Almost one year after a special audit report was handed to government on the Guyana Power and Light Company (GPL), its Chairman Robert Badal says the board is yet to see it but he said the utility is on top of receivables, which had been cited as a major problem.
“I haven’t seen that report. That report hasn’t been given to the board,” Badal told Stabroek News in an interview last week.
The audit report commissioned by the APNU+AFC government and conducted by the firm, Nigel Hinds Financial Services was submitted to the Ministry of Finance on August 29, 2016.
It had reported on a number of financial and other irregularities while stating that the utility company’s system for managing trade receivables is “loose and out of control”. Because of that some $5.6 billion will have to be written off as bad debts and that is unlikely to be the end of the problem, the report had said.
The report also stated that the system used by GPL to manage Trade Receivables was in dire need of restructuring as the current system had failed. The report noted that Trade Receivables are processed in the Commercial Division using the Customer Information System (CIS) and the Prepaid System.
However, those systems were not designed to provide the critical analysis required to monitor and manage receivables in a timely manner. The report said difficulties and the extended periods in obtaining aged receivables reports, receivable balances by tariff category and receivables reconciliation were just a few of the shortcomings of the CIS system.
It concluded that the CIS figures are of questionable reliability, particularly considering management override, back billing and unprocessed requests from the Loss Reduction Division to the Commercial Division.
The report added that GPL utilises the Oracle Enterprise Resource Planning System for its financial reporting and has the required modules to process information needs across all activities and functions of GPL but these are not being used.
“… GPL has only fully implemented the General Ledger and Payables modules with Procurement and Inventory still not fully implemented. The key module missing is Receivables whether by design or accident, it has resulted in ad hoc, make-shift, unstructured and muddled management of Trade Receiv-ables,” the report declared.
But Badal said without seeing the report that the company could today report that it was “on top of receivables.”
He pointed out too that the company was currently using the Oracle system to its full extent and it helps in making the company able to achieve a high percentage of collection in terms of receivables.
“Our management and collections is at 98% of current receivables. Our inventory management has improved quite a lot. We schedule things throughout the year rather than buy a year’s supply and hold it in a warehouse so that has improved our cash flow quite a lot,” he said.
“I don’t know the figure under the audit of receivables but what I know a lot of receivables came through from the GEC (GPL’s predecessor) days as far back as then. Then there were a section of receivables that were statute barred because once it passes more than three years you can’t collect that. Given current arrears that are less than three years the management is on top of that and we are making a lot of progress in that area. But our focus is ensuring that current billings doesn’t go into receivable and they are collected and we have been very successful with that,” he added.
However, he pointed out that there have been delays with government bills and those of the Neighbourhood Democratic Councils (NDCs) and City Hall have been a humbug.
“Of course, there are delays in some areas because government don’t pay on time number one, right. City Council don’t pay on time, the NDC don’t pay on time or don’t pay at all. The City Council has over $2 billion for us so you have to really analyze the receivables to know what’s controllable and what’s not controllable. Our best efforts to collect from the Mayor and City Council haven’t gotten us anywhere,” he lamented.
Asked the reason for this he added, “Well City Council doesn’t have money. At least they are saying that. They just don’t have money to pay. We can’t cut off the city because what will happen to the city…and then some government (departments) don’t pay on time but we get it in another period so our collections are on track. We place a lot of emphasis on collections. We shut anybody down if they are fooling around and they do not meet their payments. We have a rigid policy in that regard because it is the state’s money, it is the people’s money.”
Private sector businesses face rigid scrutiny and penalties are enforced if they do not pay up.
“All private sector companies have to pay on time. You see, our whole management we have had some improvement there. We don’t cut off somebody if today they didn’t pay or they just receive a bill and next week we cut them off. We give them a warning, we send you a text. That is why we have been asking people to register online so that we have your cell number. First of all when it goes into arrears we send you a text saying you have to settle it. It is more streamlined now. But whatever is in arrears before that and beyond three years it is difficult to deal with it because it’s statute barred. It’s a waste of time going after that you know, so many small people for small amounts, many people overseas and these kinds of things, waste of management’s time,” Badal posited.
The company would not waste time chasing after City Hall because it feels it is a losing battle. Instead it channels its resources into ensuring that its current customers pay on time.
“We ensure that the current customers don’t go in arrears, ensure large companies pay within the time they are supposed to pay and even government, we are on top of government as well,” he added.