Aggregated debt of four utility companies reach MVR 9 billion

The President Elect's Office has revealed that the four utility companies are in financially difficult positions, and that their aggregated debt reaches MVR 9 billion.

The utility services are provided by state owned enterprises (SOEs) State Electric Company Ltd (STELCO), FENAKA Corporation Ltd , Male' Water and Sewerage Company Pvt Ltd (MWSC) and Waste Management Corporation Ltd (WAMCO).

The President Elect's Office expressed concerns today about the financial status and debt levels of these four companies, and outlined some measures they aim to take to address the issue.

Transitional Spokesperson Mohamed Firuzul said that the case of STELCO is relatively not as bad as they are a profitable company, even though their debt stands at MVR 3.7 billion. However, while payments of MVR 185 million are due next year, Firuzul said there are doubts this can be achieved through the company's funds. He said this would translate as a need for the government to provide funds for STELCO.

Firuzul further noted that the information received from STELCO indicates that proper preparation is not being done to handle the peak electricity usage season of the coming year. He revealed that gensets and other equipment necessary for building capacity have not been aligned for procurement.

Meanwhile, MWSC has a debt of MVR 1.4 billion. This is broken down into MVR 137 million for various suppliers, MVR 822 million for creditors, and MVR 493 million taken as loans.

Firuzul said that MWSC is due to receive MVR 375 million for work they have completed. The delay in getting these payments has had an adverse effect on the cashflow of the company and in paying dividends.

Speaking about WAMCO, Firuzul noted that the total debt amount for the company is MVR 226 million. He highlighted that the government has been providing additional funds to the company every year, despite which the company has been facing increasing losses annually.

Firuzul also revealed that WAMCO does not have a business development plan in effect, and has not completed audits since 2020. The company has also failed in updating and monitoring their stock and inventory, according to Firuzul. He further noted that some of the company vehicles were damaged, outdated and in need of repair.

As per the details shared by the President Elect's Office, the SOE in the worst financial situation as of now is FENAKA, which is responsible for providing electricity to a large number of islands.

FENAKA has a total debt of MVR 4.1 billion; of which MVR 3.2 billion is owed to numerous suppliers, and MVR 901 million as loan repayment.

Firuzul revealed that MVR 958 million of the MVR 3.2 billion owed to suppliers is payments overdue by a period of over one year. These are owed to 1149 businesses.

The Transitional Spokesperson expressed concerns that FENAKA's budget has not been appropriately monitored. He said that the 2022 budget included MVR 1.6 billion for debts, while this year's budget had MVR 960 million allocated for the same purposes.

Firuzul alleged that there has been no plans developed on how to best manage the debt, and that arbitrary actions on the matter had caused severe damage to the financial conditions of the company. He said that FENAKA had, for the purposes of debt repayment, taken loans with large interest rates, while the company had failed to conduct an audit in the past year.

The President Elect's Office also proceeded to outline some measures that the incoming administration will utilize to improve the financial status of these SOEs.

He revealed that there are plans to restructure the utility service platform, and that this will be done in a manner most ideal to best provide the services to the public while ensuring it does not become a burden on the State.

Firuzul declined providing details of these plans at the present time. He did, however, confirm that there is no intention of privatizing any of these companies.

The spokesperson said that SOEs must be run in the form of companies, and should be able to manage themselves on their revenues, without solely depending upon funds from the State budget.

He emphasized that the companies can be better strengthened through the improvement of its financial and organizational administration.