PUC – Public Finance Disaster
The Government took over R911 million rupees of debt from the Public Utilities Corporation when the management was handed over to a French management team last year. But even today. PUC has accumulated losses of R619 million on its books. These huge losses are revealed in the Auditors Report on the accounts of the corporation for 2009, which has been given to the National Assembly.
What the Seychellois public would like to know is how a publicly owned company got into this state. It is impossible to accept that such losses were incurred simply on the provision of electricity and water.
The answer is perhaps not hard to figure out because it reflects the situation that the Government itself was, and continues to be, in. It only represents the total failure of responsibility on the part of those who were managing public finances.
Foreign obligations represent the largest share (SR875 million) of the debts taken over by the Government. These are not part of any debt write-off or re-scheduling. The Seychellois public will have to face high utility rates for years to pay them off.
As examples of the disastrous management, the accounts show that R56.8 million of desalination equipment no longer functional was written off in 2009 as well as R25 million of obsolete strategic spares. That’s R81 million down the drain on this item alone. It is another proof that the purchase of desalination plants may have been riddled with corruption.
Decisions which have cost PUC enormously include the arrangement to pre-sell electricity to the Indian Ocean Tuna factory, which became a huge loss when fuel costs increased and the rupee was devalued.
PUC is far from financial stability today, even after the transfer of the company to French management.
In a special note in their report, the Auditors have expressed concern over the prepayment of R63 million to overseas suppliers noted in the 2008 accounts. In 2009, R13 million of this was written off “with no satisfactory explanation given”, the Auditors say.
The Corporation’s net comprehensive income for the year was R6 million but that is without any payments of debts and not even the cost of the management consultancy contract of 6.1 million euros (R75 million) which is being met by the Government.
PUC is a story of a public finance disaster.
Source: Regar 7-23-10