Water Bills Expected To Increase Under World Bank Loan Terms

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Economy

Water Bills Expected To Increase Under World Bank Loan Terms


A man fetching water from a tap at the Nyeri Water and Sewerage Company (Nyewasco) factory in Gatei in Nyeri on February 16, 2015. FILE PHOTO | NMG

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Summary

  • Water bills are expected to rise following pressure from the World Bank for a new conservation tax and increased regulatory fees for water companies.
  • The multilateral financier estimates that Kenyan water service providers should cover 70 percent of the Water Resource Authority (WRA) budget out of the current 30 percent.
  • The introduction of freshwater conservation taxes will see service providers pass additional costs on to homes and businesses for running water and sewage.

Water bills are expected to rise following pressure from the World Bank for new conservation taxes and increased regulatory fees for water companies.

The multilateral financier estimates that Kenyan water service providers should cover 70 percent of the Water Resource Authority (WRA) budget out of the current 30 percent.

The introduction of freshwater conservation taxes will see service providers pass additional costs on to homes and businesses for running water and sewage.

“To improve access to water and sanitation services, and improve the management and conservation of water resources … is implementing new charges for water abstraction and water conservation,” said the World Bank.

The withdrawal fee is what licensed water suppliers pay the WRA to access product from natural sources like rivers.

“The current water abstraction charges do not provide adequate economic incentives for water conservation, nor do they generate sufficient financial resources to enable the WRA to perform its regulatory functions,” the Bank said. global.

The World Bank’s pressure to increase water withdrawals was revealed in an advisory to the government after it approved a new loan for Kenya worth 80 billion shillings to help the government. countries to continue to respond to the Covid-19 pandemic and address its debt-related vulnerabilities.

“The proposed changes affect companies that collect raw water from rivers. Water companies will ask for an increase from the regulator to reflect the higher cost of obtaining water, ”said a senior official from the Water Services Regulatory Board (WSRB), which approves the new tariffs.

The council believes that a number of water companies, including the Nairobi City Water and Sewerage Company (NCWSC), are in need of tariff review.

Service providers campaigned for the revision of tariffs which were last revised more than five years ago to cover increasing costs of operation and maintenance.

Under the new pricing guidelines, each service provider is expected to fully recover its costs of providing services in the medium and long term and leave a surplus to enable it to improve its infrastructure.

Currently, Kenyans pay an average of Sh 93 per cubic meter or 1,000 liters for running water in homes.

The planned tariff adjustment will force water consumers to dig deeper into their pockets, a painful blow at a time when the cost of living has reached unprecedented levels.

The combined impact of high water prices and the high price of gasoline and cooking gas is expected to increase inflationary pressure in an economy where households have cut certain goods and services from their budgets to get through turbulent times.

Kenyans on social media recently raised concerns about reduced cash flow, dwindling employment opportunities and rising public debt, which sparked a petition to the International Monetary Fund (IMF ) to stop giving more loans to the country.

The World Bank says the additional costs are needed to cover the costs of conserving water catchment areas.

Multilateral lenders, including the IMF, are expected to play a larger role in shaping policies that would force the government to implement tough conditions in many sectors.

The advice from the IMF and the World Bank comes on top of their multibillion shillings lending facilities in Kenya, where money flows directly into the budget to supplement public funds.

Under the administration of former President Mwai Kibaki, Kenya has steered clear of this type of credit, with much of the support from institutions like the IMF and the World Bank taking the form of backstopping. to projects.

Kenya has recently faced a deterioration in its cash position, marked by declining income, worsening debt service obligations and the effects of the Covid-19 pandemic.

The Treasury has also come under pressure from the IMF to double the value added tax (VAT) on all petroleum products in an attempt to reduce the budget deficit and bring government borrowing under control.

More recently, high water demand and bad weather have resulted in shortages in most cities.


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