SOMALIA: Galka’ayo water shortage caused by a flawed business model‏

Published: May 18, 2011

Galkayo city, the administrative capital of Mudug region, is experiencing severe water shortage after a crack in the main water reservoir ( haan) caused leakage that the Galwaaq Water Company, one of water supply companies, is unable to mend due the financial constraints.
Many people in Galka’ayo depend on traditional water wells in the city. Galwaaq Water company was formed by group of local business people who committed  US$ 220,000 to the project matched by funds from the Unicef, the European Union and Puntland Water Authority in 2003.
Fu’ad Abshir Hassan, manager of Galwaaq Water Company told Somali Channel correspondent in Galka’ao that the company had asked for financial assistance from the local business community. “They said the company has got to  sell  equity in the  form of shares to finance the water supply business,”  said Fu’ad. “The company needs US$ 1000,000.”
The business community  in Galka’ayo  knows water supply business generates decent turnover  and dividends for investors given the fact that there is neither  corporate not income tax to be levied on the company and shareholders.
Puntland government subsidises the company to the tune  US$ 60 per a barrel of petrol used  since 2003 although a barrel of petrol costs US $200 now, says Fu’ad.  It is fair to assume that Galwaaq  Water Company  has been subsiding the water supply since the price of the petrol has begun  to rise.  
Puntland government may face accusation for favouring Galwaaq Water Company over other water supply companies  as long as Galwaaq  is indefinitely subsidised by the administration. Selling shares will mean relying on shareholders to tackle business challenges otherwise the company will be seen as keen on having it both ways: existing as profit-making entity and getting subsidies its competitors have no access to.
Liban Ahmad
Horseed Media

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