GUAM WATER COMMISSION VOTES TO PRIVATIZE SERVICE

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By Mark-Alexander Peiper

HAGATNA, Guam (Pacific Daily News, May 26) - Consolidated Commission on Utilities members voted last night to fully privatize the Guam Waterworks Authority operation.

Last week, CCU members and representatives from the off-island engineering firm Black & Veatch Corp. and international utility privatization specialists Hunton & Williams met to discuss options to privatize the water agency.

The consultants presented the commission with six privatization options. Commissioners whittled that down to two, and after several hours during its weekly meeting last night, chose to privatize the water agency through a concession agreement. In a concession agreement, a private company would operate the utility, come up with its own funding for projects and the public utility's employees would become private-sector employees.

Putting a contractor in place will take at least 18 months, the commission and its consultants have said.

Commissioner Vince Camacho said the concession agreement would outlast the elected commission, insulate the operation of the utility from political interference, provide lower rates over time, and result in a faster application of technology to make improvements.

Vince Camacho referred to a management services contract as one where "there's too many hands in the cookie jar."

Commissioner Judith Guthertz made a motion to support a management services contract, but fellow members didn't support it. Guthertz then joined the other commissioners in voting unanimously for a concession agreement.

Earlier in the meeting, Guthertz said she wanted the commission to keep GWA as an operator, so long as the water agency continues fixing the island's water and wastewater problems.

Vince Camacho disagreed with Guthertz's proposal.

"We need to put a line in the sand and say there is no more. The people of Guam deserve more than: 'We will look into that,'" he said.

Commissioner Frank Shimizu said the commission wouldn't commit the government to a "bad deal.'"

Commissioners also discussed how GWA employees would be affected. Under concession, the contractor would run the utility with its own work force.

CCU members discussed employee options, such as early retirement, severance packages and the possibility of giving employees right of first refusal, so the private contractor can absorb them if they qualify.

CCU Chairman Simon Sanchez said the commission wanted to ensure that long after he and other CCU members end their terms, the people of Guam would be able to receive clean water and reliable service.

CCU Commissioner Ben Palomo added: "The (GWA) employees were so anxious to make the system work, but they weren't provided with the tools or the training. I think we all see that the employees could make the system work, but past leaders have failed them."

With the method of privatization now selected, it will take at least six months for the agency and its consultants to do a survey of the island's water and sewer system to present an accurate picture of the island's infrastructure.

Bill Cole, vice president of the engineering firm Black & Veatch, has said the island's water and sewer lines, as well as work done on those lines and other parts of the water system, were not properly documented in the past. The location of many of Guam's water and sewer lines remains unknown.

The 18-month time line incorporates the various approvals the commission will have to acquire.

The federal government, governor, Legislature and attorney general could all potentially have to approve any agreement the commission reaches with a private contractor.

Santa Rita resident Diane Galindo said that even though she has little-to-no water pressure twice a week, she doesn't know whether privatization is the answer because she doesn't know enough about the process.

What she does know, the 24-year-old said, is that the water pressure is so bad at her home that she often has to go to the water tank at the mayor's office to fetch water or visit a friend's place for a shower.

But if privatization means good water pressure for her home, she's for it, she said.

"If a private company could fix it, we should privatize as soon as possible."

Gov. Felix Camacho, in a press release, said he fully supports the commission's decision.

The press release issued last night states that the concession model is "clearly the best option for Guam."

In the meantime, GWA must still run its daily operations and meet the demands of the federally imposed Stipulated Order for Preliminary Relief. The order requires the local government to make more than $200 million in improvements to its water and wastewater systems to meet federal health and environmental standards.

One of the stipulations requires the water agency to reorganize its operations for efficiency. The commission last night formally adopted the water agency's plan to reorganize, after meeting GWA employees earlier in the day at the GATE Theater in Tiyan to hear their views. Most of the employees at the meeting voted in favor of the reorganization, which includes restructuring and streamlining some departments at the agency.

May 26, 2004

Pacific Daily News: www.guampdn.com

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