While the T&T Electricity Commission (T&TEC) continues to be in financial distress, its customers are owing more than $1.4 billion.
The main culprit of delinquent payment is the Government who owes the electricity company $1.2 billion for supplies to hospitals, police stations, schools and other agencies, while ordinary consumers owe the sum of $264 million.
This was contained in a T&TEC “Aged Analysis of Debt” dated December 31, 2020, obtained by Guardian Media, which gave a breakdown of the figures.
In the document, T&TEC divided what its customers owe in two sectors–private and public–under the headline “Total Outstanding.”
Under private, T&TEC recorded $264,408,597.22 being owed to them, while they identified the public sector of having an unsettled bill of $1,199,727,372.61
Sunday Guardian was reliably informed that private company Desalcott, which sells desalinated seawater to the Water and Sewerage Authority (WASA), owes T&TEC $50 million. State-owned WASA, which has been defaulting on its payments, owes $503 million.
In a 2018 Public Accounts Committee meeting, high-level officials of T&TEC informed committee members that to understand the nature of arrears owed to T&TEC, one has to understand the billing cycle. They noted that the commission will always have arrears because from the outset customers are billed in arrears.
The commission reported that residential and commercial customers consume electricity for 60 days before receiving a bill. Whilst the due date for payment of these bills is 14 days after the date of the bills, interest cannot be accrued on the bills until 30 days from the date of the bill.
Before a customer can be disconnected, T&TEC must give he/she a reminder notice, that is, at the issuance of the second bill when the charges of the previous bill remain outstanding, reflecting both the current bill and outstanding amount from the previous bill.
T&TEC owing NGC billions for natural gas
Appearing before a 2018 Public Accounts Committee of Parliament, general manager of T&TEC Kelvin Ramsook admitted that T&TEC had owed the National Gas Company $1.5 billion for natural gas.
However, a year after Ramsook made this revelation, Prime Minister Dr Keith Rowley announced that T&TEC had owed NGC some US$700 million ($4.75 billion).
Rowley was speaking at the signing of the term sheet agreement between Shell Trinidad and NGC.
T&TEC purchases gas from NGC which is deployed to power generating plants Trinity Powers, PowerGen and Trinidad Generation Unlimited. Since then, that figure has decreased.
T&TEC’s chairman Keith Sirju also admitted that the commission had been operating at a loss since 2011.
While Sirju indicated that T&TEC needed to trim its fat, he said T&TEC’s electricity rates had not been adjusted since 2009.
One of T&TEC’s biggest challenges, they revealed, was being owed by State-owned and private companies.
Private company Desalcott, the committee heard, was owing T&TEC $56 million at the time.
Recently, NGC was downgraded by Caribbean Information and Credit Rating Services Limited (CariCRIS).
CariCris lowered the ratings on the NGC’s USD 400 million debt issue to CariAA (Foreign and Local Currency) on the regional rating scale, and ttAA on the Trinidad and Tobago (T&T) national rating scale from CariAA+ (Foreign and Local Currency) on the regional rating scale and ttAA+ (Local Currency Rating) on the national rating scale.
According to CariCris, the downgrade is driven by the higher cost of gas from upstream suppliers and historically low international commodity prices, which have resulted in compressed profitability margins, adversely impacted financial performance, and constrained debt service metrics.
Gonzales: Debt to NGC a burden, we have been trying to settle it
Public Utilities Minister Marvin Gonzales has described T&TEC’s lingering $1.9 billion debt to NGC as a “burden around the necks of taxpayers.”
The indebtedness is from one state company to another.
T&TEC falls under the purview of Gonzales.
In a telephone interview, Gonzales said T&TEC has been trying to reduce its debt by making monthly payments of $80 million to NGC. “We have been trying to settle the debt.”
Although a portion of the debt has been paid, Gonzales said T&TEC needs a review of its electricity rates which would give the company the ability to pay NGC on its own without having the Government to stand guarantees.
“We have to do a rate review to allow the company to shoulder that burden on its own without having to rely on transfers or the Government entering into credit arrangements to pay that debt. This debt is a burden to taxpayers,” Gonzales said.
He said T&TEC does not get a subvention from the State but is allocated funding to undertake capital projects.
The commission’s average annual expenditure is $4.3 billion while its income is $3.2 billion.
For years, Gonzales said, T&TEC has not been making a profit to undertake projects, renew assets and provide proper maintenance.
Gonzales said T&TEC’s arrears and debts have constrained “the commission’s ability to undertake its capital maintenance programmes to ensure the reliability of supply across the grid. That is why I keep reiterating that we have to make our utility companies financially sustainable so they can continue to provide optimum service to citizens. It is also important to ensure economic development and growth.”
While admitting that T&TEC has been performing far better than WASA, he said there was still room for improvement.
T&TEC has a workforce of 3,000.
Gonzales said his aim in 2021 is to have T&TEC enter into a Memorandum of Understanding with a foreign electricity distribution company which will serve as a model for the commission.
The international company must have a proven track record and will provide T&TEC’s senior and middle managers with training, technical expertise and skills to improve its services.
“We have already identified one company in Florida. They are also looking at other companies in Australia and England,” he added.
He said this move will cost T&TEC nothing.