Sunday, June 16, 2024
6.8 C
Maseru

Debt-defaulting WASCO flagged

Business

Bereng Mpaki

The Auditor General, ‘Mathabo Makenete has issued a scathing audit report that uncovered Water and Sewerage Company’s (WASCO) inexplicable contraction of new loans despite defaulting on outstanding debts during the 2021/2022 financial year.

Due to its inability to meet its financial obligations during the year under review, the water utility company accumulated an outstanding payment of M221 million, of which M6.0 million was taken up during the same year.

The government normally lends or guarantees loans to state-owned enterprises and other entities for specific development purposes, guided by the provisions of the Public Financial Management and Accountability (PFMA) Act.

The borrower is required to pay interest and repay the principal amount under the agreed terms and conditions, failing which the government as the guarantor is liable to settling the debt.

“WASCO had accumulated payment arrears amounting to M221 million at year end, since 2017. This situation was worsened by the fact that current year’s loan installments on five projects, were not paid as they fell due,” Makenete said in her 2021/22 audit report on the government’s consolidated financial statements.

“Despite the defaulting status of WASCO, new on-lent loans were issued, namely Five Towns (BADEA) and Greater Maseru Water Supply. It was also established that there were three loan agreements which were contracted for similar project scope. However, one was cancelled after incurring a cost of M0.565 million. This led to fruitless expenditure and likely reputational loss.”

The audit report showed that the new on-lent loans taken up during the year were one from BADEA for the Five Towns Project valued at M564 788. 59, and another for the Greater Maseru Supply Project valued at M5 482 198.72 (about M5.5 million).

The M5.5 million loan appears, however to have since been cancelled as it did not have any outstanding balances at the end of the financial year, despite being issued the same year.

Makenete, however, also apportioned part of the blame to the Ministry of Finance’s Debt and Aid Management Department for the borrowing irregularities.

“There was no loans billing system in place within the Debt Department, as a result, invoices were not being issued, leading to inconsistent settlement of loans by agencies.”

She called for the Dept Department, whose functions include managing public debt, negotiating loan agreements and maintaining a comprehensive debt and grants database, to get its house in order.

“I recommended that the Debt Department must improve its debt management, to ensure compliance with loan contracts and the Public Financial Management Act (PFMA) Act,” she added.

Attempts by this publication to obtain comments from WASCO were not successful at the time of going to press.

- Advertisement -spot_img
- Advertisement -spot_img

Latest article

Send this to a friend