WMA Faces Financial Crisis: Rs 443 Million Deficit & Rising Overdrafts

The Wastewater Management Authority (WMA), responsible for managing sewage systems in Mauritius, is grappling with a financial crisis, as highlighted in its latest financial report as of June 30, 2023. The authority is reporting a staggering accumulated deficit of Rs 443,467,014 this year, compounding the significant challenges it already faces.

The report revealed a marked decline in revenue, which has fallen to Rs 409,326,063 for the fiscal year ending June 2023, compared to Rs 452,828,285 in 2022.

This decrease can be attributed to a reduction in income from various activities, such as service fees and licensing rights, which do not involve direct goods exchange.

This included revenues from subscriptions and commissions on specific services.

However, it is the rising expenses that are particularly alarming.

Operational and administrative costs have surged to Rs 585,184,460, a substantial increase from Rs 533,681,094 in the previous year.

Additionally, depreciation costs, which account for the loss of value of assets like buildings, vehicles, and equipment over time, amount to Rs 108,025,519.

Financial costs also add to the burden, reaching Rs 264,512,985.

In 2022, the WMA reported a significant deficit of Rs 209,386,620, but that figure has more than doubled in 2023, indicating a continuous deterioration of the authority’s financial health.

This situation raised urgent questions about the long-term viability of the WMA’s operations.

Another crucial concern regarding the WMA’s financial position is the dramatic increase in the use of bank overdrafts.

From June 30, 2022, to June 30, 2023, the overdraft has skyrocketed from Rs 10,404,996 to a staggering Rs 73,381,351.

This drastic rise demonstrated a growing dependency on credit facilities to fund operational expenses, highlighting a significant budgetary imbalance.

Simultaneously, the WMA’s available cash reserves have plummeted alarmingly.

The authority’s “cash and cash equivalents” — representing readily available financial resources — have drastically decreased from Rs 10,055,224 to a mere Rs 43,587 within a year.

This critical situation undermined the WMA’s ability to manage unforeseen expenses or ensure effective short-term operations.

The Ministry of Energy and Public Utilities has directly linked the WMA’s disastrous financial situation to administrative decisions made under the previous administration.

Specifically, contracts were awarded to companies that failed to meet their obligations, forcing the authority to incur substantial costs for poorly planned and partially executed projects, further exacerbating its financial woes.

A prime example of this mismanagement is the Grand Baie Sewerage Project.

Launched in 2019, the project has seen an investment of Rs 728 million with no tangible results to date.

Over Rs 600 million was paid to a joint venture between Henan Water & Power Engineering & Consulting Co. Ltd and Anhui Shui’an Construction Group Co. Ltd, which abandoned the project in 2022 due to financial constraints.

Rising costs of materials and labor were cited as primary reasons for this abandonment, but it also led to additional expenditures to secure sites and complete remaining tasks, including Rs 124.8 million for supplementary interventions by other companies.

In response to these challenges, the WMA has been compelled to award a new contract worth Rs 300 million to revive the Grand Baie Sewerage Project.

This decision raised further concerns about the management of public funds, as it appeared to be indicative of a lack of oversight and control.

The Ministry insisted that these failures are reflecting a direct consequence of previous lax decision-making and emphasizes the need for a comprehensive overhaul of management practices to prevent further financial mismanagement in the future.

Source: Defi Media