Water Authority will not be sold

| 04/11/2015 | 24 Comments

Cayman News Service(CNS): The government has no plans to sell off the Water Authority anytime soon, not only because it wants to protect access to the precious commodity but also because it does not want to lose revenue from one of the few public authorities that actually provides an annual return. The recommendation to sell the government-owned utility, made by the consultants Ernst & Young in their report about public sector reform, is one of well over a dozen that the current administration will not be adopting.

The decision not to put the Water Authority on the auction block was revealed in the recently published programme brief on the plans for changes in government. Selling the WA should only happen “when realizing the value has a clear purpose and when the price can be maximized”, officials wrote in the report, noting, “It can only be sold once. “

Resisting pressure that private business is always best, the government points out the importance of public ownership of such a precious resource, especially during national emergencies.

“The creation of a private sector monopoly would require considerable oversight and regulation. The option to sell is neither necessary nor attractive given the current financial position and concerns over service continuity,” the report states.

The decision will also ensure that the price for water remains affordable. The private water company which currently supplies West Bay charges its customers more than those receiving government water, giving a clear indication that one private sector supplier would soon hike up the price of the precious resource for everyone.

The government has also rejected recommendations that run counter to the PPM-led administration’s policy position of not increasing any existing fees or introducing new ones. Others are now out of date as a result of other changes, while some recommendations would have no material impact but would take up time, effort and resources that could be better directed elsewhere.

The government has, however, adapted some of the recommendations rather than accepting them wholesale. Premier Alden McLaughlin told the press Monday that they EY report was never meant to be anything more than advisory but it was fuelling reform.

Project Future – Programme Brief, October 2015

Project Future – Statement by the Premier, 2 November 2015

Project Future – Statement by the Deputy Governor, 2 November 2015

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Category: Government Finance, Politics

Comments (24)

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  1. DUBIOUS... says:

    CWCO’s licence is due for renewal in December 2015…

    The best case scenario for the Cayman Islands government would be not to renew CWCO licence and force a liquidation of its assets to be acquired on the cheap by the Water Authority…

    The international operations should be bundled in a separate company and spun off…

    To leverage its assets the Water Authority could in turn IPO 48% of its stock on the NASDQ, so that the governmentwouls still remain in control, while offering investors – local an from overseas – a chance to participate in what is going to be an explosive growth in these islands…

    If this comes to pass, we could well see the CWCO shares trading well below $6.00…

    http://www.larkresearch.com/2015/08/12/cwco-update/#comment-11368

    • Anonymous says:

      The best case scenario for the Cayman Islands government would be not to renew CWCO licence and force a liquidation of its assets to be acquired on the cheap by the Water Authority…

      CWCO is just one company, why stop there? Let’s do the banks, trust companies, hotels, accounting firms and law firms, there must be trillions of dollars there. It’s called nationalization, and it has worked very well in many countries, I just can’t name one off hand.

  2. Anonymous says:

    the government has no plans. end of story.

    • Anonymous says:

      Anyone who tries to get anything does in the private sector knows that in Cayman the competition argument does not work. Period.

      And to those people who think that it is all about votes — you are right! If it ain’t broke, don’t fix it. The Water Authority offers excellence service at low cost. What more do we want.

      Good idea, Chris Johnson. Genius idea to combine CUC and water company meter reading. We need more ideas like these.

      • Anonymous says:

        I agree with you %100 the private sector is against competition

        • Anonymous says:

          Certainly, the supposed competition in the private sector does not work to the advantage of the public.

          We have people who spout text book principles, but when comes down to practice here in our peculiar conditions — does not work!

          Price fixing, such as between Rubio and Esso, is one reason — the other is availability. You might as well buy it at the asking price, as when you shop around you might not find it at all in the end — sold.

          Then service — that is a joke — you have no one to turn to for broken contracts, poor workmanship, stupid rules, etc.

          We jump all over government — but the private sector simply does not offer a better alternative — except for more money into pockets of shareholders at the expense of service to customers.

      • Anonymous says:

        CUC read their meters remotely. Before too long both water utilities will also realise that it is cheaper to read meters remotely than to send someone out. It could be sped up by a good offer from one of the cellphone/wireless providers to send readings back once per month at a time when their network is underutilized anyway.

  3. Anonymous says:

    Gov, t should offer minority equity stake in Water Authority for sale to customers…I would buy some and the money and water supply would be safe. People always installing solar panels I just buy shares in CUC…solar panels break but shares last a long time and never need. To be fixed CUC and Facebook my two top holdings

  4. Anonymous says:

    Good call by the government look at the mess we are in with CUC. Light and water utilities should be owned and operated by the government. People have this myth that the private sector could do a better job all the time, that might be true for some cases but when it comes to something so important as water there’s no doubt government should be in charge to ensure they can offer the lowest price possible and in times of emergency (hurricanes) they can offer free water to the public which they did do after Ivan if people remember those types of things. It seems the E&Y report had one agenda and that was to privatize everything and add new fees to increase the burden on the residents of the islands. And of course the pompass agrees totally with the report. Anybody who agrees with that report as a whole don’t have no good intentions for this place or it’s people.

    • Garfield says:

      You obviously have never lived on other Caribbean islands that have government controlled power utility companies. If you had you would appreciate CUC more.

      • Anonymous says:

        No I’ve lived in Cayman for my entire life. I can assure you the Cayman Islands government could run CUC successfully by transitioning it into a more eco friendly company by pushing toward renewable energy and offer cheaper prices to consumers and still make a small profit like the water authority. I can tell you jus don’t understand what’s going on here. I will respectly show how it go like we caymanians like to say. CUC and the fuel providers are adamantly against large scale renewable energy production. Don’t take it from me do your own research large scale solar is now cheaper than fossil fuel energy production and the price continues to drop each year. Check it out for yourself. I hope a lot of you keep up to date with current events around the World especially in the Middle East the low oil prices won’t last for long. So if we don’t wise up and start pushing for more large scale solar farms or implementing solar panels on every roof in cayman we will always be held hostage by these companies.

        • Uncivil Servant says:

          As my colleagues and I have demonstrated time and time again, CIG couldn’t run a piss up in a brewery.

    • Anonymous says:

      8.36 that is of course your humble opinion. Others would suggest that privatization with introduction of competition and a regulator would be better. Tough to tell on a rock this size. Other countries have solved the disaster issue by holding a golden share so that they can control utilities until the disaster is over. What is clear is that water is damn expensive here and the water company is inefficient.

      • Anonymous says:

        And yet the private company is more expensive. Doesn’t speak well to the idea that privatizing would somehow magically improve the situation. Yes, there are economy of scales arguments to be made to reduce costs if the WA were sold, but I’m not convinced CWC or another entity would actually be able to produce and distribute water at a better rate than the WA does currently.

      • Anonymous says:

        I respect your opinion but I have to disagree the rates from water authority are pretty reasonable. I stand by my comments privatization is not the answer for water authority let’s be real here there’s one Company who has be pushing for this because they were told by the previous government they would sell it to them. That company was setup with the intention of eventually controlling the water market in cayman. I’m all for competition among companies but history had taught us the private sector don’t believe in competition either you don’t believe me. Try and start a water company and see where most of the objections will come from. Case in point look at CUC do you really think they going allow government to bring another company to come in and produce energy.

  5. Diogenes says:

    So you cannot sell the water authority because it will lead to a monopoly on water supply to their consumers which unless carefully regulated (at extra cost) would lead to consumer price increases and supply uncertainty, but its perfectly acceptable to have exactly that position already with everyone supplied by CWC? I suppose a mere coincidence that the only things government are selling are those assets (vacant land) that do not employ voters, right? Strangely enough also seems to be entirely consistent with the rest of the “implementation” of the EY report – anything which may reduce the size or cost of the civil service sidelined or torpedoed. Does McLaughlin not have the cojones to simply come out and say he will never endanger job of a civil servant that has a vote.

  6. Anonymous says:

    And in other news today, it was announced that absolutely nothing will be sold whatsoever anytime soon, and we will make up a BS story about why at the time we need to. We will do that rather than admitting that we don’t want to do the right thing to create competitive services because people will lose jobs and will not vote for us. No, we will leave that for the next administration who will also do nothing for the same reason until eventually one gallon of water costs $1,000 and you all die, hence negating the need for a vote. We of course will have waterboy cards.

  7. Anonymous says:

    okay…but what about turtle farm, cayman airways, radio cayman…etc??????

  8. Anonymous says:

    But we were going to make so much more money after we bought the water company. Don’t these people understand why we had them hire EY to do that report?

    • Chris Johnson says:

      Interesting comment about the private company charging customers more per gallon than the Water Authority. One must take into account the costs of production, the economies of scale and return on capital etc. Do not compare apples with oranges.

      A merger of the two entities would actually lead to a reduction of certain costs and a merged entity could still contain a Government interest.

      Just one further observation. Has either entity spoken to CUC to get the meter readers to do readings of water and electricity at the same time? Has either entity talked to CUC about joint billings, mailings and collection? Why not talk to the telephone companies to merge collection of all bills? Whilst I do not necessarily advocate all of them some thought should be given but I guess no one thinks outside the box these days.

      • Anonymous says:

        Splendid idea Chris. Not a vote winner though, as we would have to lay off people. Unless of course we get three people to go and read different meters at the same house at the same time but just in one car to save petrol cash and traffic jams? Brilliant if I say so myself. Gin and tonics and more votes all round!

      • Diogenes says:

        Come now Chris. Any savings that are achieved by efficiencies in staffing lead to either a reduction in votes or work permit fees. You cannot expect the government to trade lower utility prices for the consumer for a reduction in their two principal drugs. If you were advocating a new civil service department to regulate the collaboration between the various agencies, preferably requiring the private sector entities to provide reports that would require additional staff to produce for scrutiny by the additional CS, perhaps using software supplied by a friendly vendor, and in any event overseen by a new board, you might be on to something, but your ideas are simply crazy talk.

      • Anonymous says:

        So the assumption was that it would be sold to a particular company? Here I thought it would be pit to competitive bid. But maybe there was more in the background that the public didn’t know about. Please, do tell more of how we would have gone from two, non-competing, water suppliers to a pure monopoly under the EY-for-Cayman plan.

        • Anonymous says:

          Chris, very good about WAC and CUC combining efforts to read meters. I’m afraid this won’t happen unless the chip comes off WAC’s shoulder. God forbid an “Authority” steps down to a level where it cooperates with a private entity.

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