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Free living costing billion$
Rich, poor avoid paying utility bills, mortgages
BY ERICA VIRTUE Sunday Observer writer [email protected]
Sunday, March 30, 2008
An aversion to paying utility bills and low-cost mortgages is costing tax-payers hundreds of millions of dollars annually, information made available to the Sunday Observer has shown.
And this reluctance to accept that there is a cost to utility services cuts across social and economic classes, officials of the Jamaica Public Service Company (JPS) and the National Water Commission (NWC) have admitted, while revealing that some debts have been outstanding for more than 20 years.
A child walks across the paved walkway of this housing scheme in Denham Town where residents are in arrears to the National Housing Trust. The scheme was built under the Inner City Housing Project. (Photo: Lionel Rookwood)
Between the NWC and JPS, more than $1.3 billion is lost annually, with the highest portion due to theft.
In 2006, the JPS' records showed that estimated loss, due to theft, defect on lines and sums not billed, totalled $840 million. Of that figure, $400 million was due to theft, said Winsome Callum, head of corporate communication at the JPS.
"JPS has estimated that approximately 13 per cent of the electricity it produced in 2007 was lost to theft. This stolen electricity is valued at just under US$57 million, a cost that is shared by JPS and legal paying customers," she said.
According to Callum, "through a variety of strategies, the company managed to reduce the electricity stolen by one percentage point by the end of 2007. This is significant, as it represents the first time in several years that there has been a tangible reduction in electricity theft. Indications are that this trend will continue in 2008".
Callum, said the company has always tried to address electricity theft through programmes that have, over the years, changed in focus and tone.
"The tone of the current 'How come?' campaign is aimed at behaviour change based on morals," said Callum. "It is to be in effect for at least one year, and we expect that in another three years we will see some changes in that regard."
In 2007, more than 20,000 illegal connections were removed from power lines and so far in 2008, more than 10,000 have been removed in both rich and poor communities.
Callum said she would rather not state the estimated numbers of people who are stealing electricity annually, although the company does have an estimate. She said also that the JPS's effort to collect monies in some schemes failed and were abandoned.
One such, she said, was a pilot programme instituted in Denham Town, Tivoli Gardens, Central Court Apartments and Torrington Park between 1997 and 2001 under which residents paid a flat rate of $600. But the programme, she said, failed to get the desired results.
Maurice Reid, the manager who was in charge of the programme, said the pilot experienced an 80 per cent compliance rate. However, it was discontinued in 2001 after Mirant Corporation acquired the majority stake in the JPS. He could not say why.
Like the JPS, the NWC, which is now a seeking a 40 per cent rate hike, said it is owed hundreds of millions of dollars for water which it has treated and sent to communities, and for which it cannot collect a cent.
Some of the communities at the centre of electricity theft and mortgage arrears are among those that are indebted to NWC.
Corporate public relations manager of the NWC, Charles Buchanan, said there are "red" areas in all 14 parishes, and thieves have found ingenious ways of stealing the precious commodity.
"Individuals have run illegal connections through the main pipelines to take water from one side of the road to accommodate illegal connections for a community on the other side," said Buchanan. "We only realised this when we went to fix the water mains."
Twelve years ago, the NWC estimated that it was losing $500 million annually from what it then called "social water" - water for which it collected nothing.
Over the years, as the name for this phenomenon changed to "unbilled water" and now "non-revenue water", the NWC has tried to recover cost in several instances, opting at one point to use private security to police some of its pipelines.
"Of course, that is not desirable," said Buchanan. "But again, the courts take a long time to dispose of matters, so we do not use that on a regular basis. Also, we have used collectors who we pay a percentage of what is collected."
In one expensive venture, the NWC said it spent $30 million to relocate a pipeline in St Elizabeth to stop more than 1,100 illegal connections on a one-mile stretch of road.
Callum, Reid and Buchanan agreed that communities found stealing one utility were 100 per cent likely to be acquiring the other illegally. Buchanan also confirmed that "rich people" were just as guilty of stealing water as poor people.
One of the biggest areas of loss to the NWC in the past, Buchanan said, was the water provided at standpipes. Through a number of initiatives, including having the standpipes metered and the water used paid for by parish councils, the NWC has moved to collect even a flat rate sum from some communities.
Buchanan pointed to efforts in Seaview Gardens in Kingston to reduce a $197-million debt at the end of 2007. The programme, however, managed to collect only $4.62 million from 1,415 of 2,700 individuals targeted.
The experience of the JPS and the NWC is similar to that of the National Housing Trust (NHT) which, while still in the red financially, is unable to collect milions of dollars in mortgages.
The reasons for non-compliance include violence, which has forced home owners to flee their units. The upshot is that the NHT has abandoned all efforts to collect in those cases.
However, the agency, which was established in 1972 to provide mortgages from the mandatory contributions of employed persons, said it has been making progress in three problem-plagued schemes.
"The level of indebtedness to the Trust has been reduced in all instances; Trench Town, from $8.6 million to $3.8 million; Denham Town, from $33 million to $25 million and Tawes Pen from $1.5 million to $1.1 million." the NHT said in an e-mail response to the Sunday Observer.
However, the Tawes Pen units have been put in "charge off" accounts, meaning the loans are irrecoverable, and the agency has abandoned all efforts to collect on them.
The NHT said, however, that it has made provisions for the loss.
The scheme was built by the Government in 1975 at a cost of $1.2 million on lands occupied by squatters, who were evicted.
Some of the former squatters were later offered tenancy in the new development.
Meanwhile, the NHT said that as at February 2008, 132 accounts or 30 per cent of the total number of units in the three schemes mentioned have been settled.
The agency said it was working with the respective members of parliament "to treat with the arrears portfolio" and more specifically, to "regularise units that have been abandoned".
Rich, poor avoid paying utility bills, mortgages
BY ERICA VIRTUE Sunday Observer writer [email protected]
Sunday, March 30, 2008
An aversion to paying utility bills and low-cost mortgages is costing tax-payers hundreds of millions of dollars annually, information made available to the Sunday Observer has shown.
And this reluctance to accept that there is a cost to utility services cuts across social and economic classes, officials of the Jamaica Public Service Company (JPS) and the National Water Commission (NWC) have admitted, while revealing that some debts have been outstanding for more than 20 years.
A child walks across the paved walkway of this housing scheme in Denham Town where residents are in arrears to the National Housing Trust. The scheme was built under the Inner City Housing Project. (Photo: Lionel Rookwood)
Between the NWC and JPS, more than $1.3 billion is lost annually, with the highest portion due to theft.
In 2006, the JPS' records showed that estimated loss, due to theft, defect on lines and sums not billed, totalled $840 million. Of that figure, $400 million was due to theft, said Winsome Callum, head of corporate communication at the JPS.
"JPS has estimated that approximately 13 per cent of the electricity it produced in 2007 was lost to theft. This stolen electricity is valued at just under US$57 million, a cost that is shared by JPS and legal paying customers," she said.
According to Callum, "through a variety of strategies, the company managed to reduce the electricity stolen by one percentage point by the end of 2007. This is significant, as it represents the first time in several years that there has been a tangible reduction in electricity theft. Indications are that this trend will continue in 2008".
Callum, said the company has always tried to address electricity theft through programmes that have, over the years, changed in focus and tone.
"The tone of the current 'How come?' campaign is aimed at behaviour change based on morals," said Callum. "It is to be in effect for at least one year, and we expect that in another three years we will see some changes in that regard."
In 2007, more than 20,000 illegal connections were removed from power lines and so far in 2008, more than 10,000 have been removed in both rich and poor communities.
Callum said she would rather not state the estimated numbers of people who are stealing electricity annually, although the company does have an estimate. She said also that the JPS's effort to collect monies in some schemes failed and were abandoned.
One such, she said, was a pilot programme instituted in Denham Town, Tivoli Gardens, Central Court Apartments and Torrington Park between 1997 and 2001 under which residents paid a flat rate of $600. But the programme, she said, failed to get the desired results.
Maurice Reid, the manager who was in charge of the programme, said the pilot experienced an 80 per cent compliance rate. However, it was discontinued in 2001 after Mirant Corporation acquired the majority stake in the JPS. He could not say why.
Like the JPS, the NWC, which is now a seeking a 40 per cent rate hike, said it is owed hundreds of millions of dollars for water which it has treated and sent to communities, and for which it cannot collect a cent.
Some of the communities at the centre of electricity theft and mortgage arrears are among those that are indebted to NWC.
Corporate public relations manager of the NWC, Charles Buchanan, said there are "red" areas in all 14 parishes, and thieves have found ingenious ways of stealing the precious commodity.
"Individuals have run illegal connections through the main pipelines to take water from one side of the road to accommodate illegal connections for a community on the other side," said Buchanan. "We only realised this when we went to fix the water mains."
Twelve years ago, the NWC estimated that it was losing $500 million annually from what it then called "social water" - water for which it collected nothing.
Over the years, as the name for this phenomenon changed to "unbilled water" and now "non-revenue water", the NWC has tried to recover cost in several instances, opting at one point to use private security to police some of its pipelines.
"Of course, that is not desirable," said Buchanan. "But again, the courts take a long time to dispose of matters, so we do not use that on a regular basis. Also, we have used collectors who we pay a percentage of what is collected."
In one expensive venture, the NWC said it spent $30 million to relocate a pipeline in St Elizabeth to stop more than 1,100 illegal connections on a one-mile stretch of road.
Callum, Reid and Buchanan agreed that communities found stealing one utility were 100 per cent likely to be acquiring the other illegally. Buchanan also confirmed that "rich people" were just as guilty of stealing water as poor people.
One of the biggest areas of loss to the NWC in the past, Buchanan said, was the water provided at standpipes. Through a number of initiatives, including having the standpipes metered and the water used paid for by parish councils, the NWC has moved to collect even a flat rate sum from some communities.
Buchanan pointed to efforts in Seaview Gardens in Kingston to reduce a $197-million debt at the end of 2007. The programme, however, managed to collect only $4.62 million from 1,415 of 2,700 individuals targeted.
The experience of the JPS and the NWC is similar to that of the National Housing Trust (NHT) which, while still in the red financially, is unable to collect milions of dollars in mortgages.
The reasons for non-compliance include violence, which has forced home owners to flee their units. The upshot is that the NHT has abandoned all efforts to collect in those cases.
However, the agency, which was established in 1972 to provide mortgages from the mandatory contributions of employed persons, said it has been making progress in three problem-plagued schemes.
"The level of indebtedness to the Trust has been reduced in all instances; Trench Town, from $8.6 million to $3.8 million; Denham Town, from $33 million to $25 million and Tawes Pen from $1.5 million to $1.1 million." the NHT said in an e-mail response to the Sunday Observer.
However, the Tawes Pen units have been put in "charge off" accounts, meaning the loans are irrecoverable, and the agency has abandoned all efforts to collect on them.
The NHT said, however, that it has made provisions for the loss.
The scheme was built by the Government in 1975 at a cost of $1.2 million on lands occupied by squatters, who were evicted.
Some of the former squatters were later offered tenancy in the new development.
Meanwhile, the NHT said that as at February 2008, 132 accounts or 30 per cent of the total number of units in the three schemes mentioned have been settled.
The agency said it was working with the respective members of parliament "to treat with the arrears portfolio" and more specifically, to "regularise units that have been abandoned".
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