Respect Enerserve contract,
transfer water plant to GEBE
~ Managing Director Brooks tells Island Govt ~
PHILIPSBURG--Utility company GEBE has a commitment from water producer Enerserve that it will improve the existing water plant and increase water production within two months at no cost.
Therefore, the company requested the Executive Council to honour the 10-year Enerserve contract and afterwards transfer the water plant to GEBE so the company or a subsidiary could continue to provide services in connection with water production and distribution.
However, if the Island Territory of St. Maarten should close a new 10-year contract with new water supply company Air-Fin, thus terminating the contract with Enerserve, GEBE wants new terms and conditions set regarding the distribution of water.
The Island Territory owes GEBE approximately NAf. 17 million under the existing agreement and GEBE Managing Director William Brooks emphasised in a March 26 letter to the Island Territory of St. Maarten that GEBE cannot keep on subsidising the Island Territory.
“Not only is this against proper business practice of a company, but the financers of GEBE will not tolerate this. And GEBE is planning to seek new financing for the much-needed expansion of its power plant,” Brooks stated.
Brooks believes the Air-Fin contract will not result in rapid improvement of the water production capacity, while the position of GEBE has to be renegotiated. Therefore, he presented the Executive Council with a counterproposal to the proposed contract with Air-Fin.
Brooks said GEBE had received a commitment from Enerserve that the latter would improve the existing water plant at no cost on the condition that the remaining term of the agreement be respected. “The improvement of the water plant would result in an increase of the water production capacity and the capacity would in that event be sufficient to service the existing demand,” he said.
As such, no water would have to be purchased from Aqua Design or the French side at an increased rate. “This would result in improved reliability of the production while at the same time the cost would decrease and the losses incurred with the water supply would be stabilised. The improvement could be accomplished within a short term of approximately two moths.”
This would result in faster improvement of the water production capacity than if an agreement were concluded with Air-Fin, Brooks said, and this improvement would come at no cost for the Island Territory or GEBE. No new agreements would have to be concluded and parties could continue under the existing agreements, according to Brooks.
He added that once the existing agreement with Enerserve expired, the Island Territory would become owner of the water plant at no cost and could sell this to GEBE, for GEBE to act as water producer. In addition, the remaining term of three years on the Enerserve agreement would give the Executive Council and GEBE ample time to negotiate a new contract in connection with water production and distribution services.
The Executive Council presented to the Island Council on May 4 a draft 10-year contract with water production company Air-Fin for ratification. The current contract with Enerserve for the production of water would be terminated with only three more years to go on the contract, to give Air-Fin ownership of the water plant at Cay Bay. Air Fin would build a new reverse osmosis water plant in the Cupecoy area for additional production of water.
Public Works Commissioner Roy Marlin said the contract negotiated with Air-Fin was the result of an increased demand for water. The demand has increased to 12,000m3 per day, while Enerserve only produces 9,370m3 a day. The Air-Fin contract entails an upgrade of installed capacity within nine months to 16,500m3 a day and the company will guarantee a supply of 12,300m3 a day.
However, Brooks said in his letter that GEBE could not accept the extension for another 10 years of the already undesirable situation based on the existing basic agreement of 1996. Therefore, even if a contract with Air-Fin were concluded, the contract might commence without an agreement with GEBE.
Potable water for consumers in St. Maarten is produced presently by Enerserve through an agreement reached between Enerserve and the Island Territory.
An agreement exists between GEBE and the Island Territory based on which GEBE provides services related to the production and distribution of water.
“This agreement dates back to 1996 and was intended for a short term only, reason why the agreement is very basic and leaves numerous issues unresolved. It does not properly address responsibilities or liabilities, while it does not provide for a fair compensation to GEBE for the services provided or even for the property of GEBE being used,” Brooks said.
He explained furthermore that GEBE accepted and paid for the water Enerserve produced. GEBE collects the amount due on the water bills of the consumers and applies the payments to the expenses incurred by GEBE.
“The Island Territory is entitled to any profits made in the water supply, while it is also responsible for the losses incurred in connection with the water supply.”
However, Brooks said, the Island Territory has failed to reimburse GEBE for these losses. “Presently, about NAf. 17 million is owed to GEBE to cover the losses incurred.”
Brooks also said GEBE, in the interest of the people of St. Maarten, was willing to continue providing services in connection with the water supply, but the terms and conditions under which the company provided these services would have to be set in a new agreement regarding water production.
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