GCC water tariffs should be revised to hammer heavy users, says report
DUBAI, U.A.E., Jan 23, 2012 – Better education will be needed to reform current tariff structures and address water scarcity in the GCC. Furthermore governments should restructure their water tariff structures so that pricing follows usage, with heavy water users paying the most, a new report has recommended.
Findings revealed by Booz & Company in a report entitled ‘Fresh Water in the GCC: Addressing the Scarcity Problem’ said this sort of pricing would reduce waste.
Subsidies from increased tariffs can then “be directed at guaranteeing potable water for poorer residents, at supporting economic growth and other national priorities,” it stated.
The report said that “it is not a given that GCC governments should cover all the costs of delivering and consuming water in their countries; on the contrary, the region's excessive use of water shows the unintended consequences of such generosity”.
The recommended “slab” tariff system has been successfully demonstrated in certain countries across the MENA region. In Egypt, the Alexandria Water Company introduced a system whereby the first 10 cubic meters remain at a low price yet usage between 10 and 20 cubic meters is higher. After 30 cubic meters it’s double the initial price. Together with a surcharge for wastewater services, the incomes cover the cost of production.
Furthermore, the Dubai Electricity and Water Authority introduced a slab tariff system a few years ago whereby the more people consume, the higher the slab category they fall into. This results in a higher cost for water.
The report concluded: “If GCC countries do not become actively involved in research, enforce water policies and promote sustainability, the consequences will be significant. On the other hand, if they do these things, the payoff will be enormous."
Increasing water supply tariffs remain a sensitive issue as they concern basic living standards of the general public and spark conflicts of interests between providers and consumers. A case study was carried out by the World Bank studying tariff adjustment in Chongqing, China.
Conclusions from the World Bank study proved that an increase from 1.20 yuan/m3to 2 yuan/m3 not only meant it was the highest in the nation at the time, but it was also accepted by disadvantaged groups.Tariffs will continue to prove a controversial topic as Middle East nations attempt to increase fees and reduce heavily subsidized water. Last year Yemen put out a tender for a water tariff study consultancy, according to Meed. The study will aim to analyze current tariff systems and suggest “better methodologies to address the needs of the poorest part of the population”.
On the broader topic of water scarcity, Booz & Company said that Saudi Arabia and the United Arab Emirates consume, on a per capita basis, 91% and 83% more than the global average, respectively.
It said this is six times more water than the UK and that Qatar and Oman are also considered above the global average for water consumption. The report said that GCC residents and businesses have disregarded the consequences of their water usage to enjoy benefits more common in “countries with ample rain and overflowing aquifers”.
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- The topic of Tariffs, Metering and Smart Water Grids will be addressed at WaterWorld Middle East conference and exhibition, being launched in Doha, Qatar on February 6-8, 2012. For more information, please click here.