How can utilities survive the financial crisis that the COVID-19 crisis has created? That is the most frequently asked question during our Next Practices Live discussions.
And the answers have varied. Jose Rene Gregory D. Almendras, President and Chief Executive Officer of Manila Water, talked about choosing which bills to pay so that critical suppliers survived. Peter Twesigye, Manager Regulatory Affairs at Umeme Ltd, Uganda, talked about saving investments. Dr. Dorothy Okello, chairperson of the Uganda Communications Commission, talked about managing customer revenue. There have been almost as many answers as there have been participants.
How do you decide what is right for your situation?
That question was the subject of Next Practices Live with Dr. Ted Kury, PURC’s director of energy studies. Ted used his vast experience with PURC, as an energy consultant, and as an industry analyst to describe how to diagnose your situation and analyze your options.
The stakes for this issue can be quite serious. The World Bank expects that COVID-19 will increase the number of poor people in the Caribbean and Latin America by 18% to 220 million people. The number of people in extreme poverty is expected to increase by 23.3 million. The World Bank also reports that very few electric utilities in Africa were commercially viable BEFORE the pandemic. What happens to these operators now?
Water and sanitation utilities around the world rarely receive revenue sufficient to cover their costs. COVID-19 is increasing these utilities’ subsidy needs while also crashing government financial resources. The choices of how to manage water and sanitation utility costs and revenues are critical to the health and well being of millions of people.
Ted discussed projected financial impacts of COVID-19, what regulators and operators need to look for to understand their situations and make decisions, how to analyze options, and how to shore up critical financial reporting systems.