Water prices to go up as regulator mulls halting subsidies

Wasreb says most county governments are reportedly abusing the initiative, making delayed payments which constrains WSPs operations

In Summary
  • The regulator however boasts of increased water coverage which increased to 62% in 2021/22 from 60% in the previous reporting period.
  • Drinking water quality and the hours of supply (Hrs/day) also improved from 92 to 95 per cent and 16 to 17 per cent, respectively.
A household water tap
A household water tap

As the world marked Water Day last Friday, consumers in Kenya are expected to pay more per unit as providers prepare to do away with subsidies. 

The Water Services Regulatory Board (Wasreb) exclusively told the Star that it is considering doing away with subsidies as county governments are reportedly making delayed payments for as long as a year, constraining the service providers’ operations.

The prevailing cost of water across various counties is characterised by subsidies meant to cushion consumers from higher prices.

The regulator now says, the initiative has not been effective in the recent past. 

Wasreb’s acting CEO Julius Itunga said some of the service providers are being forced to ride on costly loans to cater for losses made, a scenario that has prompted an outcry from several service providers.

“It is on this basis that we are preparing to do away completely with the subsidy initiative, hence price water based on the actual cost of production to ensure our service providers remain afloat to continue with the provision of one of the most essential household commodities,” Itunga said.

“This is evident in the recent tariff adjustment applications by different Water Service Providers (WSPs), whom a majority have requested for an upward adjustment on the back of increased general cost of doing business.”

He added that the move is key to fostering service sustainability through full cost recovery.

The average cost of a single unit of household water in the country’s major cities; Nairobi and Kisumu for instance, as per the regulator now stands at Sh45 and Sh75 per M3, respectively for the first consumption block (1-6).

The pricing model has six blocks, hence different rates for different consumption levels with a steep-wise format.

A unit of water or cubic meter is equivalent to 1,000 litres. 

The charge per unit of water stays constant up to a certain amount of consumption (the first block), then increases as water usage goes up and users enter the next block until the highest one.

Other blocks are 7-20, 21-50, 51-100, 100-300 and over 300.

Users pay a low rate up to the first block of consumption, then a higher price up to the limit of the next block, and so on up to the highest block (over 300).

At the highest block, users can use as much water as they want but for each extra unit consumed, they pay the highest price in the rate structure which averages between Sh80 – Sh190 across different WSPs.

The regulator explains that the country uses this model, the increasing block tariffs, instead of the decreasing one to encourage conservation because of the country’s water scarcity problem.

Even so, there have been concerns over the general cost of household water, consumers terming it costly amid rising inflation and the general cost of living.

A spot check by The Star across different estates in the country’s capital sought to understand the disparities in charges of a unit of water despite the understanding that being under the watch of a licensed service provider in the same region, the rates should be uniform!

The study established that some households in the Kasarani area for instance, were being charged a unit at an average of (Sh90 – 110) compared to Kariobangi South which was being charged between (Sh120 – 200) for a unit.

Some of the consumers being charged the highs of Sh120 and above expressed their pain saying the charge is too costly, as they still have to buy bottled water for drinking.

"My tap water is inarguably unfit for consumption because of the coloration and odor," said John, a resident at Kariobangi South.

This is a case that probably could be prevalent in several other counties countrywide.

CEO Itunga responded to the concern saying the average cost of a single unit of a household depends on the place as the cost of production varies based on cities.

“The driving differentiation is the cost structure of that utility serving that city. The systems are different, some are gravity systems, which are fairly cheaper while others are costly pumping systems adding to other operation costs such as staff salary,” he said.

However, on the differentiating charges in the same city, he objected to the claims saying there are no different costs in the above highlighted regions.

“We take the case of Nairobi city. The whole service area is under Nairobi Water and they are using one uniform tariff. The only time you will get a difference is in the case of third parties.”

He further explains that there exists cases where borehole owners in certain localities of the city could be selling a unit at Sh120, 150 or even 200 but the major licensed WSP is Nairobi and the price is the same across the county at an average of about Sh53.

We sought to understand whether the third parties selling water at higher costs were acting within the laws and what the regulator is doing to ensure consumers are not subjected to uncensored price volatility.

Wasreb noted that the third-party players are not operating illegally since most of them have an arrangement with the licensed WSPs.

“They fall under the small-scale service providers category since we have given out the whole area to the main WSP who might not have the capacity to supply every region,” says the regulator.

“The only difference now is the price, because, at the end of the day, that party has to cover its own cost of operations.”

The regulator reiterated that the normal consumer of a WSP in either of the places cannot be exploited with heightened prices because already the price is known. 

The regulator however sympathized with consumers who might feel exploited by the third-party players currently not under any regulation by the licensed WSPs.

“The challenge is the capacity of the service provider through the county government to deliver extra water. Otherwise, if the county government and the WSP had enough resources, then that complaint should not be there,” Itunga said.

The regulator however boasts of increased water coverage through licensed WSPs across the country.

The latest data contained in the annual impact report for the year 2021/22, shows water coverage recorded an increase to 62 per cent from 60 in the previous reporting period.

Drinking water quality and the hours of supply (Hrs/day) also improved from 92 to 95 per cent and 16 to 17 per cent, respectively.

WATCH: The latest videos from the Star