WATER TARIFFS
In its commentary on the Department of Water Affairs' approved water tariffs for the 2012/2013 financial year, Agri SA said the newly released water tariff dispensation contained various positive aspects, amongst others the fact that it has not applied the maximum allowable increases. However, the organisation believes that the pricing strategy should be revised as soon as possible to bring about greater transparency in this regard.
According to Agri SA's analyses, the water infrastructure costs at some government water schemes have increased by as much as 20%. In cases where the operation and maintenance costs are not yet fully recovered, these costs could have - according to an agreement with the Department - increased by as much as 50% per annum. "In such cases Agri SA's negotiations with the department have resulted in a significant advantage of as much as 30%. Although water resource management costs in some of the 19 catchment management areas have increased in percentage terms significantly, the actual extent of these costs is in most cases nominal," says Agri SA president Johannes Möller.
"In those cases where the water infrastructure costs are already fully recovered, increases of up to 20% are, however, excessive and not in line with the annual inflation rate," said Möller. "Agriculture is exposed and susceptible to administrative prices such as water and electricity tariffs, which threaten the economic viability of the industry. These are costs that cannot be passed on directly to the value chain. Sustainable production and food security are seriously undermined in the process," added Möller.
Möller says that, in terms of legislation, the department is supposed to review the pricing strategy every five years. The strategy was last reviewed in 2005 and was effectively implemented in April 2007. Agri SA has already submitted various proposals to the department on how the affordability of water can be addressed in line with international best practice. As far as is known, the tender for facilitating the review of the pricing strategy is still pending.
"What is encouraging, however, is that water tariffs at some schemes had decreased drastically, which indicates that the refinement of the department's calculation methods is beginning to bear fruit," said Möller.