Severn Trent was never given a chance to manage GWI according to the management contract

Dear Editor,

It was with great interest I read the Stabroek News article titled, ‘Severn Trent water contract to be terminated’ published on February 10, 2007. It is clear from the article that the Guyana Water Inc has many obstacles which continue to affect the efficient management of the company. My main concern, however, is the cause of this. Who should be held accountable for the plethora of problems that engulfs the water utility and the poor performance of the company? Is it Severn Trent Water International (STWI) or is it another source?

It is quite evident from the article that STWI has been made the scapegoat for someone else’s incompetence and inefficiency. Since the management contract comes to an end some time, it seems only plausible to lay the blame for the company’s poor performance on a set of people who will eventually leave the country at some point in time, thus diverting the focus from the real cause of GWI’s continuous woes.

The article states that the Board of GWI has decided to terminate the five-year, UK-funded contract because STWI failed to meet a composite performance factor. It is my opinion that the information provided here is intended to maliciously the Guyanese people into thinking that the termination of STWI’s contract was as a result of the company’s inability to meet the targets set out in GWI’s strategic plan. At this juncture is it imperative to highlight some major issues that need to be known by the Guyanese which was conveniently not made public.

Strategic plan

It is no secret with the management of the company that the targets established in the

strategic plan are highly unrealistic. The government in its aim to push the water sector reform mandated a selected group, who clearly must not have known about the operations of the water utility, to outline targets which were to become the benchmarks for measuring performance. Targets were set without an iota of understanding of what it will take to achieve such targets and the time required to achieve these.

The major flaw of this highly unrealistic document is there was no provision on how these so-called targets were to be achieved. Would the government have readily provided the much needed funds to accelerate the cause of the water sector reform? Would the budget allocations make provisions for the realization of the targets? How were the physical infrastructure and human resources needed to achieve these targets to be provided? Or was STWI expected to bring its own monies to achieve these targets or provide a magic wand? It was hard for one to comprehend when reading this document that the targets were unrealistic and yet we were expecting STWI to achieve these within the 5 years of their contract.

Board

It seems STWI was never given a chance to manage GWI as per its management contract. This UK-based company could not perform as it should because it was not given the power to function as the management of the company. The real power was vested solely in the board comprising non-executive directors. Certain sections of the board have always sought to act as managers, thus hindering the work of those in the company instead of focusing on policies and the issues with which they are mandated to deal.

A certain faction of the board obstructed the management of the company from executing their work. It is management comprising the managing director, executive directors and senior managers who are responsible for making decisions in accordance with the strategic direction set out by the board. They are the better ones to make more informed decisions since they are on the ground daily to keep the company operational. A certain section of the board meddles in the work of the management, which has often led to frustration on the part of management. Added to this are the intermittent political hindrances and decisions which are made without due diligence, and GWI comes directly in the firing line when things go awry.

It is therefore no wonder that with these deliberate attempts to frustrate management the unrealistic targets were further hindered from being achieved.

Management contract

Managing a company does not only entail achieving targets. Neither would finance resolve all of the problems encountered by any company. It is critical to note that GWI’s management was rendered incapacitated to dismiss non-performers. The company is plagued with many persons who do not perform on the job and whose actions amount to sabotage of the company’s operations and functions. Management in most cases cannot dismiss certain individuals because these matters had to be referred to the board. Then a board member who was acquainted with an employee would sway the decision in the interest of the employee and not the company.

All hiring had to be referred to the board which took eons to make a decision in the best interest of the company. If this is a new function of the board then the human resources department and the managing director could be considered redundant. The board took a lengthy time in appointing personnel for various critical positions and often the best candidate was not selected. Parts of GWI’s labour force (inclusive of managers) are non-performers. How can efficiency and targets be achieved when the workforce is seriously flawed and can undermine the management contractor? This is a clear example of the board’s misplaced focus.

Corruption

Corruption in Guyana is so entrenched that it has become a culture and the accepted norm. This is no different in GWI. It is widespread knowledge that there are major elements of corruption within the company. Senior management has been making strides to curb this. But sections of the board have been making efforts to stop attempts aimed at stamping out corruption and this again begs the question, why? Corruption is prevalent among the local employees and is so endemic that personnel within the company are protecting those involved in such acts, and it is quite evident that investigations have been making employees all over nervous.

Mismanagement

Mismanagement is prevalent within the GWI. It seems that the management contractors and the executive directors could not make the necessary changes to deal with this because the board has to be involved in it and does not necessarily take the best actions to deal with it, having stripped management of its ability to effect changes. The mismanagement by many of the incompetent persons still in GWI has taken a great toll on the operations of the company. This has direct implications for the company’s ability to function efficiently and achieve targets.

Financial problems

It is no secret that GWI has great financial problems, but how is STWI to be blamed for that? Everyone knows that the water charges are too low. It is also a challenge to recoup monies owing to the company. Rationally, if GWI is to take a business decision to recoup its arrears then more than half of the population would have to be disconnected and we know the anarchy which would follow. But GWI does not take such draconian steps. The politicians wouldn’t like this.

By right the water rates need to be drastically increased to reflect the cost incurred by GWI to produce this commodity. But the PUC and the consumers’ advocates would not want this and neither would the government, so how does GWI get to a state of financial sustainability? If GWI cannot increase it rates and the government is reluctant to invest monies in the company, how would GWI function? This is management being caught between a rock and a hard place.

It seems redundant to keep telling the public that GWI pays about 75% of its revenues to GPL, but this cannot be emphasized enough. Expert analysis has published that this year the Ministry of Housing and Water was allocated $486M. This amount is shared between the water sector and the housing sector to cover operational costs. Therefore, the final amount going to GWI will be far less. GWI pays
on average about $145M per month to keep the water flowing to customers. Any other subventions come in the form of payments to GPL or directly to projects.

If the company cannot generate its own finances by way of tariffs and government is reluctant to provide the funds, how is the company to be managed efficiently? How are the targets to be achieved? Operational cost is not in any way minimal, given the nature of the commodity and the processes involved. Is it a wonder that the company cannot achieve financial sustainability?

Many of the decisions taken by management to improve the operations of GWI and increase the service of the water and sewerage system of the country have been negated by policymakers.

It seems that the move to terminate the UK-based management contract was not because STWI failed to achieve the targets, but because sections of the company’s policymakers were becoming agitated when they realized that STWI had the ability to effect positive changes for the benefit of the Guyanese people and were embarking upon this in a transparent manner.

Why after fours years and two months, with only eight months to go, a decision is now being taken to terminate the contract? Was the Chairman of the board present at this meeting?

It seems like a final deliberate attempt to get Severn Trent out of the picture. Now with STWI on its way out, many persons involved in corruption, sabotage and mismanagement will breathe a sigh of relief. The only outstanding thing to do is to make Severn Trent the scapegoat. Guyana has blown another opportunity to utilize the expertise and competence of persons for progress and advancement, and the water sector will remain as it is and Guyanese will continue to receive substandard services and suffer in time to come.

Yours faithfully,

(Name and address provided)

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