Dhaka WASA seeks to set 5 different prices of water

The Dhaka Water Supply and Sewerage Authority (WASA) raised the water price 14 times in the last 14 years. Now the agency wants to set five different prices for water depending on the income of the consumers. The technical study conducted by the Dhaka WASA proposes to raise the price of the water by 24 per cent to 147 per cent based on categories. The expenditures of the consumers in every category will rise if this proposal is implemented.

The Dhaka WASA claims that water is being sold at lower prices than the production cost. The government is bearing a subsidy of Tk 10 for every one unit (1000 litres) of water. The service provider has proposed to adjust the water price to curb the government subsidy. The WASA authority wants to execute the new prices of water based on consumer’s income as soon as possible.

However, the urban planners and the WASA officials themselves are saying the agency wants to put the burden of their own mismanagement and irregularities on people by increasing the price of water. The actual production cost of water is not that much. The WASA is implementing projects with money from high-interest loans and putting the debt liability on the common people. The benefits of these projects are not fully realised either.

Besides, the total system loss of Dhaka WASA is some 20 per cent. Had the agency reduced the system loss, then they would not have to raise the price of water. The WASA shows a profit of Tk 500 million per year excluding all the costs. Therefore, the proposal from a profit making body to raise water prices is not rational at all, they say.

The Dhaka WASA has been planning for setting water prices based on consumer’s earnings for the last few years. The issue came to limelight recently again due to a statement from the local government minister Md Tajul Islam.

While addressing an event at the Dhaka WASA on Sunday, Tajul Islam said, “We should not provide any subsidy to supply water to the rich. The WASA spends Tk 26 to 30 to produce 1,000 litres of water. They are selling it at Tk 15. Should the government continue providing the subsidy of 15 taka?”

At the moment, the price of every 1,000 litres of water is Tk 15 to 18 for residential consumers. All consumers have to pay the water bill at this rate regardless of their financial status. The rate of water for commercial customers is Tk 42 per unit (1000 litre).

There is no specific information regarding the production cost of water per unit. The WASA managing director Taqsem A. Khan said during a programme on 9 February 2022 that the difference between water production cost and retail price is huge. The average production cost per 1000 litres of water is Tk 25, while the retail water price is 15 taka per unit.

However, this account of water production cost is not credible, said several WASA officials. The production cost stands at Tk 25 for water purified from the sources on the surface, but 70 per cent of the water supplied by the WASA comes from underground. Only 30 per cent of it comes from sources on the surface. The production cost for water from underground is much lower. As such, the account showing a subsidy of Tk 10 for per unit of water is not right.

Speaking regarding this to Prothom Alo, WASA deputy MD (operation and maintenance) on Monday said, “Several other factors are related to the production cost. We make an average of the production costs for water coming from all sources. The minister was right that the production cost for water is Tk 25 to 26 per unit.”

However, the production cost of water can be assumed from the production costs of water from the sources in Khulna and Rajshahi. Currently, around 40 per cent of the water supplied by the Khulna WASA comes from sources on the surface. It fetches water from the Madhumati river, which is 58 kilometres away from the Khulna city. According to the sources in the Khulna WASA, the production cost for per unit water is around Tk 17 there.

Meanwhile, 90 per cent of the water supplied by the Rajshahi WASA comes from underground sources. According to the sources there, the production cost for water from underground sources is Tk 8.9 per unit. The Rajshahi WASA is supplying water in residential areas at a cost of Tk 6.81 per unit.

Dhaka WASA’s project costs are rising due to the slow pace of implementation. Most of the WASA projects are being implemented with the money from foreign loans. The Dhaka WASA has to pay a large sum of money for the instalments and interests of the huge loans that it took for implementing their projects.

The total amount of Dhaka WASA’s foreign debts for different projects now stands at Tk 190 billion, which is likely to increase further due to devaluation of taka against the US dollar, according to the officials concerned.

The benefits of the WASA project implemented with debt money are not fully realised either. The WASA constructed the ‘Padma (Jashaldia) Water Treatment Plant’ at a cost of Tk 36.70 billion to supply water in the capital from the Padma river. However, the network needed for supplying water to the capital from the plant was not constructed. As a result, almost half of the capacity of the water treatment plant has remained unused. If the WASA could make the full of its capacity, then it could supply water worth more than Tk 1.1 billion.

Some 20 per cent of the water that the WASA produces daily is system loss. According to urban planners, a 5 per cent system loss indicates the incompetence and mismanagement of an organisation. The unscrupulous officials and employees of the WASA earn money from illegal connections. If the WASA could curb the system loss, then there would have been no need to raise the price of water.

Bangladesh Institute of Planners president, Adil Muhammad Khan told Prothom Alo, “The WASA has taken up some exorbitantly costly projects. However, it is the consumers who are paying the debts for these costly projects. The consumers of Dhaka WASA are paying more for water compared to the other WASAs in the country.”

The WASA has already formed a technical study committee to set the water price as per the financial capacities of the consumers and dwelling area. The agency has proposed five categories – low income people, lower middle class, middle class, upper middle class and upper class – to set the new prices of water. Several issues, including the mouza rate, home tax and monthly income of the consumers, will be taken into consideration while fixing the area wise price of water. However, the prices will be finalised in consultation with the people concerned, including the beneficiaries, Dhaka WASA said.

The people involved in conducting the study say they are not aware of any other countries in the world fixing water prices in this way. The price of water depends on the amount of usage in the other countries. This method is called the ‘increasing block tariff’.

Speaking to Prothom Alo, Dhaka WASA commercial manager Uttam Kumar Roy said, “We want to adjust the price as soon as possible. However, there are many steps and methods to set the price. We will discuss the proposals that came up in the study with our stakeholders first. The prices will be fixed considering the problems and benefits of the customers of the Dhaka WASA.”

In the proposal submitted by the WASA, water price has been fixed at Tk 18.75 per unit for lower middle class people, Tk 25 for middle class people, Tk 31.25 for upper middle class and Tk 37.50 for the upper class.

As such, the upper class people will have to pay an additional amount of Tk 22.32 as compared to last year for per unit water. If the proposal from the WASA is implemented, the upper middle class people will have to pay an additional cost of Tk 16.07, the middle class Tk 9.82 and the lower middle class almost Tk 4 per unit water.

Some 83 per cent of the WASA consumers are middle class and lower middle class people. So if the proposal on area wise water price is implemented, then people under these two categories will have to bear the additional costs.

According to the people involved with the study, the WASA has taken the Building Code-2000 into consideration for classifying people on the basis of their financial status. According to that, those who live in a flat of 2,500 SQF or a larger in size will fall into the upper class category, those who live in a flat of 1,500-2,500 SQF will fall into the upper middle class category, those who live in a flat of 1,000-1,500 SQF will fall into the middle class category and those who live in a flat of below 1,000 SQF will fall into the lower class category.

Besides, the slums dwellers have been considered as low income people.

The commercial customers of the Dhaka WASA pay Tk 42 per unit. The rate has been increased to Tk 50 in the new proposal.

Urban planner Adil Muhammad Khan thinks there are discrepancies in the process of fixing the price of water. He said, “The WASA should not put the burden of irrational costs on anybody regardless of their financial status. Although questions have been raised regarding the transparency of Dhaka WASA, the responsible government officials remain silent. The WASA should keep in mind that it is a service provider while finalising the prices of water.”

* This report appeared on the print and online versions of Prothom Alo and has been rewritten in English by Ashish Basu