Water prices likely to increase

17 Sep 2015 15:50pm


The price of water is likely to rise when water rationing becomes a reality, a local financial services firm warned on Wednesday.

Simonis Storm Securities, in its latest analysis of the inflation outlook for September 2015, issued a warning about the water scarcity situation in Namibia and the dire consequences it holds for the end user.

The overall inflation figure increased to 3.4 per cent in August 2015 from 3.3 per cent recorded in July 2015.

"Potential water shortages caused by the poor and erratic rainfall over the last three years continues to be a worry. We will only know towards the end of the first quarter (Q1) of 2016 if water rationing will become a reality. If it does, then the price of water is likely to rise," the analysis cautioned.

The City of Windhoek (CoW) charges domestic consumers per kilolitre (kl) (1 000 litres) of water per day, with the rat" per kilolitre depending on the total consumption.

Currently for the 2015/2016 financial year, the domestic tariff per kilolitre is N.dollars 13.86 for between zero and 0.200kl per day, compared to N.dollars 42.45 per kilolitre for between 1.50 and 1.70 kl per day.

On average, one flush of a toilet costs about nine litres of water - 0.009kl. Over the 2014/2015 financial year, the CoW water tariff for between zero to 0.200kl per day was N.dollars 12.60 while the tariff charged for more than 1.50kl per day was N.dollars 38.59.

Namibia, which is a semi-arid country, faces water shortages as from August 2016 when the Swakoppoort Dam is expected to run dry if it does not rain during this rainy season.

The Swakoppoort dam has a major impact on the quantity and security of water supply in the central areas and/or the upper Swakop basin.

Grave concern has mounted over the ever-deteriorating water levels in Namibia?s dams due to insignificant inflow since 2013 already.

The CoW threatened four months ago to penalise households using more than 50 cubic metres/50 kl of water per month. However, no penalty fees have yet been imposed on residents, or businesses.

The water situation has worsened since last year, so much that local and foreign investors are worried about the security of water and electricity supply in Namibia.

The Chief Executive Officer (CEO) of the Namibia Chamber of Commerce and Industry (NCCI) Tarah Shaanika, on behalf of the business community in the Khomas Region, raised the concern with President Hage Geingob more than a week ago that captains of industry have expressed concern, not only about the security of the supply of water, but also about the shortages of electricity in the country.

Members of the Khomas Region's business community met with Geingob in Windhoek to interact with the Head of State on various issues.

Not only Namibia is affected by water problems, but the whole of the Southern African Development Community (SADC) region. Taps are running dry in many countries in Africa, hampering economic development, according to the Minister of Agriculture, Water and Forestry John Mutorwa during a meeting with stakeholders in the water industry here last month.

Namibia's sporadic rainy season normally starts in November and ends in March. Water measurements taken in May 2013 by the CoW have shown that water levels in boreholes have been dropping by an average of 2.03 metres since December 2012, due to the increased abstraction of underground water.

On a positive note, Simonis Storm Securities emphasised that lower petrol and diesel prices announced at the beginning of September 2015 (95 Octane unleaded petrol decreased by 30 cents per litre and diesel decreased by 40 cents per litre) might bring a little relief in transport inflation, but does not guarantee a slowdown in overall inflation.

It warned that the South African (SA) Rand's volatility remains a concern for the medium term and imported inflation - a significant contributor to overall inflation, will put pressure on domestic prices.

With South Africa as Namibia's prevalent trading partner, the increase in SA inflation can slipover to Namibia in terms of import inflation, according to the local financial services firm.