Unpaid utility bills by ministries, department and agencies (MDAs) are worsening liquidity positions for the country’s water boards, the Malawi Water Boards Pension Funds Trustee has said.
In an interview on Tuesday, the trustees’ chairperson, Ben Kaluwa, who is also Chancellor College economics professor, said unless ownership and customer status for parastatals is delinked, issues of high defaults and poor performance will persist.
He said: “Government is the major defaulter in utility bills.
“Even if we have reforms, they may not yield better result if government is still attaching its ownership status to the firms.”
Kaluwa’s sentiments are in reaction to figures published in the 2020 Malawi Annual Economic Report which show that public institutions owe water boards over K22 billion in unpaid utility bills despite their poor performance.
Treasury confirmed in the report that delayed payment for goods and services for the country’s State-run firms has worsened liquidity positions for parastatals following the erosion of their working capital during the 2019/20 financial year.
It said the situation forced the cash-strapped firms to turn to banks for overdrafts, thereby increasing borrowing.
This has increased their financial risks, payment of tax obligation amd ptjer trade payable and deferring payment of tax obligations.
Treasury—which owns the companies on government’s behalf—says although prospects among the commercial parastatals suggests improved profitability, they are likely to be unmet due to uncertainties arising from the impact of Covid-19 pandemic and the slowdown in business operations.
Economics Association of Malawi president, Lauryn Nyasulu, in an interview yesterday said the performance of the parastatals partly reflected the impacts the economy has had, but their impact on revenue collection poses a huge challenge.
Figures show that Blantyre Water Board (BWB) is owed K5.1 billion, Southern Region Water Board (SRWB) K10.17 billion, Central Region Water Board (CRWB) K4.3 billion, Northern Region Water Board (NRWB) K3.3 billion while Lilongwe Water Board (LWB) is owed K10.84 billion by both public and private institutions.
As at mid-year, BWB projected a loss of K4.4 billion while CRWB’s loss was projected at K2.3 billion.
On the other hand, SRWB projected a decline in profit from K649.9 million the previous year to K124.74 million in the year under review.
Similarly, LWB projected its profit to fall to K726.39 million in the 2019/20 financial year from K4.8 billion the previous year.
However, NRWB, which has always been a star performer, projected a profit rise to K395.1 million in the review year from 323.8 million the previous year.