Water boards face tariff hike dilemma
The country’s water boards and Parliament face a dilemma in their push for tariff increments as government which is supposed to approve the proposal is reluctant to do so.
The water boards argue that the current tariff is below full cost recovery as they lose over K23 billion annually to ministries, departments and agencies (MDAs) in unpaid bills and K30 billion to non-revenue water.
During a meeting with the Natural Resources Committee of Parliament yesterday in Mzuzu, Northern Region Water Board (NRWB) acting chief executive officer Francis Munthali said to stay afloat, they need a 55 percent water tariff hike.
He warned that failure to adjust the water tariff would make them fail to meet operational costs.
Munthali said: “By December last year, we had already made a K1.9 billion loss. The figure will grow to over K4 billion by the end of this financial year.
“Our projection is that if we apply 55 percent price adjustment, we should be able to turn around from the losses.”
He argued to the committee that the water tariff framework they are using is pro-poor and that the water tariff hike would still benefit the poor.
“For example, even after 55 percent, for some customers they will still pay less than K1 000 in a month for water.
“The threat that we have is that for an institution of our size to be making losses of over K4 billion is a huge loss and not sustainable.
But the parliamentary committee chairperson Welani Chilenga said a water tariff adjustment in the face of a cholera outbreak would have negative impact and worsen the situation.
He said: “If tariffs are not increased, the water boards will no longer be able to produce enough water to serve people.
“Our recommendation is that everything has gone up, including production of clean water, so they need to increase the tariff to keep on producing.”
The other water boards Blantyre Water Board and Central Region Water Board have proposed an average of 40 percent, Southern Region Water Board has proposed 35 percent while Lilongwe Water Board is asking for 25 percent, according to Chilenga.
In an earlier interview with The Nation, Water and Sanitation Minister Abida Mia said raising the tariffs before the cholera situation eases will not be allowed.
She said government is looking at several ways of helping water boards recover debts which are owed by MDAs.
“I am aware of them discussing everything, which is okay, and normal but as long as there is cholera, the President [Lazarus Chakwera] will never allow a tariff adjustment,” she said.
According to a presentation Munthali made yesterday, the board requires an ideal tariff of K2.90 as unit cost per one litre which includes operation cost of K1.44, depreciation of K0.21, financing costs of K0.24, replacement cost of K0.50 and capital expenditure of K0.51.
If the tariff is hiked, communal selling points will spend a minimum of K973 and maximum of K2 920.20 for three cubic litres of water, up from a minimum of K628 and a maximum of K1884.
