Business Page – July 20th, 2003

Water, water, everywhere, nor any drop ...

Introduction  

Not insignificantly because of natural factors, Guyana is rated internationally among the top ten countries of the world for the provision of water to its residents. According to a letter in the Guyana Chronicle of January 8 of this year, the rating is based ‘not only on the amount of water resources but the effectiveness of how those resources are used’. This makes it less easy for cynics to dismiss the rating as unsurprising if not inevitable in a country known as the Land of Many Waters, after all, availability of water in its natural locations and its delivery in urban as well as far-flung coastal areas are two separate things.
Indeed the conservancy system which we enjoy is a tribute to the water engineers who established it about one hundred years ago although it must be said that many many Guyanese can still recall the lines at the stand pipes early in the mornings. Experience has shown however that even with our good record of annual rainfall, droughts are not unusual and systems must exist and operate efficiently to mitigate the consequences of droughts which can last for several months and even lead to water rationing.


Free good?

The natural availability of water raises the additional issue of revenue collection. With access to safe water having been accorded the status of a human right by the United Nations, many Guyanese regard it in the same way as they do air - a free, social good - to be used and abused at will. The UN committee which elevated the concept to a human right made the obvious statement that water is indeed ‘fundamental to life and health and that water is indispensable for leading a healthy life in human dignity and a prerequisite to the realisation of all other human rights’.
Of course, the matter does not end there but rather raises several contentious and highly politicised issues. There are some who will argue that if water is such a fundamental right then is it not the duty of the state to provide it at no cost as is done with medical services? But is the right to housing not also fundamental and why does no one any longer expect the government to provide free housing for the nation?
Since in the final analysis the taxpayers rather than the government finance all public expenditure we also need to ask ourselves how should the cost of the delivery of water be borne? And who pays for the inefficiencies and for the water provided to those who may not be able to afford economic rates? And should there not be severe sanctions against those who pollute and in some cases destroy our water sources?

Expectations

It seems that at least at the level of the government not only have we taken the position that water must be paid for by the consumers in the same way as say electricity but that it should be privatized even if only in the form of management. It is interesting to note that even pre-independence water was publicly controlled but it must be admitted that not many would have mourned the passing of the much maligned GUYWA over which there were all kinds of questions.
While a new body Guyana Water Inc. has been set up as a company to succeed GUYWA it appears to have inherited more that just the poor image of its predecessor and the public still consider the water quality and service delivered by the new entity as way below expectations. Indeed only a few months ago but before the new management contract came into operation, respondents to the Stabroek News What the People Say used the words ‘stink’, ‘discolored’, ‘inadequate’ and ‘poor’ to describe the services.

Value For Money

While it has been just over six months since the British firm Severn Trent has been managing the water services, it may be a little late for the country to consider some of the bigger issues affecting and affected by water such as its role in national development given the country’s emphasis on agriculture. However we as a people must question whether the billions spent on the sector prior to the new arrangement gave us value for money and even whether private management of the sector was a correct approach to the problem. It is certainly more than appropriate and not at all late for the operation of the contract to be put under the microscope. Nor is it too late for there to be far wider consultation on users’ expectations, how the industry is structured and managed and what changes need to be made to the existing contract to ensure that it operates effectively.

Severn Trent

As Business Page understands it Severn Trent has a five-year contract worth some £3.2M funded by the British Government. In addition the firm stands to benefit from incentive payments amounting to £284,922. The appointment of Severn Trent was not without controversy however and its own record in Trinidad & Tobago where it had managed their water authority had come in for adverse publicity in the local press not least because of its reported poor record there as well as the fact that it won the contract here even though its bid was higher than the only other bid.
An article in the Stabroek News prior to the award of the contract had noted that ‘Guyana’s Cabinet is said to be gathering information on Severn Trent’s performance in Trinidad before making any firm decision’ and cautioned that whatever company they (the Cabinet) chose, ‘there may need to be a more thorough and public discussion on whether private management is the way to go’, a caution that appeared to have been ignored.
Perhaps because of this the award of the contract to Severn Trent was very recently defended by Water Minister Shaik Baksh in the National Assembly on June 20, but who within a week was blasting Severn Trent for their poor management. He lamented the fact that the progress over the first six months of the contract was below his expectations and emphasized the need for ‘much more progress in many areas of weakness at GWI’.

Understatement

Mr. Baksh who has presided over the sector for several years was only willing to concede that Severn Trent had inherited a ‘few problems’ which even Guyanese opposed to foreign management of the sector would regard as a gross understatement and he would only have had to read the Stabroek News column referred to earlier to gauge the public’s perception of GUYWA’s performance over the past decade. Except for the Booker Tate contract in the sugar industry, Guyana has had a very bad record of joint ventures including bauxite (Reynolds), electricity (CDC/ESBI) and telecommunications (GT&T) and the public spat between the Minister and Severn Trent is hardly likely to be helpful in resolving the disagreement between the company and the government.

Managing Relationships

At a wider level exacerbating differences between this country and the British do not help particularly among supposed friends. The Wilton Park debacle is the most recent case but there was also the undiplomatic criticism of the unwillingness of the British in respect of some specific assistance for the police. With the continuing need for international support for the country’s debt relief initiatives, Guyana cannot continue to project the image of being unable to manage relationships. While Severn Trent must be held accountable for its contractual commitments and hopefully the contract provides both incentives and penalties, this must be done in a constructive and professional manner that leads to improvements and efficiencies in the system.

Embarrassing Exchanges

On the other hand the Minister’s willingness to challenge the company should be taken seriously by Severn Trent and both parties must be prepared for constructive discussions on addressing the problems and finding solutions. It is quite possible that Severn Trent might have underestimated the magnitude of the problems in GUYWA and it is also possible that the latitude which they might have expected or resources they needed to manage the operations have not been made available. What is certain is that they would expect an environment that was conducive to the achievement of the contract’s objectives rather than embarrassing exchanges in the press. The disturbing events on the East Coast Demerara lasted for the better part the first half of the year and the public which has not been taken into the confidence of either the government or the company can only speculate on their impact.

“Guyanisation” Clause

The contract provides for a very limited number of expatriates and the government, keen to emphasise that it has not privatized water has put a Guyanisation clause into the contract. As a consequence many of those who were in the former organisation are still there and one has to wonder whether it is realistic to expect that those who had been unable to solve the problems for so many years could now be part of the solution. Indeed the Minister himself had presided over the former entity and had accepted little accounting and accountability even as his government made billions of dollars available to it. The Minister of course understands the political sensitivity of water and one cannot expect entirely rational decisions from him but he and the government must also understand that they will benefit from the successful execution of the contract i.e. they and the managers have a common interest and therefore he should function as a facilitator.

Legacy

In the absence of specific information, it is impossible for any outsider to make any recommendations but a review of the operations of the first six months of the contract is not only desirable but it would seem urgent. Minister Baksh, however, is in the unique position of being able to oversee and register potentially the most resounding success for any post-independence administration which would have a major impact on the lives of all Guyanese.
He therefore must decide whether this is to be his legacy or whether he will preside over another taxpayer-financed disaster. He must deal with this monumental task using principles that would be familiar to any business student exposed to management 101. The problems must be clearly identified and understood before solutions can be developed. While we are already months into the contract it is not too late to step back and reassess the situation especially in view of obvious dissatisfactions with the current direction in which things are (not) progressing.

Conclusion

Once this objective evaluation is completed, solutions must be agreed upon and plans made as to how these solutions can be arrived at. The objectives must be clearly established and communicated and resources directed to accomplish them. While significant funds have already been expended the old adage that sunk costs are irrelevant will have to be applied if the problems are to be dealt with adequately.
Measurement mechanisms must obviously be put in place that would help determine specific verifiable achievements along the way to the objectives established. Continuous monitoring and evaluation are essential elements of the process so that where necessary, adjustments can be made to the strategy as circumstances dictate. Of course bureaucracy and politics have no role in this and Mr. Baksh mustcarefully pick the spots when he determines that his intervention is necessary. He should remember that managing sometimes works best by letting persons with the expertise function and staying out of their way.