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Business News of Thursday, 30 June 2016

Source: B&FT

GHC250m debt suffocates Ghana Water Company


Government and private companies owe the Ghana Water Company Limited (GWCL) to the tune of GHC250million, with government accounting for approximately 61% of the debt or exactly GHC151.6million.

The government debt constitutes the cost of water consumed by various government agencies, the Auditor-General’s report for 2014 has revealed.

Chairman of the Public Accounts Committee (PAC) of parliament, Kwaku Agyemang-Manu expressed worry over the debt when officials of the company appeared before the committee on Tuesday.

The company, he said, is not taking steps to write off any provision or recover government debt to the tune of GH¢151.6million.

However, Fred Lokko, MD of the company, explained that: “With the government of Ghana we assume a 100percent collection and so we don’t provide provision on the government billings.”

He further explained that a clearing house system used to exist where all the utility companies submitted their bills to the Ministry of Finance for payment.

“But after December 2013, that arrangement was abolished. As a result, the government of Ghana is not paying; they say we should go to the institutions to go and collect the money and when you go they say they have not received subvention to pay. If we disconnect and come with a payment-they pay but unfortunately we are not allowed to disconnect,” he added.

According to the Deputy Minister for Water Resources, Works and Housing, Sampson Ahi: “When Finance Ministry introduced the GIFMIS concept. They asked MDAs to budget for utilities so it is assumed that the various government institutions, the MDAs will budget for the utilities and on quarterly basis, Ministry of Finance will make releases to them-then they can take care of their utilities-so this is the concept- as to whether it is released timely or not that is another issue.”

Kwaku Agyeman Manu noted that the committee will capture the indebtedness in its report and present it before Parliament to urge government to pay-in order to make GWCL more efficient.

Officials of GWCL also told members of the committee that private companies owe them GHC99million, which the chairman indicated that he doubted whether they can recover such amount.

He enquired from management of GWCL, what happens to debt that is unrecoverable.

The MD said the company is doing all in its power to recover the debt, indicating in respect of unrecoverable ones, however, that: “We applied to the board for authorization to write them off and we have started the process.”