Government subvention cut by Lm4.3m since 2005

The Water Services Corporation has reduced its need for a government subsidy by Lm4.3 million since 2005, while also improving its efficiency and cutting its losses, Public Investments Minister Austin Gatt told Parliament yesterday.

Speaking at the opening of a two-day debate on the financial estimates of the corporation, Dr Gatt said the WSC was next year expected to spend Lm22.2 million as recurrent expenditure and Lm11.6 million as capital.

Between 2006 and 2005 the corporation had reduced its recurrent expenditure by Lm1.2 million. Losses went down by Lm2 million and the government subsidy was reduced by Lm3 million.

This was achieved without the tariffs being touched and without the corporation taking even one cent from the surcharge charged to consumers for water and electricity. Indeed, the government had no intention of touching the tariffs or the subsidies currently given. Furthermore, the water sector would remain in government hands.

Dr Gatt said Malta Desalination Services Ltd, the subsidiary which used to operate the reverse osmosis (RO) plants had been fully integrated into the corporation after a decision was taken against privatisation.

Importantly, major investment in the RO plants, made through EU help, meant that water production in Malta was now among the most efficient in the EU.

It was also significant that the WSC had reduced non-technical losses (mostly unbilled water) to 2.8 per cent from 3.5 per cent last year. The international benchmark which the WSC was aiming to achieve by next year was 1.6 per cent, a figure which in the case of Gozo was achieved years ago. This percentage was 6.5 just five years ago.

The minister pointed out that by the end of this year, as compared to 2005, the WSC would have reduced water production costs by Lm50,000, and administrative costs by a further Lm500,000, in the latter case even though salaries went up.

Such figures did not include the sewage section. In that section alone, savings between 2005-2007 would reach Lm1.5 million.

In all, between 2005 and 2007 the corporation would have cut its losses by Lm2.2 million and the government subvention would have been cut by Lm4.3 million. Were all government entities to work in this way, the minister of finance would be a happier man!

Dr Gatt said capital investment was not being slowed in any way. Since 2003 investment had risen by Lm9.3 million. And yet bank loans were down Lm4.3 million.

Could anyone argue that this meant management and financial efficiency?

Dr Gatt said the corporation now had 357 fewer workers than in 2003, the reductions having been achieved through a reorganisation, retirement and transfer to the civil service. No one was dismissed. Still, the corporation had some excess workers, particularly in the sewage system, and it would be better if they reverted to the civil service, which actually employed them.

The minister said the corporation was responsible for 20,000 new services between 2003-2007, an average of 4,300 per year. Some 75km of water pipes and 25km of drainpipes were replaced.

Concluding, Dr Gatt said the main projects on the corporation's agenda were further improvement of water quality by better mixing of production from RO plants and groundwater extraction and continuation of work on the storm water masterplan. The first draft of this plan, being prepared with EU assistance, was expected to be completed by the end of this year, incorporating all of Malta and Gozo in a holistic manner.

By the end of 2008 three sewage treatment plants being built with EU assistance - in Gozo; at ic-Cumnija in the northwest of Malta and between Xghajra and Ricasoli would be commissioned. A gallery from Marsa to Ricasoli would have to be laid out as part of the work for the third plant. Dr Gatt said the siting of the €70 million Ricasoli plant had been moved because of the SmartCity project.

Dr Gatt stressed that no EU funding would be lost on these projects.

The WSC and Enemalta were also embarking on an extensive IT programme which would include an efficient, effective and flexible metering system, real time management information and better financial reporting. This project was the subject of international tendering and the successful bid was expected to be selected by the end of this year.

Nationalist MP Mario Galea praised the way how the WSC had reduced the amount of unbilled water, particularly through leakage control and better metering.

Leakages amounted to 3,900 cubic metres of water per hour in 1995 when the infrastructure leakage index (ILI) stood at 10. Progress had been registered every year, to the point of 590 cubic metres per hour by the end of 2006. This compared very well with international standards, and the WSC had gained great international respect for its efforts in this sector.

Yet this achievement was not yet enough and the WSC was aiming at reducing losses to under 350 cubic metres per hour for 2007.

The corporation was also concentrating on non-technical losses which meant non-payment for water. This could be due to under-registering or otherwise defective meters, mistakes in meter reading and mistakes in billing. The bottom line for this phenomenon represented 23 per cent of consumption.

Mr Galea observed that with much of Malta's water produced by RO plants, reducing production by eliminating waste also meant helping the environment through less electricity consumption.

Frederick Azzopardi (PN) praised the WSC for the integrated manner in which it was conducting its operations in Gozo and highlighted the success achieved in water leakage control. Work currently in hand on the sewage treatment plant would spell the end of sewage outflows in scenic Wied Mielah and San Blas. As a result Wied Mielah was now being rehabilitated.

Mr Azzopardi also praised the WSC for extending the sewage system to various localities.