THE Auditor General has revealed that the Eastern Water and Sanitation Company (EWSC) owes the Zambia Revenue Authority (ZRA) and the Local Authority Superannuation Fund a combined total of K10.5 million in respect of outstanding statutory obligations.
And the Auditor General has revealed that the water utility incurred a cumulative revenue loss of around K37.6 million in 2017 and 2018 due to Non-Revenue Water (NRW).
According to the Auditor General’s Report on the accounts of water and sanitation companies for the financial year ending December 31, 2018, EWSC owed the ZRA over K9.7 million in unremitted Pay As You Earn (PAYE), while it equally owed LASF nearly K840,000 in unpaid remittances of pension.
“Failure to Remit Statutory Obligations: EWSC owed amounts totalling K10,567,178 in respect of outstanding statutory obligations as at 31st December, 2018. Zambia Revenue Authority, PAYE: K9,728,255; LASF, pension: K838,923,” read the report.
The report further revealed that the utility had K683,540 in unaccounted-for stores during the period under review.
“Unaccounted for Stores Contrary to Public Stores Regulation No. 16: various stores items costing K683,540 procured during the period under review could not be accounted for in that there were no disposal details,” it read.
And the report disclosed that the company lost over K37.6 million in revenue due to NRW, which is the difference between the quantity of treated water distributed in the network and quantity of water actually billed.
“NRW consists of technical losses (leakages) and commercial losses (illegal connections, unbilled customers, wastage on un-metered customers’ premises). According to NWASCO, the accepted level of NRW was between 20 per cent and 25 per cent of the quantity of treated water distributed in the network. However, during the period under review, the Company’s NRW was 42 per cent in both 2017 and 2018 against the recommended benchmark of between 20 per cent and 25 per cent. This resulted in a cumulative revenue loss of K37,643,788. The NRW deprived the company of the revenue to help improve its operations,” it narrated.
The Auditor General further revealed that despite staff efficiency, EWSC still recorded inefficiencies due to high staff costs.
“Staff Cost in Relation to Billing and Collection Billing per staff per month is the billing attributable to one member of staff per month. A higher figure indicates better staff efficiency. On the other hand, average personnel cost per staff per month reflects the cost attributed to each staff. A billing per staff per month must be higher than the average personnel cost per staff per month, implying that what the commercial utility pays each employee must be lower than the revenue the employee is bringing into the company. The desirable target for the sector is to have a combined weighted average of 40 per cent or less. It was, however, observed that although the Company’s staff per collections reduced form 98 per cent in 2017 to 75 per cent in 2018, it was still higher than the sector desired target of 40 per cent. The company was, therefore, inefficient as the staff cost was higher than the billed and collected amount, thereby affecting its profitability,” read the report.
Meanwhile, EWSC was also found to not hold title deeds for 96 properties, which included their head office building, among others, contrary to the Lands Act No. 29 of 1995, which required that institutions or individuals owning land should have or possess title deeds as proof of ownership.