Water Costs Going Up

Nico Smit

1 June 2011

Cabinet has approved an average increase of 14 per cent in water tariffs for all NamWater clients.

This marks the start of a period of high tariff levels, as NamWater is facing a capital recovery backlog of N$500 million and is finalising plans for infrastructure upgrades that will cost N$3,5 billion over the next five years, according to chief executive officer Dr Vaino Shivute.

He said NamWater initially requested a 23 per cent increase because it had not received any approval for the last three financial years. However, Cabinet shot down the request.

The NamWater CEO said they are doing a valuation of infrastructure in order to set tariffs on a full cost-recovery basis.

Shivute expressed the hope that the increases will be softened by capital grants from Government.

In addition, increases in electricity costs put pressure on water tariffs, as power makes up about a third of NamWater’s costs. As a result, an increase in electricity tariffs should result in an automatic increase in water tariffs.

This does not bode well for the consumer, as NamPower is due to receive an answer from the Electricity Control Board on its application for a tariff increase.

Shivute indicated that the tariffs for local authority customers will be implemented later this month.

He said as long as NamPower was subjected to high power tariff hikes, it would need to recover the input cost from consumers.

Shivute said people should not think that this year’s record rainfall will result in lower water tariffs, as there is no direct relation between the two.

According to the NamWater CEO, the cost of treating water actually increases during the rainy season, as more dirt needs to be cleaned from the water.

Furthermore, extensive damage to water infrastructure at Walvis Bay and significant damage to the main canal from Angola have resulted in emergency repairs costing more than N$10 million. The total repair bill will be over N$20 million.

Shivute said NamWater has to date not received any money from Government, and has managed to operate on a commercial basis. Assistance is now required on the social water schemes in order to maintain tariffs in communal areas and smaller local authorities.

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