New bid to hike water tariffs

The country’s five water boards have proposed a new tariff increase in the 2023/24 financial year with struggling Blantyre Water Board (BWB) bidding for the highest rate at 90 percent.

The five unveiled their proposal in Lilongwe yesterday when the Ministry of Water and Sanitation met the Parliamentary Budget Cluster Committee on Agriculture and Food Security and Natural Resources and Climate Change to discuss the 2023/24 National Budget.

Northern Region Water Board (NRWB) has proposed a 55 percent increase, Southern Region Water Board (SRWB) and Central Region Water Board (CRWB) are bidding for a 50 percent hike each while Lilongwe Water Board (LWB) is proposing a maximum of 35 percent.

The water boards say the proposal is justified in the wake of the May 2022 devaluation of the kwacha by 25 percent and government’s delay to implement proposed tariff increases in the current financial year despite Cabinet’s approval.

The pending tariff increase in the current financial year hovered between 15 and 40 percent, depending on the water board. The Ministry of Water and Sanitation attributed the hike suspension to the cholera outbreak.

In his submission, BWB director of finance Paul Chiumia said the delay in implementing what was approved last year for this financial year has had a huge impact on their operations to the extent that the utility lost K10 billion.

“It is expected that we may be registering around K20 billion in losses in the financial year that is ending this month,” he said.

Chiumia added that BWB generates around K2 billion monthly from which they are supposed to pay an electricity bill of K1.3 billion.

“As you are aware, we have very high energy costs as BWB. On a monthly basis, the board incurs a K1.3 billion bill. We do not have the resources to pay that bill and it is because of that reason that we owed Escom [Electricity Supply Corporation of Malawi] huge sums. As at the close of January, we owe Escom K34 billion,” he said.

Taking his turn, LWB director of infrastructure services Maclenan Nyang’wa said they have split their proposed increase in three categories.

He said: “We have planned a tariff increase of 20 percent for kiosks, 25 percent for domestic user and 35 percent for institutions.

“Basically, although we are making profits, the profits are becoming marginal as you are aware that the city is also growing fast, we are supposed to do other investments. Without increasing tariffs, we will be close to making losses.”

SRWB chief executive officer Duncan Chambamba said they were affected by high cost of production which has led to 63 percent losses.

“We are spending K1 469 to produce one cubic metre of water and we are selling that, on average, at K901. This is a loss of about 63 percent.

“The ideal (increment) would have been 75 percent, but looking at issues like cholera and others and zero tariff on kiosks we are stopping at 50 percent,” he said.

The utility companies also blamed their financial problems on arrears in excess of K15 million which government institutions including State Residences and Malawi Defence Force (MDF) owe them.

State Residences owe LWB and BWB K3.1 billion and K2.3 billion respectively while MDF owes SRWB K7.4 billion and it has unsettled bills totalling K3.7 billion at CRWB and K160.8 million at LWB.

Meanwhile, the Ministry of Water and Sanitation has said the call for tariff increase is justifiable considering the economic challenges facing the water boards.

In an interview on the sidelines of the meeting, the ministry’s Principal Secretary Elias Chimulambe said they will, however, review proposed percentages while urging the water boards not to increase the tariffs for kiosks.

He said the tariffs adjustment which the Cabinet approved will come into effect in April this year amid a fall in cholera cases.

Ministry of Finance and Economic Affairs budget director Loyce Chilimunsungwi, who was not in the meeting but was summoned later for questioning on why government was not clearing the long-standing arrears, said the State Residences were being billed highly because of leakages in the water systems.

This, she said, resulted in miscalculations when budgeting for State Houses. However, she said the problems have been rectified through projects carried out by the water boards.

Chilimunsungwi added that Treasury has hatched a plan to clear all the water board arrears in the 2023/24 financial year.

On his part, the cluster committee co-chairperson, Sameer Suleman said while they welcomed the water boards’ proposal to hike the tariffs, but said there is need to structure the increment in favour of low-income communities.

The water boards previously argued that the current tariff is below full cost recovery as they lose over K23 billion annually to MDAs in unpaid bills and K30 billion to non-revenue water.