Wednesday, May 30, 2012

Gambia: Hard Times Loom Large

As electricity, water and sewerage tariffs hike
The prices of electricity-related goods and services will soon skyrocket as the National Water and Electricity Company Limited has increased tariffs of electricity, water and sewerage, though both individuals and corporate consumers denounced the move initially.

With effect from 1 June this year, the tariffs of electricity, water and sewerage will increase across the board, for all consumers.

Tariffs for domestic electricity consumption will be increased from D7.20 to D9.10 per kilowatt, commercial usage of electricity will also be increased from D8.60 to D9.70 per kilowatt. Hotel, club and industrial uses of electricity will also hike from D8.95 to D10.40 per kilowatt.
Electricity uses for agriculture, the backbone of the Gambia economy, will also be increased from D8.00 to D9.70 per kilowatt.  The usage of electricity by area councils and central government will also be accelerated to D9.70 per kilowatt from D8.70.

In the same vein, the tariff for domestic water consumption will be increased from D10.40 to 13.83 per cubic metre, commercial usage of water will also be increased from D16.90 to D22.48 per cubic metre. Hotel, club and industrial uses of water will also hike from D24.01 to D31.93 per cubic metre.

Water uses for agriculture will also be increased from D7.80 to D10.37 per cubic metre. The usage of water by area councils will increase from D10.52 to 13.99 per cubic metre and central government will also be accelerated to D14.12 per cubic from D10.62.

The sewerage tariff is also set to hike as follows: domestic from D2.20 to D2.93 per cubic metre, commercial from D6.60 to D8.78, hotel, club and industries also from D6.60 to D8.78, area councils from D2.20 to D2.93 and central government from D6.60 to D8.78.

The tariffs increment, consented to by the Public Utilities Regulatory Authority (PURA) - a multi-sector utilities regulator, particularly that of electricity has sparked fear and worries for consumers in the country.

As it is now, before the increment takes effect, The Gambia is said to be one of the countries in the world paying the highest price for electricity.

The European Union programme manager, Sylvain Lequere, earlier this year reiterated that the rate at which Gambians continue to pay for electricity is among the highest in the world.

Many people, ranging from private individuals to proprietors and entrepreneurs who have spoken on this medium following the latest increment on electricity tariff for various categories of consumers, have expressed deep concern over the “unpopular move”.

In one of the recent public hearings organised by PURA to gauged public view about the application of tariffs increment, Tombong Saidy of AMRA Consulting did say the current tariff for electricity in the country “is already high” to be further increased.

The average person in the country is struggling to pay utility bills under the current tariffs, so increasing tariffs on these services will logically deny the masses of people electricity, which is a basic need, argues Mr Saidy.

“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,” he said.

The resulting effect of the increment will be difficult to fathom as its consequences will affect cost of production and inflate prices of essential commodities and services, which leads to a high cost of living for the country’s populace. The fundamental necessities of life such as food, household activities and education will be difficult to afford as the effects of the electricity bill hikes continue to hit hard.

With the tariffs increment, businesses will have to push their prices up. This applies to prices of commodities in general, since electricity and water, in particularly, are prerequisite in the manufacturing of goods.

However, before approving the tariffs to be implemented on 1st June, PURA says it took into consideration the need to balance the interest of all stakeholders whilst at the same time ensuring that the procedures set out and due consultation with all stakeholders were adhered to.

It says it relies upon the principle that NAWEC has little or no control over the cost of utilities, such as fuel and energy payments to the Independent Power Producer (IPP), which are fully absorbed in the tariff in accordance with international best practice.

One of the reasons put forth by NAWEC to justify the tariff increment is that the company will hardly raise the financial resources needed to provide the required utilities if tariffs remain unchanged.

“The current revenue base of NAWEC is not enough to sustain the company’s operational obligations, which has resulted in the company going in for short term borrowing from commercial banks at exorbitant cost,” NAWEC Finance Director Alhagie Jallow has said.

He says the company is currently undergoing extreme financial difficulties due to its ever-increasing cost of light and heavy fuel and lubricants, cost of energy purchased from the Independent Power Producer (IPP), and high cost of running the corporation.


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