Water prices likely to go up in the near future

By WAINAINA NDUNG’U

NAIROBI, KENYA: Your water bill might soon show a substantial increase if hints of a looming rise in tariffs by the regulator of water services are anything to go by.

Water Services Regulatory Board (Wasreb) said in an annual report that most water service companies (WSPs) were operating at a loss, which was threatening their long-term financial stability.

Wasreb said in its annual scorecard, Impact for 2013, that operation and maintenance cost coverage – the ability of a water company to cover its costs of operations and maintenance from its own revenue – has dropped significantly for both urban and rural water companies.

The report says on average, urban water companies’ performance on this score dipped from 118 per cent in 2010-2011 to 105 per cent in 2011-2012, while rural water companies declined from 109 per cent to 105 per cent.

“The big drop indicates that too many urban WSPs continue to operate with tariffs that are not cost reflective. To avert this threat to their financial sustainability, the water companies urgently need to submit tariff applications to Wasreb for review and approval ,” said the report,

In the year under review, Wasreb reports it approved only three tariff adjustments for Murang’a South, Isiolo and Coast, and turned down many other applications that were incomplete.

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Wasreb Head of Regulatory Services Peter Njaggah confirmed that there is a big likelihood of an increase in water tariffs.

recover costs

“Like any business, WSPs must recover their costs if they are to sustain their operations. Tariff adjustment is the most common way of doing so,” said Eng Njaggah in an email communication.

He, however, explained that tariff adjustments also serve other goals beyond raising revenue to cover all or part of the costs.

“Tariffs adjustments are also used to ensure access across social economic groups, send price signals to users and ensure fairness in water service delivery,” he said.

He promised that Wasreb would interrogate the tariffs applied by the WSPs in order to ensure that only justified costs are allowed.

“The implication of the review gives rise to two scenarios: Tariffs may be adjusted upwards or remain constant and new conditions imposed, for example, reduction of water losses and enhancing collection efficiency,” said the regulatory services head.

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Wasreb water service companies