OfReg spends $1M on consultants

Employee salaries and benefits average about $100K per person

The Utility Regulation and Competition Office, known as OfReg, spent some $2.2 million on salaries and benefits for 22 employees last year, and also had to spend more than $1 million on consultants because the staff lack the skills to carry out the office’s regulatory work, according to OfReg’s 2017 annual report.

OfReg’s report states that it spent $1,052,451 on consultancy and professional fees, which was $177,368 more than the office budgeted for last year. The overspending took place because OfReg needed more consultancy services in the telecommunications sector to handle an increased number of projects, the report states.

The report notes that OfReg is “endowed with a small group of enthusiastic, willing and dedicated staff” but that “the organization currently lacks, in house, the range of requisite skills to perform its regulatory work.”

Therefore, OfReg “must rely on consultant help,” states the report, which also shows that OfReg spent $2,228,992 on salaries and benefits for a “total full-time equivalent staff” of 22 people – about $100,000 per employee.

The report explains that OfReg is working to train its staff to be “the best of the best,” and is also committed to recruiting economists, engineers and lawyers who have the skills to succeed at the office.

“The expectation is that in the short- to medium-term, consulting and training costs will be high,” the report states, “but consulting costs will trend downwards as the effects of the training and development initiatives are realized.”

Along with consultancy and professional fees, OfReg also spent $243,752 on legal fees last year – nearly $37,000 more than budgeted.

The legal expenses were made for an ongoing court case between OfReg and Datalink, the Caribbean Utilities Company subsidiary that manages the territory’s telephone poles. DataLink is challenging a 2017 decision by OfReg that prohibits it from charging telecoms companies fees to reserve unused space on its telephone poles, which the companies need in order to expand their fiber-optic cable networks.

The judicial review hearing for that case was held last month, but a judgment has not been made yet. OfReg stated in its report that the expected cost of the legal dispute is about $250,000, though some of that may be mitigated if the regulator wins the case.

OfReg also spent $234,233 on travel-related activities last year, which was nearly double what was budgeted; and $304,630 on “other operating expenses,” which was $49,997 more than budgeted.

These expenses as well as revenue shortfalls contributed to a nearly $1.5 million operating deficit by OfReg in 2017. OfReg officials have also stated that the office has been underfunded since it was created last year as a consolidation of the Information and Communications Technology Authority, the Water Authority, the former Electricity Regulatory Authority and some functions of the former Petroleum Inspectorate.

In May, OfReg had to ask central government for a $1 million cash injection to address its budget shortfall.

5 COMMENTS

  1. Part of the problem with our lack of transparency in government is we are challenged to determine what they even spent their money on. Are our phones better? Is our electricity more reliable or cheaper? Is our water clean? Why is our fuel so high? As far as value for money, the Caymanian population is getting NOTHING for its money here.

  2. Holy Schniekies! The PAC team with Chris and Ezzard should have a field day with this one. 22 staff all making around 100k a year, sounds quite excessive along with a whopping 1M on consultancy, 2.2M on salaries and ben., almost 250k on travel?
    If PAC is attempting to hold the Health Ministry Chief Officer in contempt, what will happen with this circus? Sounds like another ‘PORT’ debacle and wasteful public spending!

  3. Why are we paying all these people an average of CI$100,000 a year in salary and benefits if they do not have the skills to do the jobs they were employed to do, resulting in the need to employ consultants to do their work for them?. Who are these people and what if any qualifications do they have?. Is this a result of Government’s drive to employ Caymanians?.