Corporation is sinking as former star manager faces probe

The news out of Plot 39 Jinja Road, the National Water and Sewerage Corporation (NWSC) head office in Kampala, is not good.

In several interviews with The Independent, top officials of the corporation have sought to allay widespread speculation that the company is “technically bankrupt”, can no longer provide adequate water supply and has recently “secretly” increased the price of water for consumers.

If insiders are to be believed, the good old days of NWSC under William Muhairwe whose contract expired on Nov. 17, 2011and was not renewed, were a facade.

According to NWCS workers; the corporation was able to hide its rotting under-belly under Muhairwe because staff feared him and he had cultivated a media persona that led his performance and that of the corporation not to be questioned.

The new boss, Alex Gisagara, who is the corporation’s acting MD and was formerly the Chief Manager, Engineering Services, may not have the same privilege.

Quite media shy, he told The Independent that he could not comment on the issues in the press because “he is still acting”. Gisagara is quite popular with the staff; one of them described him as a “humble old hand”, and it appears to be the general view. However, if he is to do better at his former boss’s job and beat off raising number of aspirants, he needs to act quietly and decisively.
Although new information surfacing about Muhairwe indicates that he was financially profligate, he was hardworking and strict.

NWSC is grappling with a problem of water shortage that has compelled the corporation to ration the resource. Just last month, a briefing statement on the crisis was sent to President Yoweri Museveni, The Independent has learnt.

“The current water supply capacity of the water treatment facilities have been outstripped by demand,” the briefing notes.

It explained how the current dry spell has worsened an old problem.  According to the briefing to the President, the current NWSC water demand is estimated to be over 210,000 cubic metres per day (m3/day) yet the current practical water supply production capacity is 180,000 m3/day.  This water is the capacity of the three Water Treatment Plants located in Ggaba that pump to booster stations.

NWSC top officials admitted to The Independent that the institution has cash flow problems mainly because of bad debtors.

Because the corporation cannot pay its creditors, some of observers have concluded that it is “bankrupt”. But a source who sits on the board dismissed this saying the corporation is not “bankrupt” but is merely “cash strapped”.

“How can people say NWSC is broke, look at how much we owe and how much we demand from people. Debtors are our biggest problem now and this makes it hard for us to operate,” the source, who requested anonymity, said.

The source said NWSC has adequate funds but they are held in fixed deposit accounts.

“These accounts earn the corporation interest,” a board member told The Independent, “ but we need money and most of them have not matured so we will have to pay a small interest on an over draft and service our debts. But let no one lie to you that we are broke.”

There have also been allegations, that NWSC financial doldrums are not new but the previous MD, Muhairwe, adroitly dodged reporting them. “Muhairwe always reporting a trade surplus,” is how an expert in NWSC affairs put it. A trade surplus describes a positive difference between money coming in versus money going out. It does not reflect the cost of the trade or in NWSC’s case the cost of the turnover or sales. Therefore, the high sales will make it look like the corporation is profitable whereas it might not be. The Independent could not verify these claims in the absence of audited accounts.

Part of this irregular financial reporting was because Muhairwe’s bosses, the board of governors and those at the Ministry of Water could not touch him. He always reportedly told them that he knew what he was doing.

Who would stand in the way of a man that had beaten the odds and turned around the loss making NWSC into “a model of excellence” and even written a book about it Making Public Enterprises Work (2009) that still features on the syllabus of Management institutions?

Muhairwe’s card house is falling apart. Shortly before the recent Kyankwanzi retreat, Betty Bigombe the state minister for Water was given a report to present detailing how after Muhairwe’s departure, the corporation had made substantial savings on travel, hotel, media, phone call among other costs. Extravagance is one of the reasons that made Muhairwe fall out with board members.

As his contract ended, Muhairwe fidgeted. When this reporter went to interview him after several postponements, he declined saying “there is already a lot in the press, we would not want to worsen the situation.”

Around this time, he still hoped he would retain his job. Several top government officials vouched for him in the highest offices saying that Muhairwe had to retain his job even if it meant expiring the whole board. The reason was that Muhairwe’s record was sound. He was a renowned manager—a species hard to find in Uganda.

The Independent has learnt that it took the intervention of President Yoweri Museveni for NWSC to oust the “exception manager” even amidst all sorts of accusations by the board, the ministry and others before the Inspector General of Government. The board accused Muhairwe of using NWSC resources to undertake and promote his personal projects, extravagance among others.

The institution once hailed as “a model” is increasingly coming under public attack over its debts, water rationing and mixed up financial reports.

Water tariffs raised

Government institutions are the biggest debtors with their debt standing at Shs 15 billion or 36 percent of the institutions debt that by Dec.12 last year stood at Shs 46 billion, according to minutes of a recent board meeting.

A document entitled “Notice to Disconnect Water Supply to Government Ministries and Departments Due To Outstanding Unpaid Water Bills, lists Mulago Hospital with over Shs 6 billion as the biggest debtor followed by Uganda Prisons at Shs 4.5 billion and Uganda Police at Shs 2.8 billion on a list of 14. These were supposed to be disconnected by Feb.10.

The government debt alone would be enough to clear the corporation’s Shs. 9.2 billion pending obligations to creditors and leave it with a staggering Shs.6bn to run its operations.

When NWSC in January increased its tariffs by 10.2%, speculation was rife that it was trying to fill the cashflow gap.

Pheona Wall, the NWSC principle public relations officer told The Independent that the corporation increased its tariffs but said it was prompted by UMEME’s power tariff increased which raised the NWSC tariff by 69 percent.

As a result NWSC also increased their tariff from Shs 1,734 for a cubic metre to Shs 1,912 for domestic consumers, while institutions and the government that used to pay Shs 2135 now have to pay Shs 2,353. Public stand pumps that used to pay Shs 1,121 now have to pay Shs 1,236 while commercial entities now pay Shs 2, 887 up from Shs 2, 619.

Low supply

The inadequate supply will be more difficult to cure. Due to this supply shortage, during dry spells, areas like Kawempe -Mbogo, Nansana, Lubowa/Seguku, Gayaza, Kyengera suffer. As a result, NWSC has resorted to rationing water.

According to an expert at the corporation, some areas that are on main lines are more likely not to suffer shortages like others on the hills where water has to be pumped. Other areas are not rationed due to infrastructure limitations.

Umeme load-shedding and power shortages have led the south western parts of Kampala like Lubowa, Seguku and Kajjansi supplied from Entebbe to suffer water shortage as less water is produced.

Generally speaking, however, the Greater Kampala has been experiencing major water supply challenges in the last two years due to population explosion, pollution of raw water quality in inner Murchison bay the source of raw water for the Ggaba Water Treatment Plant and fluctuating Lake Victoria level.

Experts point out that water demand for the Greater Kampala is expected to reach 350,000 m3/day in the next 15 years.

The problem is worsened because the demand keeps fluctuating. The start of the dry season was also marked by the festive season reduces the demand for water as most industries, except beverages and breweries, slow down activities.

Over the same period, many Kampala residents shift to their village homes. However, starting with the first week of January, the industries resume production and water demand jumps by over 20 percent. This creates a supply short fall of 45, 000m3/day.

Usually, water production during the rainy season is 165,000m3 but this was in the first week of January 2012, increased to 175,000m3/day and Jan.21, production was stretched to 192,000 m3/day, the maximum quantity that can be produced from the three water treatment plants at Ggaba.  Top officials at NWSC say that production at 192,000m3/day will be sustained at least up to March 2012, when the dry spell subsides.

Water supply has in Kampala improved but there are traditional water stressed pockets that require major long-term investments.

The corporation is also constructing a number of water booster stations to improve water supply. These include the Wandegeya Booster to serve areas along Gayaza road and parts of Kawempe. The Matuga Booster, Namumgona, Nansana among others.

In the next four years period, NWSC is set to embark on rehabilitating the Ggaba water treatment plants to restore their production capacity to 230,000m3/day using Euros 212 loan from a consortium of European Development Banks that include European Investment Bank, KfW, France Development Agency and EU-Infrastructure Trust Fund. The funds to the government and NWSC contributed were secured to improve water and sanitation services in the Greater Kampala.

NWSC plans to also rehabilitate and expand the water distribution system in the Greater Kampala and construct a new water treatment plant of daily capacity of 240,000m3 at Katosi 30km from Mukono Municipal council.

If these two projects are realised, they would change the sector completely. This is because together, the Ggaba plants and the new plant would have production capacity of 470,000m3/day— a huge surplus— considering that water demand is estimated to be at 350,000 in the next 15 years.

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