African Water Development Report 2006 - United Nations Economic ...

Water Pricing by the Addis Ababa Waterand Sewerage Authority (AAWSA):An Ethiopian experience:Conveyance of water through pipes started inAddis Ababa in 1901. At that time, water wasdelivered at no cost to the residents. In 1945 atariff was set at a rate of 0.50 Birr/m 3 and it remainedwithout any change for a period longerthan almost half a century. According to LisaneworkA. A. (2003) a new water tariff system wasinitiated from July 1995 at a selling price fixedas follows:0.50 Birr/ m 3 /month for the first 15m 30.75 Birr/ m 3 /month for the next 16 - 40m 31.50 Birr/ m 3 /month for any consumptiongreater than 40m 3 and0.50 Birr / m 3 / month for all public tapsTo assess the effect of water tariff increments, asample survey was conducted by AAWSA whichfound that about 77 per cent of the respondentsknew about the increase of water tariffs whereas23 per cent did not. Out of the respondents whoknew about the increase, 32.9 per cent felt thatit was too high, and 36.3 per cent said it was alittle higher than the previous and 30.8 per centdid not state their views. The result of the samplesurvey ascertained that more than 68 per centof the interviewees consume the same amountof water as before the tariff increase. From theabove fact, it can be concluded that the tariff didnot result in decrease in consumption and wasaffordable.Furthermore, even though the tariff was increased,the water production and distributionexpenditure of the authority did not decrease.This was due to the increase in the prices ofpipes and fittings, maintenance, chemical, fueland other expenses. Earnings from the currenttariff rate covers only 70 per cent of the operationand maintenance expenses of the authority.In order for the authority to cover its expenseswith the tariff incomes a new tariff system wasstudied (table 12.6). This study was based on increasein population, per capita consumption andunaccounted-for-water. As a result of the shortageof water, the current per capita consumptionis very low. The tariff rate was fixed taking intoconsideration the current per capita consumptionof 75 l/day, expected to increase to 100 l/dayin the coming 20 years as well as the expected reductionof the present 35 per cent unaccountedfor-waterto 25 per cent.The main objectives of the latest tariff are:(a) To develop and implement a policy of financialself-sufficiency for AAWSA operations;(b) To ensure regular supply of water and sewerageservices at a rate affordable to the urbanpoor;VALUING WATERTable 12.6: The New Water Tariff System of Addis AbabaWater Consumptionby Customers1 st yearTariff rate2001/2002Birr/m 32 nd yearTariff rate2002/2003Birr/m 33 rd yearTariff rate2003/2004Birr/m 34 th yearTariff rate2004/2005Birr/m 35 th yearTariff rate2005/2006Birr/mPublic Water Taps 1.15 1.30 1.45 1.60 1.75Domestic 0 – 7 m 3 1.15 1.30 1.45 1.60 1.757 – 20 m 3 1.60 1.85 2.10 2.35 2.60Above 20m 3 2.30 2.60 2.95 3.25 3.25Industrial(all consumption)2.30 2.60 2.95 3.25 3.25Source: Lisanework A. A.: Water Demand Management Perspectives: Concepts and Applicability to the City of Addis Ababa, Case Study, WARREDOC,Perugia, 2003289