The novelty of modern sewerage has translated into a reluctance to pay for the service.
ASC's loan gets negative rating as collection problems persist
Residents of Ajman only recently gained access to modern sewerage for their buildings, but already the emirate's only supplier of the service is having trouble getting them to pay. "The situation is evolving," said Oliver Crasson, the managing director of Ajman Sewerage Company (ASC). "Nobody was paying for anything before, and now they are having to pay. It's a normal situation. It's not going to be perfect from the first day." Standard & Poor's, the ratings agency, yesterday placed an ASC loan on "CreditWatch with negative implications" because of the lower collection rates than expected. The agency's report said the company had received collection fees on only 40 to 50 per cent of the properties it serviced in the first half of the year, compared with projections of a minimum of 60 per cent. Completion of the ASC's Dh800 million (US$217.8m) network has been delayed by about four months, with three pumping stations still under construction despite a completion deadline of Oct 8. ASC has so far provided sewerage services to about 25 per cent of the residents in Ajman for the past year, Mr Crasson said. The report did not specify the consequences of achieving less than projected revenue. "We could lower the underlying rating by more than one notch if we see no indication that the project's performance in these areas is improving, or if the project is forecast to breach its required covenants in 2010," the report said. Mr Crasson said the company was well aware of its collection difficulties and had hired more than 100 staff to go door-to-door and explain the system to customers. He said the ASC could also direct government authorities to shut off power to any customer who refused to pay. "There is a difference between our overly ambitious projections and reality," he said. "We have to take care of it, but the strategy is already in place." S&P representatives are scheduled to visit the company in Ajman on Nov 12 to reassess the situation. Ajman is striving to build the infrastructure it needs to sustain its growing property industry. Power supply is the biggest problem, with some developers already preparing to install diesel generators to guarantee power to buyers. The fear is that construction will be held up in the same way as it was with the Dh30 billion Al Salam City development in Umm al Qaiwain, which was halted in May because of inadequate infrastructure. Tameer, the developer, blamed the emirate's lack of adequate power and water for the delay. In July, the Ajman Government announced it would build a US$2bn (Dh7.34bn) coal-powered electricity plant that would be finished in 2012. Mr Crasson said that Ajman's wider power problems were not a factor in the delays at his company. "Power in Ajman is a problem for the next years, but we have a strong supply," he said, adding that the system had experienced only one hiccup three months ago, when the power went out. "We assume that growth in the next years will be a little bit less impressive because of these problems." Aside from the 20 per cent government stake in the company, the other major shareholders of ASC are Besix Group, Veolia Water Systems, Black and Veatch, and Six Construct. The facilities are operated by Moalajah, a joint venture between Veolia and Besix. email@example.com