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Editorial: Must we always fight price rise?

Men pulling handcart with water jerry cans.
Residents in informal settlements in urban areas pay almost 50 times for a litre of water than residents with piped water. Price of piped water in Nairobi ranges between Sh34 and Sh53 for 1,000 litres. In informal settlements price ranges between Sh10 and Sh50 for a 20-litre jerry can.

County governors have rejected new law that increases permit fees water services firms pay to Water Resources Authority. County governments own water services firms working in their counties. The firms will pay Sh5 for every 1,000 litres they take from any water resource. They are paying 50 cents for 1,000 litres. The water services firms have been paying 50 cents since 2007.

Why are Kenyans ready to fight whenever price of a good or service is raised?

Often, this resistance to price rises comes from trade associations and the media. An example is when Energy and Petroleum Regulatory Authority releases monthly maximum prices for diesel, petrol and paraffin. Newspaper stories are predictable. It’s either ‘pain at the pump’ if the regulator increases price. Or a ‘relief’ if the prices are reduced or unchanged.

Most economists believe that low, stable, and—most important—predictable prices increase is good for an economy (borrowed from International Monetary Fund). Because consumers know prices will slightly rise in future gives them incentive to buy sooner. This increases economic activity, increases income generated by producers and increases economic growth.

The Water Services Regulations for 2021, published on 12 August 2021, will increase water permit fees from 50 cents to Sh5 for 1,000 litres. Water services firms have been paying Water Resources Authority 50 cents since 2007. The authority is responsible for regulating the management and use of water resources.

Don’t blame water permit fees

County governments have said the higher fees would reduce their capacity to supply water to consumers. They said they will not support the new fees because this would deny Kenyans water and sanitation. County governments own water services firms working in their counties.

Low customer connections and water losses are the biggest hindrances to water services firms’ survival.

Latest report by Water Services Regulatory Board shows that water coverage in areas served by regulated firms declined from 59% in 2019 to 57% in 2020. Sewer coverage declined from 17% recorded in 2018/19 to 15% in 2020.

Water loss, or non-revenue water, increased from 43% to 47%. The government’s National Water Services Strategy targets non-revenue water of less than 30%. Vision 2030’s non-revenue water goal is less than 25%.

New regulations bring useful changes

Too much focus on water permit fees has prevented discussion on other important regulations in the Water Services Regulations for 2021. These regulations cover financial sustainability of water firms, their integrity, registration of water professionals and safety of drinking water.

Financial sustainability of water services firms. A water services provider must be managed on a commercial basis and in accordance with sound business principles. Each water services firm must give Water Services Regulatory Board an annual report. The report must show:

  1. the water service
  2. network expansion and rehabilitation
  3. commercial and business growth
  4. progress towards financial sustainability and viability

Protect water sources. A licensed water services provider must ensure availability and development of its sources of water. This is to help the firm supply adequate quantities and quality of water to consumers.

Safety of drinking water. It’s an offence to contaminate or pollute water used or intended to be used for domestic supply. The regulations give a penalty to anyone who supplies water unfit for domestic use. It’s a fine not exceeding Sh1 million or imprisonment not exceeding two years, or both.

Registration of professionals and contractors. A person will be qualified to plan, design and operate water services infrastructure if they have a valid licence issued by Cabinet Secretary for water. Also, they must be in good standing from the Engineers Board of Kenya.

The penalty is a fine not exceeding Sh1 million or imprisonment not exceeding two years, or both.

To promote integrity of water services providers. It’s an offence for an employee of a water services firm to fail to read meter, disconnect water, report illegal connection or help illegal connection. Penalty is imprisonment not exceeding six months or a fine not more than Sh20,000, or both.

Governors and water firms must do their work

The Water Services Regulations for 2021 give duties to county governments and water services firms. These roles aim to make water firms financially stable so as to connect more customers.

County executive committee member is responsible for development and provision of water and sewerage services within their county. The county executive committee member must formulate and periodically review county policies, strategies and plans for developing and providing water services.

The strategy’s aim is to give clean and safe water in adequate quantities, and reasonable standards of sanitation.

The county water and sewerage services strategy must show:

  1. how water the firm or firms will provide water services in the entire county on a commercially viable and sustainable basis.
  2. a plan and targets to reduce and manage levels of water loss (non-revenue water) by county water service providers.
  3. criteria and procedures on how county government will give financial, technical and other assistance to county-owned water firms and community water providers.
  4. a programme for developing water sources, including cross-county bulk water sources, to secure adequate water.

The regulations show water firms how to charge customers for water and sewerage. Water firms in urban areas must charge a price that enables them to meet their capital, operation and maintenance costs. They must be able to pay for these costs without getting money from the government.

Water firms working in rural, low income urban or nearby urban areas must charge price that enables them pay operation and maintenance costs. This is without the option of expecting money from the government.

READ: Unpaid bills: ‘No free water’

About Kaburu Mugambi

Kaburu Mugambi is a veteran of business reporting having worked with two national newspapers in Kenya. He is a graduate of economics from Kenyatta University. He started his journalism career in 2000 with The People Daily as a business reporter before becoming a business sub-editor. He joined Daily Nation in 2004 as a business writer. He holds a post-graduate diploma in mass communication from University of Nairobi's School of Journalism and an MBA in marketing from the same university. In 2016, he founded Water Tower, a media firm focused on water, energy and climate. Its content cuts across water, energy and climate with emphasis on adaptation and sustainability.

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