Consumers anxious about crucial water tariff study

MBONGENI MGUNI
Staff Writer | Tuesday August 17, 2010 00:00

 

Under the Water Sector Reform Programme (WSRP), Water Utilities Corporation (WUC) - until recently the sole water supplier in Botswana's towns and major villages - has already taken over 56 rural villages from the DWA and local authorities and is fast-tracking the remaining 100 villages under Phase 3 of the programme.

However, rural consumers fear the change will hit them with higher tariffs because WUC's existing tariff schedule is informed by its operating costs and was geared at comparatively higher income earners.

In addition, WUC charges VAT on all new connection fees and monthly bills, which could mean higher costs for users migrating from the DWA and local authorities.

For March 2010, the government received P62 million in VAT via water charges and P53 million in March 2009, figures which indicate that it will be unwilling to forego VAT for its new consumers.

As at June 2010, WUC was billing consumers in the 56 villages taken over under Phase 1 and 2 of the Water Sector Reform programme. Yesterday, the Minister of Minerals, Energy and Water Resources, Ponatshego Kedikilwe, said recommendations from the tariff study would be submitted for Cabinet's consideration before the end of the year.

He said associated with this, the planned Energy and Water Regulator would recommend tariff structures and subsidies to be extended to low-income earners and similar groups.

Government has engaged Mott MacDonald, Cameron McKenna and Collins Newman & Co. as consultants for the establishment of the regulator, with progress reportedly at 'an advance stage'.

'At the moment, there are all sorts of subsidies because the charges, especially from DWA, are clearly not according to the cost of delivery or drawing the water from the sources,' Minister Kedikilwe said.

'Apart from that, where people have water in their own homes in villages, there's a special scheme for those who cannot afford the rate and those who are assessed and considered poor, 'Until we have a complete study that shows the true cost of water, we cannot say what the level of subsidies will be or if there should be consideration of subsidies.

It's inevitable that certain people will have to be assisted, but as to how, this will depend on the level that is yet to be determined.'

Kedikilwe said the regulator would play a critical role in the insulation of the poorer consumers, while simultaneously monitoring water quality, overall costs and tariffs.

'Not only will the regulator try to equate good service with price; it will look at the extent to which the less able will be able to afford the tariffs,' he said. 'The regulator will determine the level of subsidies.

'It must be understood that Cabinet may change the recommendations or even say it's not the right time to have a regulator.

Cabinet could say there should instead be some form of regulation so that there's an independent assessment of quality of service and water in terms of international best practice.'

Thus far, WUC has experienced difficulties in the takeover of new consumers' accounts due to the incompatibility of its billing systems with the DWA and local authorities. This incompatibility resulted in billing delays to the new consumers, which were only ironed at the end of June.

'The billing systems of the various councils differ,' said Minister Kedikilwe. 'But there should be a single system in place. We must avoid a system where in some areas, it takes months for consumers to get bills and when it arrives, instead of P30 per month, the bill is for P180!

'That cannot be borne. The people cannot afford an accumulation of such an extent. WUC is working out a programme for the billing problems that have occurred in the past.'

Government will soon commence public consultations on Phase 3 of the Water Sector Reform Programme that involves the final batch of 100 villages. Phase 3 takeover is scheduled for October 1, 2010 while WUC will also assume wastewater services in December.

However, the takeover of wastewater services is dependent on the passing of proposed amendments to the Water Act by Parliament at its end-of-year sitting in November.