THE Auditor General has revealed that Chambeshi Water and Sewerage Company (ChWSC) Limited had accumulated NAPSA penalties in amounts totalling around K31.1 million as at December 31, 2019, due to non-payment of statutory obligations.
And the Auditor General further revealed that the company was distributing water that was below the quality standards set by NWASCO, the national regulator.
According to the Auditor General’s report on the Accounts of Water and Sanitation Companies for the financial year ending December 31, 2018, the utility accumulated over K31 million in NAPSA penalties, among other unremitted statutory obligations.
“As at 31st December, 2019, ChWSC owed the Zambia Revenue Authority (ZRA) and the National Pension Scheme Authority (NAPSA) amounts totalling K2,128,813 in unremitted statutory obligations, contrary to the Income Tax Act Chapter 323 of the laws of Zambia and the National Pensions Scheme Authority Act No. 7 of 2015. As a result of non-payment of statutory obligations, the Company had accumulated NAPSA penalties in amounts totalling K31,093,673 as at 31st December, 2019,” the report read.
The Auditor General further revealed that the utility owed over K4.9 million to 243 members of staff in salary arrears, long-service bonuses, among others.
“ChWSC owed amounts totalling K4,925,878 to 243 staff in respect of gratuity, leave pay, long-service bonus, salaries and wages and other terminal benefits for periods ranging from one to seven years. As a result of non-payment of benefits, 11 separated officers continued drawing salaries and had been paid amounts totalling K497,906 as at 31st December, 2019,” the report read.
It was also revealed that during the period under review, the company was owing amounts totalling K65.9 million and around US $3.7 million to 11 contractors in delayed payments.
“During the period under review the Company entered in 11 contracts with various contractors for consultancy, construction, and rehabilitation of water systems in Northern and Muchinga provinces at a total contract sum of K459,500,319 and US $12,486,526.80. The following were observed: Delayed Payments to Contractors – A review of contract documents revealed that certificates of payments were to be settled within 28 days after being issued. However, as at 31st December, 2019, the Company had unpaid interim payment certificates in amounts totalling K65,902,136 and US $3,741,850.25 owed to 11 contractors, which were outstanding for periods exceeding 28 days. Expired Performance Bonds: Section 52.1 of the contract provided that the performance security shall be valid until a date 28 days from the date of issuance of a completion certificate in case of a bank guarantee and until one year from the date of issuance in case of a performance bond. Contrary to the section, performance bonds for three projects that were still in progress were not renewed after their expiry,” it read.
And the Auditor General stated that the struggling utility was distributing water that was below the required quality standard.
“Water quality is important due to the health impact it has on the consumers. The overall compliance for water quality is assessed through a sequential three step process namely confidence level, number of samples tested in relation to the minimum required and number of tests meeting the national drinking water standard. The benchmark for acceptable water quality set by NWASCO is a score greater or equal to 95 per cent. During the period under review, ChWSC failed to meet the minimum required water quality as the overall assessment was below 80 per cent,” the report read.
The company is further said to have incurred a loss of revenue amounting to over K54.6 million in Non-Revenue Water (NRW).
“NRW is the difference between the quantity of treated water distributed in the network and quantity of water actually billed. NRW consists of technical (leakages) and commercial losses (illegal connections, unbilled customers, wastage on un-metered customers’ premises). According to NWASCO, the accepted level of NRW is from 20 per cent to 25 per cent of the quantity of treated water distributed in the network. However, the Company’s NRW ranged from 44 per cent to 51 per cent resulting in a cumulative revenue loss of K54,663,405. The NRW deprived the company of the revenue to help improve its operations,” narrated the report.