Water bills for homes and businesses in Nairobi are set to rise up to 40 percent if the regulator agrees to a fresh tariff review, setting the stage for a further squeeze on household budgets.
The water services regulator said Friday that Nairobi City Water and Sewerage Company (NCWSC) had sought higher tariff review to recover costs, pay loans and upgrade infrastructure.
The Water Services Regulatory Board (Wasreb) has given the more than five million residents of the capital a month to submit their views on the proposed higher consumer tariffs.
The NCWSC, a subsidiary of Nairobi County, has sought the regulator’s approval to increase water tariffs by between 20.44 percent and 39.57 percent depending on monthly consumption levels.
The planned tariff adjustment will force water consumers to dig deeper into their pockets, a painful blow coming at a time when the cost of living has risen to unprecedented levels.
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The combined impact of high water tariffs and costly petrol, cooking oil and staple maize flour will pile inflationary pressure in an economy where households have knocked off some goods and services from their budgets to navigate the turbulent times.
Inflation surged to a 58-month high of 7.9 percent in June from 7.1 percent in May, breaching the government’s preferred target range of 2.5-7.5 percent.
Nairobi residents who consume an average of 15 cubic metres of water per month or 15,000 litres should expect to part with about Sh1,685 up from the current Sh1,241.
This amount is inclusive of sewerage charges – which are 75 per cent of the amount charged on water units consumed – and Sh50 as meter rent.
High-end homes that gobble up 55,000 litres monthly to support facilities like swimming pools and watering lawns will pay Sh6,922 from Sh4, 952, reflecting a rise of Sh39.57 percent.
“NCWSC proposes an upward tariff review to enable the utility water to operate at full cost recovery and meet conditions necessary for improving service delivery,” said Peter Nyagah, the director for licensing, standards and advocacy at Wasreb, in Friday’s Kenya Gazette notice.
Water service providers have been lobbying for the review of tariffs that were last revised more than five years ago in order to cover the ballooning costs of operation and maintenance.
Under the proposed tariff guidelines, each service provider is expected to recover its full cost of providing services in the medium- to long-term and leave a surplus to allow them improve infrastructure.
The utility is proposing to double the consumption blocks for billing to six and remove the flat monthly rate of Sh204 for homes that use less than six cubic metres or 6,000-litre units of water.
Homes consuming between 7,000 litres and 60,000 litres monthly will pay Sh67 for every a thousand litres from the current Sh53.
Schools using up to 600,000 litres monthly will part with Sh50 from the current Sh48 for every a thousand litres.
Water tariff reviews are usually done every three years.
Nairobi Water has defended the proposed tariffs increase, arguing it will help offset nearly Sh10.38 billion average annual operation costs.
The firm says its estimated annual average costs comprise Sh8.86 billion for operation and maintenance, Sh616.31 million for investment and Sh900.33 million for servicing its debts from French Development Agency, the World Bank and African Development Bank.
The utility firm projects the new tariffs will generate about Sh10.68 billion in annual revenue, leaving it with a margin of 2.89 percent.
“The WSP [water service provider or Nairobi Water] shall adhere to the budgetary levels set in the tariff,” Mr Njaggah said.
“The surpluses projected to be realised shall only be used in extension on water/sewer network system to increase coverage/access to water and sanitation services.”
The firm has committed to invest Sh1.95 billion in the three years to June 2025
It has pledged to cut revenue losses largely due to leakage in the aged pipe systems and illegal connections from 46 percent of water that gets to its network in the year ended June to 44 percent this financial year.
It will further cut the system losses to 43 percent the following year and 41 percent in the one ending June 2025. The cuts will translate to additional revenues.
Costly commodities have hit workers hard given that the average real wages, adjusted for inflation, stood at negative 3.83 percent last year compared to negative 0.59 percent in 2020.
Employers say the real wages will take longer to improve amid the recovery of the economy from Covid-19 economic hardships, which delivered layoffs, pay cuts and business closures.