PHILIPSBURG–Utilities company GEBE outlined its financial situation, the challenges it faced post-Hurricane Irma, and the steps it will be taking moving forward during a meeting of the Central Committee of Parliament on the company’s financial situation on Tuesday.
According to figures provided during the parliamentary sitting, the company lost NAf. 3.5 million up to November 2018, but closed that calendar year with a net income of 1.8 million guilders. MPs were told that the loss in revenue is due to the company’s loss in income and partly due to recovery cost after Hurricane Irma which caused extensive damage in September 2017.
The company’s cash status as of August 2017 was NAf. 43,175 million; as of January 2018, this had reduced to NAf. 33,374 million and as of January 2019, it plummeted to NAf. 29,885 million. GEBE told MPs the company has not defaulted on its payments to any of its suppliers or financiers, which include SOL, Wärtsilä, Seven Seas Water, Pacific Life and CUNA.
The company forked out NAf. 157,083 in sales and operating expenses in 2015; NAf. 173,923 in 2016; NAf. 163,328 in 2017 and NAf. 154,411 up to November 2018.
The company’s revenues for water stood at 36,171 in 2015; 37,778 in 2016; 39,689 in 2017; and NAf. 34,194 up to November 2018.
The electricity revenues were NAf. 149,535 for 2015; NAf. 142,214 in 2016; NAf. 128,118 in 2017; and NAf. 108,942 up to November 2018.
The company’s 2017 financial audit has been completed and its asset valuation was accurately updated. The company’s expenses decreased by NAf. 8 million in 2017 despite the reconstruction phase during the last quarter of that year.
Thirty-seven per cent (NAf. 30.5 million) of the company’s funds are allocated to labour; 12 per cent (9.9 million) to material; 13 per cent (10.5 million) to main expenditures; 22 per cent (18.7 million) to general expenses; and 17 per cent (13.8 million) to depreciation expenses.
Following Hurricane Irma, GEBE took several measures such as an immediate hiring freeze and slashing training, overtime, consultancy and leisure expenses, and requested that government defer its concession payment. Despite these measures, MPS were told that the company’s fixed cost is still too high. GEBE said it will have to maintain measures to remain afloat and if the situation continues as is, something will have to be done about labour cost.
The company has renegotiated its water agreement with Seven Seas Water during the current recovery phase; changed its pension schedule to 65 years with flexibility giving workers the option of retiring earlier; revised its draft 2018 budget; and completed its 2019 budget; revised its strategic business plans; engaged in negotiations for Dutch funding; negotiated a new insurance broker; and met with its shareholders on its dividend and concession.
Challenges the company faces include not having capital expenditure for its 2018 and 2019 budgets, having its water grid under stress because only some of its water tanks are operational and not having roofs over some of its engines, resulting in these engines only being able to run during the day and not at night due to risk of rainfall.
As it relates to insurance, prior to Irma the company’s loss limit had been NAf. 15 million and the company is now covered for all risk with a loss limit per area. The distribution grid is also now insured, as the majority of the grid is underground. The company had to change its insurance broker because, while it had been covered for hail and snow, it had not been covered for wind damage.
Moving forward, GEBE plans to continue its cost-cutting measures, explore new revenue-generation measures and secure financing for its capital expenditure. There are also plans to have a new dual fuel engine, a smart city concept, streetlight restoration, a new main building, complete underground network, continue with the rebuilding of its water tanks and have all of its streetlights switched to LED and be in working condition.
Representing GEBE at the meeting were Chief Executive Officer Kenrick Chittick, Chief Operations Officer (COO) Veronica Jansen-Webster and Chief Financial Officer Iris Arrindell.
VROMI Minister Miklos Giterson was also in attendance and delivered opening remarks at the start of the meeting.
The meeting was adjourned after GEBE made its presentation and MPs had a chance to ask their questions and express their concerns.
Source: The Daily Herald https://www.thedailyherald.sx/islands/84999-gebe-lost-naf-3-5-million-in-2018-1-8-million-net-income