Performance Audit of Montserrat Utilities Limited: Efficiency, Effectiveness, Financial Stability, & the Transition to Renewable

4th March, 2025

The Office of the Auditor General is pleased to announce that its report entitled Performance Audit of Montserrat Utilities Limited: Efficiency, Effectiveness, Financial Stability, & the Transition to Renewable Energy was presented to the Legislative Assembly on Tuesday, February 25th, 2025.   

Background: Formed by the merger of the previous Montserrat Water Authority and Montserrat Electricity Company, M.U.L. is 100% owned by the Government of Montserrat (GOM).  M.U.L. is primarily responsible for providing electricity, piped water, and sewage-system maintenance on Montserrat. 

Key Findings:

  • Damaged and aging water-networks & power-infrastructure.   Most of the distribution-network is old and many sections of the network are leaking or damaged.   There are large annual losses of water at various points of the network, in addition to the losses at the spring-sources.   The above-ground power-network faces multiple risks (e.g., extreme weather-events; environmental hazards), and the water-network is at risk from the climate-crisis, from human activities, and from the activities of various species of animals (especially at and around the water-sources).  Water-quality is at a very high risk.
  • Risks of major systemic failures are high and rising yearly. At the time of the audit, there were 7 engines/generators at M.U.L. During our Fieldwork Stage, four of them were in operation (Numbers 3, 5B, 6, and 7); one was out of service for complete maintenance (No.4); and two were phased out (Numbers 1 and 2). Of the 4 engines that were operating, two generators have major radiator issues.
  • Water-rates and electricity-prices remain unchanged for up to 30 years, while costs to M.U.L. soared.   The domestic electricity revenue-rates have not changed since February, 2001, the water revenue-rates have not changed since January, 2004, and the commercial revenue-rates are the same since year 1994.   The outdated prices to M.U.L.’s customers have not kept pace with the rising costs from M.U.L.’s suppliers.   The rates of revenue are key drivers to the financial performance and sustainability for M.U.L.   
  • M.U.L. has been consistently operating at a net loss for the past 8 years.  In recent years, the Company’s administrative and other operating costs continued to exceed the Divisions’ gross profits,leading to netlosses since year 2016.  Delays by suppliers, longer shipping/delivery times, and rising costs of imported fuels, vehicles, equipment, generators, spare parts, and other items, together affect every part of the Company’s operations and finances. Commendably, the long-serving technical officers have helped to sustain the frontline operations despite severe financial constraints and supply-chain challenges.
  • A drastic loss of over 38,950,000 gallons in water-supply at Killikrankie Springs during years 2020 to 2023.   Since year 2020, the net output from every spring-source of M.U.L.’s water has declined rapidly.   For example, Killikrankie Springs, the long-time major source of water-supply catchment area, urgently needs repairs.   In December of 2020, the Killikrankie Spring recorded a catchment of about 150,000 gallons of water per day.   In year 2023, this spring recorded a catchment of only 50,000 gallons of water per day (i.e., nearly a 70% loss!).  Meanwhile, groundwater is rapidly depleting through heavy use of wells at Belham.

Key Recommendations:

  • Gradually adjust M.U.L.’s rates of revenue. To return M.U.L. to its long history of profitability, the Board should advocate through Cabinet for an urgent updating of the rates per unit charged to customers for water and for electricity services.  This is the most important step in achieving M.U.L.’s viability and sustainability.  
  • Strengthen M.U.L.’s efficiency and revenue/collection capacity.  M.U.L. urgently requires a fully equipped Compliance/Collections Unit and a Legal Unit.   Given the tens of millions of dollars of annual revenues at stake, and the large losses of revenues from delinquency and from uncollected amounts, effective enforcement requires dedicated professionals in these functional areas.  
  • Repair, protect, and maintain the springs & catchment areas. In addition to testing each water-catchment to assure that the water sourced and distributed remains safe, there needs to be a monitoring program with regular full maintenance of the catchment areas.   This includes cleaning of each system’s roof, tank, gutters, and filter.  
  • Repair and climate-proof water- & power- infrastructure.     Urgently accelerate progress to renewables by year 2030 to reduce the high and rising costs and risks of over-dependence on imported fossil-fuels and related vehicles and equipment.  With the support of GOM/FCDO, M.U.L. must deploy a comprehensive strategy to repair infrastructure, to keep it well maintained, and to replace old/malfunctioning assets in a timely fashion.   In the interest of national security, energy-security, water-security, food-security, economic resilience, and public health, the key stakeholders should work together to accelerate past plans and efforts to place more of the distribution-network underground. 
  • Diversify revenues and urgently reduce the deficit.  M.U.L. should diversify its revenues, products, and services (e.g., branded bottled water versus bulk piped water), and eliminate its budgetary deficit much faster. This should also be reported to the public to support and promote accountability and transparency. The focus should shift from stopgap measures to choosing methods and technologies that will be sustainable and suitable for the Water and Electricity Divisions in order to serve the Montserrat Community with a high quality of service consistently.

The full audit report highlights several other findings and recommendations.  Their implementation will bring significant improvements to M.U.L and the Montserrat Community.

The report in its entirety can be found at the Montserrat Public Library, Publications Page or by requesting an electronic copy from the Office of the Auditor General, located upstairs Angelo’s Complex, Brades. E-mail: audit@gov.ms; Telephone: (664) 491 – 3460 or 491 – 4569.