Nairobians to pay more for water after tariffs increase

The water services regulator has allowed the Nairobi City Water and Sewerage Company (NCWSC) to increase consumer tariffs, setting the four million residents of the Kenyan capital on the path to paying more for the utility beginning January.

The Water Services Regulatory Board (Wasreb) said on Friday it had given the NCWSC a conditional approval for the planned tariff increment after conducting month-long public consultations.

The NCWSC, a subsidiary of the Nairobi county government commonly referred to as Nairobi Water, had sought the regulator’s approval to increase water tariffs by 104 per cent, but was allowed 93 per cent.

It means that most Nairobi residents who consume an average of 20 cubic metres of water per month should from next year expect to part with approximately Sh1,674 up from the current Sh868. This amount is inclusive of sewerage charges – which are 75 per cent of the amount charged on water units consumed – and Sh50 as metre rent.

Low-income earners who consume six cubic metres of water and below will see their monthly bills go up from the current Sh187.10 to a flat rate of Sh204 – a nine per cent increment.

READ: MPs ask State to set water tariffs for service providers

“We sent our recommended tariff to Nairobi Water last week for them to engage the public in a 30-day consultation exercise to explain (to the residents) why they are raising the tariff and how they will implement it,” said Peter Njaggah, Wasreb’s head of regulatory services.

“They will then submit the findings to us (and) we shall give them the final go-ahead to implement the new tariff.”

The water regulator has in the past months approved upward tariff reviews for counties like Nyeri, Embu, Kiambu, Kisumu and Uasin Gishu by between 70 per cent and 100 per cent – highlighting the national scope of the adjustments.

This latest tariff adjustment will force water consumers to dig deeper into their pockets, a painful blow since it is coming at a time when the cost of living has risen to unprecedented levels. Philip Gichuki, Nairobi Water’s managing director, defended the higher rates, saying they were necessary since the company urgently needs extra income to improve its infrastructure.

It is estimated that Nairobi loses up to 50 per cent of its water to leakage in the aged pipe systems and illegal connections. It all started in March when Nairobi Water petitioned the regulator to allow the company to increase water tariffs, arguing that operation costs had nearly doubled since the last review was done in 2009.

Water tariff reviews are meant to be done once every three years. Nairobi Water proposed that domestic and commercial consumers using between 0-6 cubic meters pay a flat rate of Sh200, while those using between seven and 60 cubic meters pay Sh56 for each unit. Those using over 60 cubic meters were to pay Sh90 for each unit.

Had this been adopted, the average consumer – who uses about 20 cubic meters of water per month – would have parted with Sh1,772 per month, a 104 per cent increase from the current monthly bill of Sh868. However, Wasreb approved rates of Sh204, Sh52 and Sh64 for the three tariff bands.

When reaching this decision, the regulator also blocked Nairobi Water from including Sh6.2 billion it intended to source for infrastructure investments in the tariff review, saving consumers from picking up the tab.

“It would not have been right to allow these capital requirements to be factored into the review since a part of this money was to be sourced from government and this would be tantamount to double taxation,” said Mr Njaggah. Wasreb, however, approved some of the utility firm’s requests.

The water company had proposed to increase the flat rate for low-income earners – those living in informal settlements- consuming a maximum of 10 cubic meters per month by 6.8 per cent from the current Sh187.1 to Sh200.

The regulator has now allowed them to charge these customers even more by approving a flat fee of Sh204 for the first six cubic meters of water they consume beginning January.

Wasreb also allowed the water distributor to introduce a communal charge for consumers who live in flats and gated communities where these estates will start being billed via a single meter only. The approved rate is Sh50 per cubic meter, which is lower than the Sh60 proposed by the NCWSC.

Mr Gichuki sought to justify the increase, saying Nairobi Water was in 2009 paying a monthly electricity bill of Sh15 million, but this has now risen to Sh35 million – a cost they have had to meet.

“The tariff adjustment will not only cushion us from the rise in costs, but more importantly, it will be used in investments which are urgently needed to improve our service,” said Mr Gichuki.

“During the public engagement which will begin in the last week of this month, we will explain these issues to our consumers. We will then submit their sentiments to Wasreb and proceed to implement the new tariff in January.”

He said that since the last review five years ago, two collective bargaining agreements had been approved – raising the personnel costs to 54 per cent of total expenditure.

In scaling down the company’s proposed rates, Wasreb took issue with the amount of revenue the company loses and also the fact that supply was still not optimum. Nairobi Water currently collects about Sh560 million per month from its 280,000 customers but this amount would have been higher since the firm loses about 38 per cent of its revenue.

The regulator also wants the company to reduce the number of defaulting clients, curb illegal connections, mostly in informal settlements, and reduce its personnel to operations costs ratio from 54 per cent to 30 per cent over the next three years that the new tariff will be in place.