In the matter of an Application by the DAR ES SALAAM WATER SUPPLY AND SEWERAGE AUTHORITY (DAWASA) For a Tariff and Charges Adjustment
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1 In the matter of an Application by the DAR ES SALAAM WATER SUPPLY AND SEWERAGE AUTHORITY (DAWASA) For a Tariff and Charges Adjustment Background 1. On 19 th November 2010 DAWASA submitted an application for review and approval of tariff as follows: (a) to adjust water tariff over three (3) years period starting with an increase of 184% during 2011/12, then an increase of 9% during 2012/13 and lastly a decrease of 17.9% during the third year 2013/14; and (b) increase of a sewerage tariff over two (2) years period starting with an increase of 13.2% during 2012/13 followed by an increase of 11.7% during 2013/14. Stakeholders Consultation 2. Pursuant to section 19(2) (h) of the Energy and Water Utilities Regulatory Authority Act, Cap. 414, EWURA conducted an Inquiry into the reasonableness of the proposed adjustments for tariff and charges. This Inquiry included an economic and a technical evaluation of the Application and public hearing meetings that were held in Kibaha town on 8 th June 2011, Bagamoyo town on 9 th June 2011, and Dar es Salaam City on 10 th June 2011to hear the views of stakeholders. 3. During the public hearing meetings, DAWASA made presentations explaining the basis of the Application and the justification of the proposed adjustments for tariff and charges. All stakeholders including the Public, Government Consultative Council ( GCC ), and EWURA Consumers Consultative Council ( EWURA CCC ) were given an opportunity to examine and comment on the reasonableness of the DAWASA Tariff Application. DAWASA had a chance to respond to stakeholders comments in the meetings and later by submitting written responses to EWURA. 4. EWURA CCC was concerned, among other things, with high Non Revenue Water (NRW) of about 54%; poor institutional setup which makes the Operator fail to meet its performance targets; Millennium
2 Challenge Account Project which requires approval of the proposed tariff increase as a pre-condition for funding; imposing ineffective financial penalties to the operator for failure to meet targets which end up being passed on to the consumers; failure to fulfill many conditions set out in the EWURA Order No of July 2009; and proposed huge and sudden increase in tariff which is not backed up by independent studies like consumer willingness to pay and ability to pay studies. 5. GCC was concerned, among other things, with high tariff to industrial customers; high proposed tariff increase which calls for critical look on the proposed investment plans; high NRW; failure to meter all customers by January 2010; low sewerage coverage of about 10%; decrease in the population directly served with water from 68% in 2008/09 to 48.2% in 2009/10; and relying on poor expectations that the government will write off the DAWASA debts. 6. The Public was concerned with very high proposed tariff increase which will not be affordable to many customers; weaknesses in commercial operations; non-adherence to the water rationing schedule; water leakages; non-operational water supply tanks; disconnection of customers from the Mitamba Ranch pipeline; improper complaint handling; failure to connect customers beyond 300m from the distribution main; high debts; exposed water pipelines which are susceptible to vandalism; existence of two institutions: DAWASA and DAWASCO leading to an institutional setup which is costly to customers; and failure to reconnect customers to the newly constructed distribution system. 7. At the closure of the inquiry process on 24 th June 2011, DAWASA had reasonably responded to stakeholders comments and EWURA had gathered satisfactory and adequate information to prudently determine the application. During the review, DAWASA was requested to provide supplementary information in support of its application. 8. EWURA has followed up concerns raised by the stakeholders through verifications, inspections and performance audit of DAWASA and DAWASCO. EWURA has developed various conditions which shall be subject to the new tariff in order to address the shortcomings that have been observed with an objective of improving the service provisions. Analysis and Adjustment 9. As a result of the inquiry EWURA concluded that DAWASA s proposed tariff was reasonable except for: 9.1. low water production which did not take into consideration
3 new investments aimed at increasing water supply; 9.2. high NRW which does not comply with EWURA Order No of July 2009 of requiring DAWASA to reach NRW of 40% by June, 2010; 9.3. incorrect computation of Return on Capital Invested (ROCI) which considered ROCI as equal to Contribution to Investment instead of Weighted Average Cost of Capital; and 9.4. exclusion of the impact of electricity tariff increase of 40.29% approved by EWURA. Decision 10. Following the adjustments highlighted in Paragraph (9) above, the projected revenue requirement is as shown in the table below. DAWASCO TZS TZS Million Million Total Operating and Maintenance Costs 42,644 58,713 Total Depreciation Return on Investment on own financed assets 0 4 Return on Investment on donor/government financed assets 0 22 Total Return on Investment 0 27 Total Revenue Requirement 43,400 59,496 Less Other Income 4,513 4,823 Total Revenue Requirement from Water 38,887 54,673 DAWASA Total Operating and Maintenance Costs 25,729 28,302 Total Depreciation 7,279 23,626 Return on Investment on own financed assets 0 3,801 Return on Investment on donor/government financed assets 0 24,843 Total Return on Investment 0 28,644 Total Revenue Requirement 33,008 80,572 Less Other Income 5,046 5,119 Total Revenue Requirement from Water 27,963 75, The Board of Directors of EWURA having met on 24 th May, 2012 to consider this matter decided as per the Order below.
4 THE WATER SUPPLY AND SANITATION ACT (CAP. 272) ORDER No... (Made under section 28(d)) THE DAR ES SALAAM WATER SUPPLY AND SEWERAGE AUTHORITY (DAWASA) (TARIFF ADJUSTMENT) ORDER, 2012 Citation Tariff adjustment Conditions 1. This Order may be cited as the Dar es Salaam Water Supply and Sewerage Authority ( DAWASA ), (Tariff Adjustment) Order, 2012 and shall come into force on the 1 st July, The water supply and sewerage tariff within the Dar es Salaam Water Supply and Sewerage Authority ("DAWASA") designated area are hereby adjusted as specified in the Schedule to this Order. 3. The approved tariffs shall be subject to the following conditions: (a) On or before 30 th June, 2013, DAWASA shall establish the correct level of service coverage. (b) On or before 31 st July, 2012, DAWASA shall ensure that all water customers are billed according to the water consumption indicated by meter readings. In case of a faulty meter, a customer shall be billed according to the assessed average water consumption based on previous meter readings. (c) On or before 30 th September, 2012, DAWASA shall submit a status report on the implementation of customer outreach programme, which shall include a dissemination of Codes of Practice. A status report on the implementation of that programme shall be included in all future Applications for tariff and charges adjustments and considered by EWURA in evaluating the reasonableness thereof. (d) DAWASA shall continue to provide EWURA with information about its financial and operating condition in accordance with the requirements of EWURA. This information will be used by EWURA to evaluate DAWASA s performance in comparison with other utilities and the improvement of its performance over time. This evaluation will be considered by EWURA in evaluating the
5 reasonableness of all future requests for tariff adjustment. In particular, DAWASA shall ensure that the accuracy of information provided in monthly reports through Water Supply Services Information System (MajIs) is improved. (e) DAWASA shall on quarterly basis starting from 1 st July, 2012 submit a status report to EWURA on the operations of all DAWASA owned boreholes in accordance with the requirements of EWURA. Revocation 4. This Order hereby revokes the EWURA Order dated 10 th July 2009 for DAWASA tariff adjustment and EWURA Order dated 8 th June 2010 for tariff adjustment on public standpipe/kiosks in the DAWASCO Operational Area.
6 SCHEDULES Table 1: Water Supply Tariff Current Tariff (TZS/m 3 ) Approved Tariff (TZS/m 3 ) Operator Tariff FTWC Tariff Lessor tariff Total Customer Tariff 850 1,119 1,077 Note: For customers consuming 0-5m 3 per month, tariff will be charged at the operator tariff, that is, TZS 604/m 3 and TZS 403/m 3 for 2012/13 and 2013/14, respectively. Table 2: Sewerage Tariff Current Tariff (TZS/m 3 ) Approved Tariff (TZS/m 3 ) Operator Tariff Lessor Tariff Total Customer Tariff Table 3: Kiosk Tariff Current Tariff (TZS/20 liter bucket) Approved Tariff (TZS/20 liter bucket) Kiosk Dar es Salaam HARUNA MASEBU Director General (EWURA)
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DAR ES SALAAM WATER SUPPLY AND SEWERAGE AUTHORITY ( DAWASA
In the matter of an Application by the DAR ES SALAAM WATER SUPPLY AND SEWERAGE AUTHORITY ( DAWASA ) For a Tariff Adjustment, Submitted on 11 th March 2009 Order No. 09-008 1.0 BACKGROUND On 11 th March,
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