Bid to increase water prices questioned

A HCMC resident of Binh Thanh District collects water in buckets from a tank he has bought due to low water pressure at his house.

Ho Chi Minh City’s major water supplier wants higher retail prices to offset losses, but critics say it should address leakages that cost more than $200,000 a day.

A price-hike proposal by the Saigon Water Supply Corporation (SAWACO) has run into a barrage of criticism from diverse quarters including its own former director.

The critics have questioned the timing, the rationale and practicality of the move, and advised the corporation could reduce its losses by better management and control of leaks.

In its latest proposal, SAWACO, HCMC’s biggest water supply corporation, has asked the municipal Finance Department to allow increases in retail water prices by up to 86 percent.

Current retail water prices in HCMC are between VND2,700 (15 US cents) and VND8,000 (46 cents) per cubic meter, with the service and production sectors paying higher prices than households.

Under the new proposal, the prices will be between VND4,500 (26 cents) and VND13,000 (75 cents) per cubic meter, excluding value-added tax, environment protection and water drainage fees.

The proposed plan also modifies the price slabs, which would make consumers pay even more.

Current prices offer prices prorated on how many cubic meters of water a person uses every month, while the proposal bases it on a household as the unit of consumption irrespective of the number of members it has.

A quick calculation shows a family of four may have to pay VND92,400, almost double the current bill of VND43,200, if they use 16 cubic meters of water a month.

Early this year, an unnoticed increase in retail water prices by SAWACO had drawn the ire of city residents. The corporation offered the belated explanation that the increase of VND40 per cubic meter was actually environment protection fees.

Wrong reason

SAWACO has blamed the losses it is suffering for the price hike proposal, saying production costs per cubic meter of water has increased to VND7,500 (43 cents) recently.

The production cost of clean water had increased to VND6,000 (34.5 cents) in 2008, it reports.

However, critics say increasing prices is not the best choice. Instead, the corporation could avoid financial losses by controlling water loss in its pipe systems.

Vo Van Duong, the corporation’s former director, says SAWACO should reduce the huge leakage of water that has increased over the years.

Between 300 to 400 liters of water per every 1,000 liter produced is lost during distribution, he says.

Such losses have only increased of late, from 34 percent in 1999 to 42.5 percent last year.

The corporation loses more than 500,000 cubic meters of water of the total 1.3 million cubic meters it supplies a day.

The loss is estimated at double the capacity of the Tan Hiep Water Treatment Plant in Hoc Mon District and valued at VND3.7 billion ($212,155) a day.

Duong also took aim at the proposal to prorate retail water prices based on the household rather than the number of people in each house.

“Any welfare plan has to depend on the number of people. The water corporation shouldn’t apply the same price frame on a household with two people and a household of 10.”

Le Hieu Dang, deputy chairman of HCMC Fatherland Front Committee, also recommends dealing with water losses rather than increasing prices.

“I sympathize with the corporation’s difficulties. But they shouldn’t increase prices of such a basic commodity in the context of the economic downturn. If the water loss was reduced, consumers wouldn’t have to suffer high prices.

“Their financial losses are partly caused by water loss but they have failed to act on it despite instructions from the municipal government to do so.”

Dang also says the current water price frame, which applies the lowest price of VND2,700 a person for the first four cubic meters consumed, was a reasonable rate that had been thoroughly researched.

“The new price frame would hurt consumers for certain.”

Nguyen Dang Nghia, a representative of the municipal People’s Council, says the increase is being proposed at the wrong time.

“The government has issued several policies recently to stimulate consumption and reduce residents’ daily expenses.

“An increase of water prices would be a wrong step at this time.”

He also warns people will drill wells to source groundwater and reduce costs, which will create other problems like a lack of hygiene, depletion of underground water and violation of regulations relating to groundwater use.

SAWACO has signed contracts to supply tap water to nearly 700,000 customers, 44,000 of whom use underground water to avoid high prices while 50,000 households are using less than four cubic meters a month to cut down on expenses.

Upward trend

Hoang Manh Hien, deputy chairman of the Hanoi People’s Committee, says the city might increase retail water prices but “not for now.”

Water supply companies in the city would have to conduct careful and thorough research before submitting any proposal to increase prices.

Current water prices in Hanoi, applied since 2005, are between VND2,800 and VND7,500 per cubic meter, including environment protection fees.

In the central province of Binh Dinh, the provincial water supply and drainage company has increased retail tap water prices since early this year.

The prices per cubic meter have increased to VND4,700 from VND4,100 for household use; VND6,200 from VND5,300 for government offices use; VND7,400 from VND6,400 for production activities and VND15,800 from VND12,700 for trading and service sectors.

The Gia Lai Water Supply Company in the Central Highlands has announced it will soon increase retail water prices by VND1,500 per cubic meter.

Current prices in Gia Lai Province are between VND2,700 and VND6,500, with the lowest prices being applied to ethnic minorities.

In the Mekong Delta, water supply firms in Soc Trang and Ca Mau provinces are seeking approval from local authorities to increase water prices by VND800 (4.6 cents) per cubic meter.

Ca Mau Province currently sells water to poor households at VND2,200 (12.6 cents) per cubic meter.

In Vietnam, the poverty line until 2010 has been set at a monthly income of VND200,000 per person in rural areas and VND260,000 ($15) per person in urban areas.

Source: TN, TT