Senate gives Wanga two weeks to resolve Sh19m water loss in Homa Bay
A Senate watchdog committee has given Homa Bay Governor Gladys Wanga 14 days to put in place measures to solve non-revenue water losses bleeding the company up to Sh19.4 million annually.
The Senate County Public Investments and Special Funds Committee is further concerned by the company’s huge negative working capital of Sh23million and has now given the Governor 60 days to turn around the loss-making Homa Bay Water and Sanitation Company (HOBWASCO).
In addition, the committee chaired by Vihiga Senator Godfrey Osotsi told Wanga to fast-track the transfer of the ownership of the water utility firm to the county government within 60 days.
During the audit queries, auditors revealed that the water utility firm’s total current liabilities of stand at Sh82.6 million exceeding the total current assets of Sh59.6 million resulting in the negative working capital.
“The company is technically insolvent. The governor should put in place measures to tackle non-revenue water losses as well as fast-track the process of transfer of ownership of the water company to the county in line with the law within 60 days,” said Osotsi.
According to a report by Auditor General Nancy Gathungu for the financial year ended June 2021, the firm also posted a loss of Sh7 million depleting the company’s retained earnings which stood at negative Sh25million.
During the period under review, the company produced 1,004,646 cubic meters of water out of which only 552,670 cubic meters were billed to customers.
The balance of 451,975 cubic meters or approximately 45 percent of the production volume represented non-revenue water which is 20 percent over and above the allowable loss of 25 percent in accordance with the Water Services Regulatory Board guidelines.
Gathungu said the non-revenue water represents a loss of Sh19,434,925 in earnings for the company at the average rate of Sh43 per cubic meter.
“Although management has disclosed the issue in the financial statements, management did not provide measures taken to change the situation. In the circumstances, the company’s sustainability is dependent upon continued support from government, shareholders, bankers, and creditors,” said Gathungu.
Governor Wanga told the committee that the company has been raising Sh4 million a month but they now intend to push the revenue to Sh11 million monthly in order to remain afloat.
She said the company has been depending on the county government to progress and the county has been pumping in money in terms of subsidies in areas of electricity and purchase of chemicals.
The governor said her administration is putting in place measures to wean the company from loss-making including an upwards review of water tariffs to increase revenue, carrying out customer identification surveys in all operational areas to weed out illegal connections and ensuring 100 percent current bills collection.