Forced reconnections cost Water Utilities Corporation

Water Utilities Corporation has recorded an operating loss of P242.9 million this year compared to a profit of P71.3 million recorded in March 2020.

In its financial results, the corporation disclosed that it considers the loss as a consequence of significant increase in expected credit losses from trade receivables and decline in revenue consumption, particularly from the business customer base due to the Covid- 19 pandemic.

The corporation’s management indicated that government’s directive at the beginning of the pandemic which stated that there should be no disconnection of water supply to all customers resulted in an increase in consumer receivables and subsequently an increase in impairment compared to the previous year. “The Government declared a State of Public Emergency and issued a directive in April 2020 for the Corporation to reconnect defaulting customers. The Corporation could not recognise the related revenue since the probability of collection was low given the background of defaulting.”

The corporation reconnected about 40 000 customers including those disconnected due to non- payment and those who had been inactive.

According to the published results, the Corporation reassessed contracts with the customers because of the change in these circumstances as it didn’t meet the criteria for revenue recognition and such revenue from these customers was recognised on a cash basis. On this basis, water consumed during the year by defaulting customers for whom reconnections were made amounted to P32.5 million.

However, the Corporation’s management stated that it currently has sufficient liquid assets to settle obligations as they fall due and the Government of Botswana, through the Ministry of Land Management, Water and Sanitation Services has indicated that they will continue to support the Corporation towards financing infrastructure and operational budget requirements to enable achievement of its mandate. “Such support has been realised in the current year and after the reporting date.”