State locks horns with regulator over water billing

A war of words has erupted between the Water ministry and the regulator over plans to increase water prices by including inflation and foreign exchange adjustments to the monthly bills.

The state wants to develop the new billing system known as indexation that will include the monthly variation in inflation, exchange rate and the cost of energy (electricity and fuel) placing the water companies at the same level as Kenya Power.

The intention is to allow the water companies to adjust their monthly prices relative to the exchange rate and energy cost without seeking the approval from the regulator—Water Services Regulatory Board (WRSB).

“This will be with a view to improve the cost recovery performance of water service providers and promote sustainable use of water,” says David Stower, the permanent secretary in the water ministry.

However, WRSB says the government move runs parallel to the spirit of the law that gives the regulator powers to approve tariffs that will sustain operations of the water companies and cushion consumers from being overcharged.

“Our position is that we will not approve those rates. The water companies should improve their efficiency levels first before being given a soft landing in the form of automatic adjustments,” said a director at WRSB who sought anonymity.

“We cannot have a situation where water prices are changing every month.” The regulator is the only body charged with approving tariffs.

The chief executive of WRSB, Mr Robert Gakubia, confirmed the difference but refused to comment on the matter.

He admitted that the bulk of the water companies are inefficient, and there is need for them to revamp their operations to grow revenues,” said Mr Gakubia.

A large number of water and sewerage systems in Kenya do not even collect enough revenue to cover their operation and maintenance costs.

Performance of the water companies is a national eyesore and according to the water ministry, only 22 out of 120 companies meet their expenditure.

This together with illegal connections and rampant corruption at the water firms has contributed to perennial shortages across most towns as the firms have been unable to upgrade their ageing supply networks to keep pace with soaring demand.

Now, WRSB is asking the water companies to boost their governance standards and increase the amount of water they bill to shore up their financial position instead of resorting to tariff hikes.

The bulk of the water companies lose half of their water through theft and ageing infrastructure.

The government says the increment is necessary to enable the suppliers pay for the surge in the cost of treating water and to allow the companies to build financial muscle to upgrade their ageing supply networks.