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Economy

New inflation charge to increase water bills every July

A car wash operator cleans a vehicle on Nairobi’s Kasarani-Mwiki Road. FILE PHOTO | NMG
A car wash operator cleans a vehicle on Nairobi’s Kasarani-Mwiki Road. FILE PHOTO | NMG 

Water tariffs will be increased annually every July if a fresh pricing formula by the regulator that incorporates inflation is adopted.

The Water Services Regulatory Board (Wasreb) published the proposed formula in the latest Kenya Gazette that will see the utility cost rise every year in line with annual inflation — which last year stood at 8.01 per cent.

Wasreb chief executive Robert Gakubia said Friday the annual review that is tied to inflation is meant to guard against the steep water price increases occasioned by the prolonged review of tariffs.

Water prices on average are reviewed after about five years, a period that has seen most firms double the costs, sparking consumer uproar.

“The proposed formula is intended to avert steep tariff increases at subsequent tariff reviews thereby shielding consumers from steep price increases every other tariff period,” Mr Gakubia said in the Friday Kenya Gazette.

Wasreb is proposing to review the water tariffs on the 15th day of July every year, to remain in force until the 14th day of July the following year.

It will rely on the annual inflation from the Kenya National Bureau of Statistics (KNBS) – which averaged 8.01 per cent last year, 6.3 per cent (2016), 6.57 per cent (2015) and 6.88 per cent (2014).

“The annual review will do away with the current regime which has seen water prices double after reviews done after about five years,” said Mr Gakubia.

100pc rise

In 2014, Nairobi Water and Sewerage Company (NWSCO) increased consumer water tariffs by up to 100 per cent. 

The utility firm, which last increased consumer tariffs in July 2009, justified the jump on the rising cost of items like electricity, water treatment chemicals, pipes, fuels, lubricants, sewers and fittings.

The new formula will see water billing modelled on that applied in the electricity market where the Energy Regulatory Commission (ERC) adjust power prices every six months in line with the US inflation rate.

Currently, electricity users are charged Sh0.42 cents monthly for every kilowatt hours (kWh) and covers the period between January and June.

Mr Gakubia reckons the annual tariff review will boost the cash flow of the utility companies, offering them resources to boost investments in a country where a large share of the population lacks piped water.

World Health Organisation says that less than 35 per cent of Kenyans have access to piped water. Still, more than a third of the water supplied by the firms are not billed due to ageing pipes and illegal connections.

The regulator is also mulling introducing a levy in water bills for development of sewerage networks, backed by the Water Act, which became law in 2016.

Sewer development

The levy will be ring-fenced for development of sewers.

Currently, water bills contain a sewer charge, but the fee has often been diverted to other uses like improving and maintaining the water connection infrastructure and meeting operation costs, leaving little for sewer development and upgrades.

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