5 May 2010

South Africa: Water Tariffs Set to Rise to Reduce Need for Borrowing

Cape Town — Water consumers are going to have to dig deeper into their pockets as all of the country's 13 water boards are set to increase their tariffs in July. Proposed increases range from an inflation-related 6% to a huge 43%.

While the water boards are required to consult with local government and ask the Treasury for its comments, the Department of Water Affairs told Parliament's water affairs committee yesterday that neither the minister nor Parliament could approve or reject the tariff increases.

A delegation from the department told the committee that the financially crippled Namakwa Water Board is set to increase its tariff by 43%, making its water the most expensive in the country at R9,11/kl.

The largest of the boards, Rand Water, is to increase its tariff by a substantial 14% but it comes off a relatively low base and increases the price of its water from R3,48/kl to R3,97/kl. The Pelladrift Water Board is also implementing a large increase of 20%, but this takes the price of water there to R2,28/kl.

The department's submission says the increases will allow the water boards to finance capital expansion and decrease their dependence on loan finance.

It said pressure on the boards to reduce their tariffs would result in a higher level of borrowing, which would result in tariffs being increased to unaffordable levels.

Eleven of the 13 water boards were financially viable. The exceptions were Namakwa and Bushbuckridge, but rescue plans were being put in place.

The committee was also told that municipalities owed the water boards more than R1,3bn. Of this amount, R704m is arrears while R691m is current.

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