OPENING THE TAP MAY SOON COST YOU 65% MORE
Water tariffs will, on average, rise by 65%, and some irrigation farmers will have to pay as much as 2 578% more for water if the department of water and sanitation’s new pricing strategy is accepted.
The strategy is still open for comment for the next three weeks. According to a notice in the Government Gazette, a tariff adjustment is necessary to recoup the full costs of water use from consumers. They must pay for water management costs, infrastructure maintenance, a projected economic regulator for water, the water research commission and waste water management. The policy emphasises that water tariffs should reflect the water shortage in the country and discourage wastage.
The department’s economic impact study indicates how the policy will affect water users. Current tariffs for unprocessed water vary widely for different users and in different areas, and the policy is trying to correct these imbalances. Affordable water must be provided to “black people, people in remote areas, women and the poor” without placing Treasury under more pressure.
The department, however, does not foresee a devastating effect on the economy despite businesses and households having to pay more, because water expenses make up a relatively small part of their expenses.
A hybrid cost model – in which some costs will be determined at national level, while others will be levied by water purifiers and municipalities – makes it difficult to predict by exactly how much water prices are likely to increase.
Another policy change that will affect industry in particular is a proposed move away from water extraction rights and the phasing in of a system of mandatory measurement to determine actual use instead of registered use.
Farmers who irrigate could pay “nearly three times more” for water, according to the impact study, but in some areas the increase could be as high as 2 578%. The study’s authors assumed farmers would be able to pass on all their increased costs to consumers and the effect for them would in any case be minimal, as water makes up a small part of farmers’ input costs.
However, Nic Opperman, director of natural resources at AgriSA, differed. He said the cost of electricity had also risen sharply and he accused the state of not doing enough to help farmers in a time of crisis for agriculture. AgriSA is preparing its presentation in the hope of a more favourable policy outcome.
The new policy must come into effect from April 1 and tariffs will be determined thereafter at three-yearly intervals.