Malawi: BWB Engages With Customers On Need for Cost Effective Tariffs

1 August 2023

In its turnaround strategy in order to serve better through cost-effective tariffs and to sustain the gains it shall earn in the long run, Blantyre Water Board (BWB) took customers to Walker's Ferry to appreciate that there is huge cost attached to production of potable water all the way from Shire River to the City.

This was for the customers to realise that, while water is supposed to be free, customers need to pay for the production cost for the services to be effectively sustained to provide clean and safe water.

They were taken right at the first pumping facility of Walker's Ferry informing them that Shire River is full of impurities that include sludge during rain season which require many processes to purify -- that incurring huge production costs.

They were told that from the production costs, its huge is that of power from Electricity Supply Corporation of Malawi (ESCOM) for pumping water that ranks extremely high at K1.3 billion a month -- against the K1.9 billion that the Board generates as monthly revenue.

The remainder is used on other management and production costs as such imported chemicals; water testing in laboratories; replacement and new connections of pipes and accessories; wages & salaries; transport and operations, among others.

Having appreciated all the processes, Enock Gadama -- leader of the customer delegation drawn from various BWB zones which interact through social media -- said it had been such an educative experience and greatly acknowledged that indeed safe and water production is costly.

"We are satisfied that Blantyre Water Board is justified to adjust the tariff because we have seen for ourselves how complicated the production is," he told the media that accompanied the delegation.

"We have seen for ourselves that for us to have such clean water from the Shire River that has many so many impurities, is costly and for the service to be sustained the Board needs to apply the cost effective tariff adjustment."

The effected tariff adjustment is for middle to high income earning households while low income residential locations, who use kiosk was not increased in order to cushion any economic impact.

BWB Board member, Rev. Masona Tembo Kaluluma accompanied the customer delegation together with director of technical services, Engineer Mavuto Chiipamthenga and production & supply manager, Engineer Luke Dette -- who said the 40% tariff increase might look huge but it translates to K1.06 a litre, up from 76 tambala a litre.

"The Board spends K300 to produce a 20-litre drum of water which we were selling at K150 but now it is at K212," he said. "We cannot sustain ourselves by maintaining the old tariff because our vision is to satisfy our customers with safe portable water."

He added that at the same time, BWB needs to carry out new innovations to satisfy the growing demand through population boom and on his part Engineer Chiipamthenga told the delegation that their turnaround horizon looks towards 20 years to come.

"With funding from ExinBank of India, we plan to expand our intake at Likhubula in Mulanje, which at the moment does not have a dam but we draw water direct from the sources.

Earlier last week, BWB engaged media managers on the same turnaround strategy and on the Mulanje source of water, which is gravity-fed up to Nguludi, needs to be expanded through the reservoir dam to ease ESCOM power costs from Walkers Ferry.

BWB also plans to reduce energy consumption by implementing independent power production using solar, whose farm shall be constructed at its 12-hectare land at Nguludi pumping station.

At the media interface, BWB Board chairperson Joe Ching'ani in the company of fellow Board members, Chief Executive Officer, Robert Hanjahanja and members of his senior staff, that they will thus require reduction of energy consumption and effect annual cost-effective tariffs and to sustain the gains it shall earn in the long run.

The high ESCOM cost is through the long distance of Walkers Ferry because of gradient which is further assisted by Kameza booster pumping station in Chileka.

The Board will also upgrade its Mudi Dam treatment plant, exploit off-peak pumping regimes and to invest in bottled water.

For this to be achieved, BWB needs to effect annual cost-reflective tariffs, which was implemented at an increase of 40% in June to be done in two phases with one scheduled in October.

Ching'ani said BWB's "stand has always been never to compromise on standards in any way" adding that on this they "are proud to declare that our water is the safest, the cleanest and the purest".

"Yet to get to that level, it requires use of resources of acceptable standards, quality and quantities. While costs of operations have kept rising over the years, the water tariff has remained below cost, thus choking operations."

Ching'ani emphasized that the BWB's resolve still remains to maintain their vision -- which is to continue providing safe and consistent water supply; respond to faults in time; reduce and minimize situations of dry taps; efficiently accommodate new connections and to use durable materials.

"All these require financial resources -- hence the need to use cost reflective tariffs and not cosmetic tariffs," he emphasized, while also declaring that "for all low income customers, many areas of which are served by water kiosks, the tariff remains unadjusted -- zero increase.

"This is to cushion any economic impact. When effecting the tariff increase, Blantyre Water Board has decided that all low income residential locations will have a zero increase. Thus, we are very sensitive to the plight of the financially vulnerable customers.

He justified the decision for the annual tariff assessment and possible increase by quoting the Water Works Act No 17 of 1995, section 35, on:

* (1) The Board shall make such charges as are approved, within a reasonable time, Board to by the Minister for the supply of quantities of water measured by meter, for the make charges rental of meters, or for the provision of other services. Such charges may differ in for supply of respect of different classes of water consumers;

* (2) Such charges shall be levied and enforced in accordance with rules made by the Minister;

* (3) Such rules may provide for -- (a) different rates being fixed and levied in respect of different classes of premises or parts thereof; (b) rates to be increased in response to price inflation;

* (4) A schedule showing the tariff of rates and charges payable to the Board shall be available for inspection at the offices of the Board and shall be advertised in such 15 other manner as the Minister may, on the advice of the Board, prescribe.

BWB was established in 1929 and reconstituted in 1995, that supplies potable water to Blantyre City and rural areas, parts of Chiradzulu and Thyolo Districts -- a population of over 1.4 million which has over 74,000 connections.

It has aged network infrastructure, which needs to be upgraded while other challenges include illegal water connections, meter tampering, corruption, faulty and aged water meters and prepaid meter challenges -- which are contributors to BWB's low performance.

Having effected the water tariff adjustment at at 40% from June, there will be annual adjustment of 10% from April 2024 and to reduce short term liabilities by 20% annually from K39.1 billion; improve sales volumes by 46%; reduce operational costs by 70% and increase customer base by 24,000.

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