanoa.

Aqualectra hinted yesterday that she has already indicated step by step how it is working on complying with the points in the matrix, by amongst others informing the public and economizing internally. “I have seen a letter on that, but the content is not clear. When you indicate that you comply with the matrix arrangements, then it must be quantifiable. For example: per when do you want to achieve the targets?” said Davelaar, who thinks that there is sufficient material to discuss extrajudicially.

(Source: National Newspaper Amigoe)

23 September, 2008