This is why the price of water needs to go up substantially

Sungula Nkabinde on Moneyweb Today :

 

“Proposed revisions to South Africa’s water pricing strategy are as broad as they are complex, but what is clear is that water will become significantly more expensive in the future.

The Department of Water and Sanitation (DWAS) has gazetted a draft of the revised water pricing strategy, which outlines a theoretical framework that would engender a fully functioning water eco system. The 2013 document has led the discussion on how South Africa can reduce the financial burden on municipalities, which are required by law to provide water to those who cannot afford to pay for it, by transferring the full cost of delivering water services onto users. They will  incur a raft of charges that will see water pricing reflect the level of water scarcity in the country.

Domestic and commercial users will pay for charges related to planning, capital costs, operation and maintenance, depreciation, and future infrastructure build on government water schemes. A new polluter pays principle will also be imposed to ensure users discharging water containing waste into a water resource or onto land pay an additional amount.

According to the DWAS, South Africa ranks as one of the 30 driest countries in the world with an average rainfall of about 40% less than the annual world average rainfall.

Even though the implications could potentially be disastrous for an already struggling economy, the consequences of not the addressing the water security problem could be worse. The revised pricing strategy seeks to incentivise more efficient use of water, and ensure the much needed upgrade to the country’s water infrastructure is properly funded.

Municipalities struggling with poor billing systems, significant water leakage and high rates of non-revenue water (water provided for which no income is received) are a big part of the reason why there significant capital is required to resolve the water crisis in South Africa.

Sanlam economist Arthur Kamp says it’s not possible to give a definitive, or even a ball-park figure of how much the cost of water is going to increase by, saying price structures are going to be quite complicated because it is going to be a hybrid model. There will be a wide range of charges that will be determined on a national level, other times sectoral level.

Says Kamp: “What (the draft revised water pricing strategy) does is it gives one the flavour of what they’re trying to achieve. There is a lot of infrastructure coming and we can’t afford it so the user is going to pay. And I don’t think anybody is going to dispute that water is a scarce resource and that tariffs need to reflect that”.

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