Monday, March 12, 2012

Electricity, water tariffs to further increase by 33 per cent


The National Water and Electricity Company Limited has proposed to further increase the current tariffs of electricity, water and sewerage services by 33 %, barely one year after the electricity tariff was increased by 16.50% for domestic consumption and19.44% for commercial usage.

Justifying this unpopular move, NAWEC explained that it current tariffs are not sufficient to sustain their operational obligations due to rising cost of inputs such as fuel, lubricants, and spare parts.

Most of the people said the current tariff for electricity in the country “is already high” to be increased, but NAWEC insists that its current tariffs not being sufficient to sustain the company’s operational obligations.  As a result, NAWEC said, they have since resorted to short term borrowing from commercial banks at exorbitant cost and the repayment of investment loans, which is also putting the company under enormous financial stress.

In this vein, the company has filed an application for an upward review of its tariffs to the Public Authority Regulatory Authority (PURA), a multi-sector utilities regulator, including NAWEC offered services.  Accordingly, PURA, as part of its mandate to balance the interest of both the consumers and public utilities, is to stage another Public Hearing on 17th March at Father Pharrel Hall in Westfield. 


The public hearing is meant to obtain public comments about the proposed tariff increment in order to enable PURA - which have the legal powers to determines, review, approve, modify or refuse NAWEC’s application - to arrive at a decision to pass the final judgment.

NAWEC has attached, to its application, operational expenses for the year 2011 to convince the regulator of its financial predicament in order to succeed to increase the tariffs.  As part of the figures, the loan portfolio of NAWEC is more than three billion dalasis.

Many people, ranging from private individuals to proprietors, entrepreneurs and potential investors have expressed deep concern over the looming situation of hiked electricity tariff.

The average people in the country are struggling to pay the electricity tariff as it is now, so increasing the tariff will logically deny those people electricity, which is a basic need.

Any increment on tariffs of electricity, water and sewerage will affect the poor people whose income is very low. They will not be able to solve their family problems much more the cost of electricity, water or sewerage.

Will NAWEC succeed in its lobby?

During the last public hearing, in February 2011, almost 98 per cent of the people present at the occasion vehemently condemned the tariffs increment by NAWEC but that notwithstanding it was increased, though with modification.

The PURA Act 2001 and the Electricity Act 2005 mandated PURA to consult with all stakeholders on matters of such importance and sensitivity that affects both the operator and the consumer.  Already initial consultations were held with the government authorities, industrial, and commercial consumers.

Public Hearing is the sixth of the nine steps that PURA is to take before the final tariffs come into effect.  The other steps PURA is expected to take after the public hearing is to take a definitive decision with regard to the increment, publishing the new tariffs, and finally the tariffs come into effect.

Last year, NAWEC lobbied for 37%, 25% and 26% increment for electricity, water, and sewerage respectively but due to the mass rejection of much move by the general public during the public hearing, PURA in its effort to mandate to balance the interest of both the consumers and public utilities, approved only that of electricity and discarded that of water and sewerage services for “social reasons”.  The electricity tariff was increased for different classes of users - domestic consumption was increased by 16.50% while commercial usage of electricity was increase by 19.44%.

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