Rura hears the pleas of rural water companies
Saturday July 07 2018
The Rwanda Utilities Regulatory Authority (Rura) plans to commission a study that will inform a process of reviewing water tariffs in rural areas countrywide.
This comes at a time when operators of rural water networks have been asking for an increase in tariff fees due to high costs incurred in running and maintaining their networks, with a section of them now seeking to terminate management contracts in loss-making networks.
According to Alexis Mutware, the acting head of Energy, Water and Sanitation Department at Rura, the tendering process to find a consulting firm to assess the suitable methodology for tariff setting for rural water services has started.
The firm will also carry out a survey on affordable tariffs for rural water consumers and find out the amount they would be willing to pay for before setting the tariffs.
“We plan to have the studies done and the tendering process is underway with financial support from Unicef,” said Mr Mutware, adding that the new tariffs should be expected in about three months.
The current tariffs — the first set since Rura came in to regulate rural water services — came into effect in January 2017.
The regulator caped tariffs at a maxishould be expected in about three months.The current tariffs — the first set since Rura came in to regulate rural water services — came into effect in January 2017.
The regulator caped tariffs at a maximum of Rwf338 and Rwf833 per cubic metre for networks on gravity and electricity pumping respectively while those on diesel pumping pay Rwf1,087 per cubic metre.
This translates to Rwf8 to Rwf25 tariffs per jerrycan of water in parts of the country. However, operators say the uniform water tariff setting system used by the regulator did not take into account the country’s topography in particular, in order to determine the cost of running the networks.
Rura says only two companies have formally filed complaints about the tariff structure — currently under review.
They include Ayateke Star Company Ltd and Aquavirunga Ltd with operations, which have more than 12 districts and manage close to 200 rural water systems.
The companies, with an estimated loss of about Rwf30 million each, sent notices to respective districts requesting to terminate contracts involving loss-making networks if nothing was done about it.
However, Rura officials say their audits of the companies showed their losses were not linked to low tariffs, rather mantainence and operations not being properly done.
Mr Mutware cited incidence of system failures which someimes lasted weeks without being attended to because “parties were not abiding by their contractual obligations,” and this translated in losses for the operator.
Poor design
“From our assessment, if the systems are well designed, and all technical problems addressed and maintenance done properly, operators would not incur any losses. We plan to send our audit findings soon to the districts and advise them that there is a need to improve their working relationships,” said Mr Mutware.
The country has over 1,000 rural water supply and distribution systems that are jointly managed by over 40 operators and districts through public-private partnerships, where districts act as infrastructure owners and are required to handle all major repairs.
The networks include those that run on diesel, electricity and gravity while others have more complex systems.
The different stakeholders agree that each water system should sustain itself based on the set tariffs, but figures from conducted audits suggest that operators only made profits on gravity systems and a few networks with a huge number of users.
However, Rura agrees that the planned tariff review would consider clustering the water systems in case the methodology proves to benefit both the users and the operators.