Published On: Sun, Dec 16th, 2018

Questionable behavior

Hilbert HaarBy Hilbert Haar

The General Audit Chamber-report about Dutch assistance to St. Maarten in the wake of Hurricane Irma reveals that one of the island’s key state-owned enterprises – utilities company GEBE – is in serious financial trouble. The report also suggests that GEBE is not too willing to cooperate with the World Bank. And lastly, it shows some questionable behavior by the government; in four years time it has practically depleted the company’s reserves and it is not paying its dues either.

The World Bank has almost $11 million available to save GEBE from going broke, but the utilities company is apparently not happy with the conditions it has to meet. The one that stands out is obviously the requirement for public tenders for underground cabling excavation work and for ordering new water tanks.

The World Bank does not want GEBE to go to its regular contractors without a public bid. This makes a lot of sense, because without such bids, projects tend to become more expensive. When that happens, the door to corruption stands wide open.

GEBE’s argument against public tenders is not very believable. The company complains that this delays the execution of projects.

While it is true that preparing and executing public tenders takes time, this can hardly be used as an argument against such procedures. After all, we’re talking about a considerable gift to the company and the donor – the Netherlands – has engaged the World Bank to make sure that this money is well spent.

The Audit Chamber report suggests that there is some sort of Mexican standoff between GEBE and the World Bank; repairs to electricity and water distribution infrastructure came to a full stop towards the end of October. Don’t tell me that it is impossible to put together a public tender in four weeks time.

There are of course other factors that stand in the way – like the government. It has contributed in a big way to GEBE’s financial woes. How is it possible that the reserves have melted away – from $34.2 to $12.2 million – in just four years time? What on earth happened to those $22 million? That’s an interesting question for GEBE’s supervisory board.

According to the Audit Chamber-report the government has taken “millions” (without mentioning an exact amount) in dividend from GEBE. I wonder how this is even possible since there is, as far as I know, no dividend policy for government-owned companies in place.

The government is also a badly behaving customer. It does not pay its water and electric bills, or it does not pay them on time. Current payment-arrears add up to $4.4 million. That number makes me wonder how much the government has outstanding with its telecom provider TelEm.

Lastly, I wonder how all this will affect the budget, because the World Bank demands that the government foregoes the collection of $4 million in dividend and more than $5 million in concession fees.

I am also curious to know how large hotels are going to react if GEBE attempts to charge them cost-recovering tariffs. Maybe they will just stop providing free rooms to those who offered them soft deals in the past.