Traditional water development works required very large
capital outlays that called for Government financing, via the World Bank, the
United Nations Development Programme (UNDP) or other international financial
agencies, to fund the work; plan, implement, construct and commission. Such
development projects, consider as humane, employed very long-term debt with
very low interest rates and in many cases, were written off and forgiven based
on unavoidable economic declines. Small water delivery projects, benefiting thousands
of people and connecting communities, were funded by accessing, free money via
aid and grants. Freeness always leads to abuse, brides paid for single family
estate connections, contracts awarded to unqualified and incapable friends and
family, purchase orders for missing items, and padded invoices, were all
skillfully accounted for before commissioning.
Financial Waste in daily operations, through perceived
political intervention in hiring requirements, the award of contracts and
procurement practices, is well known but difficult to stop or prosecute and can
only be reduced or eliminated via private sector participation; where values outweigh
votes. A state owned and operated water company will, from generation to
generation, continue its inefficient practices, as many are proud to have their
children employed by or with such an operation, a government job for life. But
such inefficiencies cannot be allowed to continue, during a lengthy economic
recession. Led by the International Monetary Fund (IMF), lending agencies both foreign
and domestic, and bondholders are demanding transparent prudent oversight; checks
and balances, before considering further funding proposals.
Handing over expansion projects and routine maintenance, to
investors as oppose to bondholders, in exchange for more operating efficiency,
less corruption and regulated returns, may seem as privatization, the selling
out of the national patrimony, by many workers' unions. But unless Government's
national budget can fund the water company substantial net annual losses or the
Government is prepared to increase water rates across the board, investors are
required, inclusive of employees’ pension plans and workers' unions. Listing a
small percentage of the operation, the majority retained by the Government, on
the stock exchange, with the Securities and Exchange Commission's enforced
rules, will offer comfort to such desperately needed individual investors. Please
Note the water company does not and cannot own the water.
International best practice shows that state built assets
are best operated by individuals with a commitment to performance based
rewards, who will respond to current economic circumstances, supply and demand
issues, and implement strategies to limit downtime. Management contracts will
demand proactive approaches to negative issues and reward the surpassing of
preset goals. No more forcing of square pegs in round holes, purchasing of inferior
items at exorbitant prices, or kick backs on the award of contracts. The
mission is quality water on demand.
Rationale
T.A.J & Associates Company Limited uses this occasion to comment on topics that have been covered, both academically and by the mainstream media, to add its opinion and point out investment opportunity, not to invoke any social action.
