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The Financial Express

Why is this arbitrary water tariff hike?

| Updated: October 24, 2017 08:25:24


Why is this arbitrary water tariff hike?

Most consumers, both residential and commercial, in Dhaka city got a shock on receiving their water bill for the month of November last. It was inflated by 17 per cent. The Dhaka Water and Sewerage Authority (DWASA) had increased the water tariff by more than 12 per cent in July last. So, in total the hike was around 30 per cent within a period of only five months. 
The people usually get prior information about the hike in power and gas tariff since the media remains focused on the relevant issues. Besides, the gas and power distribution companies cannot increase their rates arbitrarily. Public hearings are usually arranged by the Bangladesh Energy Regulatory Commission (BERC)) on price-hike proposals for days together. The regulator takes into cognizance the presentations and arguments made at the hearings while fixing fresh power or gas tariff. In most cases, the BERC approves hike, but not at rates proposed by the utility service providers. Though people are unhappy with the frequent hike of power and gas tariff in recent years, they have welcomed the provision of public hearing at the BERC, for it, at least, offers them the scope of venting their opposition to the price-hike moves. 
There is no regulator for the DWASA. It sends proposals on hike in water tariff to the Ministry of Local Government, Rural Development and Cooperatives for approval. In between, there is no way of knowing the consumers' reaction to any proposed hike. The DWASA publishes in one or two newspapers a small notification about the raise in water tariff and the same usually escapes the notice of the consumers. 
The DWASA kept the water rates unchanged for more than one and a half years at Tk 7.71 per unit. Usually, it hikes the water tariff by 5.0 per cent annually. But this time it has gone for a substantial hike at one go. The water tariff for commercial use is now Tk 32 per unit. 
The state-owned entity, reportedly, has said the hike was necessary to narrow the large gap between the cost of production and selling price of water. The DWASA claims that the cost of per unit of water it supplies is Tk 28. If that was true, the WASA is still providing a subsidy of Tk 18 per unit (1000 litres). 
The cost the WASA mentions about the production of per unit of water does appear too high. The organisation, in fact, does not produce water. It mainly lifts ground water using deep tube wells and supplies the same to the consumers through a vast network across the city. It spends most part of its revenue on account of power bill, maintenance and repair works and debt-servicing. 
The cost of making available a unit of water to the consumers would have been much less had the WASA been a private entity. Inefficiency, corruption and mismanagement are the trademarks of state-entities. The government policymakers do publicly acknowledge this fact. But they hardly take corrective actions and allow the rot to continue.   
The cost of production of any manufacturing industry owned by the government of Bangladesh has always been higher than that of a private one. This is because inefficiency, graft and gross irregularities in public sector organisations do have a bearing on their operational cost. The state-owned sugar mills are a glaring example. The cost of production of a kilogram of sugar in these mills is three times higher than the cost involved in the import of the same quantity of the item. And to keep these mills operational, consumers are being made to buy the sweetener at a price twice the normal one. The government has made sugar costlier by imposing additional duties and taxes. 
The DWASA is also passing the cost of inefficiency and gross financial indiscipline on to the consumers by increasing water tariff.  An English contemporary reported that most of its lower tier employees, numbering about 3,500, drew more than twice the amount of their basic salaries as overtime in 2015-16.They, allegedly, drew Tk 560 million as overtime while their total basic salaries amounted to Tk 270 million. 
The system loss of water is claimed to be now 20 per cent. The claim appears to be far less than the actual. A thorough assessment of unauthorised water connections would surely put the figure on much higher side. Then again there are widespread allegations of supplying contaminated water to the consumers of different areas of the city. The residents of some areas of the city are often forced to buy safe drinking water. 
The DWASA is making investment to improve water supply. Most part of such investment comes in the form soft loans provided by multilateral donors. There is no denying that the DWASA is required to service its debts and meet its operational cost. In doing so, it might be encountering deficit. But a large part could be met by reducing its so-called systems loss and gross financial irregularities and not by burdening the consumers with high water tariff.  
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