IDB highlights non-revenue water as Caribbean utilities' biggest challenge

A recent study by the Inter-American Development Bank (IDB) concluded that utilities in the Caribbean have sufficient infrastructure to supply drinking water but additional investments are needed for wastewater treatment and management projects. 

The report, however, highlights non-revenue water (NRW) – or the difference between the amount that enters the distribution system and the that billed – as Caribbean utilities' biggest challenge. 

“It is extremely important to carry out projects to reduce the level of NRW,” Corinne Cathala and Evan Cayetano, specialists at IDB’s water and sanitation division, said in a written response to a request submitted by BNamericas. 

“NRW reduction projects may include investments in technology, new networks, and replacement of existing networks,” they said. 

IDB’s Caribbean Water Study, released in November, found that most utilities in the region have NRW levels of over 40%, but in some cases it is as high as 75%.

The specialists also cited increasing sanitation coverage and reducing vulnerability to natural disasters as priorities.

The report looks at the operational and financial performance of water utilities in the Cayman Islands, Jamaica, the Bahamas, Dominica, St Lucia, Barbados, Grenada, Trinidad and Tobago, Belize, Guyana and Suriname. 

Haiti and the Dominican Republic are not included due to the way IDB categorizes regions, while Cuba is not a member of the bank and Puerto Rico is US territory. 

Projects and investments

Cathala and Cayetano said Jamaica and Trinidad and Tobago are the countries investing the most in the types of projects looked at. 

Citing a few examples and milestones, the experts point to the report identifying an NRW reduction project in New Providence, Bahamas, in recent years. It managed to reduce NRW levels by 6.8mn imperial gallons per day. 

Another example is a similar project in the metropolitan area of Kingston, Jamaica, where 25 water supply installations – involving pumps, reservoirs and two large drinking water treatment plants – are close to being fully rehabilitated to reduce NRW levels by 25%. 

Other milestones reached in recent years are a project in Guyana to improve water quality and the continuity of service to the population in three communities through the construction of three water treatment plants. It ended in 2020 and also included components to improve the measurement and reduction of water losses.

In Suriname, access to drinking water was expanded to 16,000 households, and the NRW level was reduced by 6%, they said. 

In Trinidad and Tobago, through a multi-phase program, wastewater collection and treatment were improved with a project that ended in 2020 and benefited more than 20,000 households with access to sanitation services.

Asked about the most common financing models used by the utilities, the experts said that “many of the operators in the Caribbean are public and have limited financial capacity. This implies that operators have difficulties in accessing long-term private financing.”

“Therefore, a large part of the investments come from government funds and/or with financing from development agencies, but with a sovereign guarantee from governments,” they said. 

Water utilities 

Of the 11 utilities considered for the study, only the one in Belize is not 100% government owned. The full list is: 

1. Bahamas’ Water and Sewerage Corporation 
2. Barbados Water Authority 
3. Belize Water Services 
4. The Water Authority of the Cayman Islands 
5. Dominica Water and Sewerage Company Limited 
6. National Water and Sewerage Authority (NAWASA) 
7. Guyana Water Incorporated
8. Jamaica’s National Water Commission 
9. St Lucia’s Water and Sewerage Company 
10. Surinaamsche Waterleiding Maatschappij 
11. Water and Sewerage Authority 

IDB found that, in general, access to piped water is high, but access to sewerage connections is low. 

The bank also highlights that the percentage of wastewater treated in the Caribbean is very low, and only two countries (Barbados and Jamaica) of the 11 have data on the proportion, at 3% and 8%, respectively.

Regarding wastewater collection, the report found that St Lucia, Barbados, and Suriname have the lowest percentage of sewerage connections (below 5%), while the average percent of connections for the 11 countries stands at 11%.

Also, profitability and financial capacity are low for most water utilities included in the study, the bank said, adding that many have Ebitda margins well below what is required for financial sustainability.