Veolia, the company that built and operates the territory’s St. Thomas and St. Croix wastewater treatment plants, may stop operations unless the government pays more than a year and a half in past-due invoices.
On March 12, Stephen Kruger, Veolia’s senior vice president of operations for its southern division, sent a letter to Attorney General Claude Walker, Public Works officials and the Waste Management Authority threatening to cut off service.
“While we recognize the enormous demands that Hurricanes Irma and Maria have placed on GVI’s resources, the amount now owed to Veolia has reached an untenable amount,” Kruger wrote. He said the USVI is “the equivalent of 1.6 years behind in payments, has not made a meaningful payment to Veolia in approximately 18 months, and there has been limited communication” about an outstanding balance of more that $4.669 million.
He said “Veolia has repeatedly tried to engage” the V.I. government “to sit down and work out a payment plan” but the V.I. government has not engaged and recently “adopted a strategy of completely avoiding Veolia’s phone calls, emails and letters.”
“Veolia intends to terminate the Service Contracts if GVI does not pay the amount to Veolia within the 30-day cure period.” Kruger said.
Government House had no immediate comment.
“I will share the info with you as soon as I have it on Veolia,” spokesperson Sandra Goomansingh said Tuesday.
Waste Management Authority representatives also said they would give information as soon as they could, but had not provided any as of 10 p.m. Tuesday.
A Veolia representative said the company hopes to come to terms and avoid a shutoff.
“We have had discussions with VIWMA and are hopeful we can reach a resolution very soon,” Veolia North America Director of Communications John Lamontagne said in an email Tuesday.
This crisis has been brewing for several years. (See Related Links below.) In July 2016, then-acting WMA Executive Director Steve Aubin told senators the authority already owed contractors a combined $10 million for wastewater treatment and for baling at St. Croix’s Anguilla Landfill.
Aubin asked the Legislature to find funds to help pay for the vital services. Two years ago he said failing to come up with the extra funds, which were not part of the FY 2017 budget, would lead to “work stoppage by the impacted contractors … resulting in the failure to dispose of solid waste at the Anguilla landfill, discharging of untreated sewage into the environment” and “undoubtedly create a public health crisis.”
At that time WMA was budgeted $3 million per year for sewage treatment but the actual funding was less than appropriated.
In 2016, the fund already had a negative balance of $5.7 million and so only half the fees are given to WMA and the other half are going to pay off the negative balance. The shortfall “has contributed to delayed payments to the authority’s primary wastewater contractor,Veolia, which operates the Harold Thompson Treatment Plant on St. Croix and the Pedrito Francois Treatment Plant on St. Thomas,” Aubin said.
Since then, the territory had a $110 million budget shortfall it planned to fill with borrowing, but the government has been unable to borrow on the private market. Then the storms hit last fall, increasing costs, reducing tax revenues but also opening up large amount of federal and other spending in the territory and federal disaster loans. The most recent revenue figures posted by the Internal Revenue Bureau show a smaller than anticipated drop in revenues – which still leaves a large deficit that may be only partially filled with federal disaster loans. The territory tried to borrow more than $300 million, with $250 million to help the budget, but the federal government initially only disbursed $85 million with $65 million for the central government’s budget; an amount considerably less than the most recent budget shortfall projection.