Prepaid water policy needs proper planning

20 Jul, 2018 - 00:07 0 Views

eBusiness Weekly

Plans by the Zimbabwe National Water Authority (Zinwa) to demand payment in advance from local authorities and other large consumers will attract a degree of sympathy from others who suffer from the huge payment delays of our deadbeat councils.

Zinwa needs its money to maintain its infrastructure, to service loans it has taken out to build new dams and pipelines and to continue expanding Zimbabwe’s water storage. And it is clear that this money is not rolling in when the accounts are presented.

But unfortunately for Zinwa, prepayment for its raw water has to be the last step in a changeover from the inherited systems of water bought on account with payment in arrears to raw water bought up front.

Councils are not paying because their consumers are not paying, or are not paying on time. And while councils could well need a sharp incentive to take Zinwa’s bills seriously, cutting off supplies to a town will punish the innocent as well as the guilty.

It would also create a major health hazard and would almost certainly be blocked by the central Government.

Switching to prepayment for water has to start at the bottom, with the individual consumers before it can be applied to “wholesalers” as Zinwa is planning. Starting at the top is simply unfair and impractical.

This does not mean prepayment is a bad idea. In fact it can sort out a lot of problems. The biggest single example is Zesa. We can all remember when Zesa was shedding load in a major way, was owed hundreds of millions of dollars, took forever to fix a fault because “there are no spares or transport” and was generally a basket case.

Then came the prepaid meters for most domestic and commercial consumers, along with a sensible system of collecting previous sums owed that did not cause much suffering. Suddenly Zesa was being paid, it had a guaranteed cash flow and it watched its customers taking a great deal more interest in using energy wisely and carefully.

Zesa could even use its staff more rationally, with fewer on the payroll having to chase up delinquent accounts, often at a cost far in excess of the debt, and spend more on technical staff who could keep energy flowing. The problem of paying for imports switched from not having the money in the first place to having to take its place in the RBZ queue.

Those Chinese contractors who have extended Kariba South and are now working on extending Hwange Thermal are not charities. They must have wanted to see Zesa’s accounts and cash flow projections before their banks would set up the required loan schemes.

Zesa still has to finish installing prepaid meters for all the smaller consumers who buy energy, and then use a prepaid smart meters for the big customers who buy power. But generally it has shown that the system works rather well. It has even sorted out payment hassles; you can buy units with ecocash at 1am on Sundays.

Prepaid water is now becoming more common around the world. This is why Harare City Council has been able to try several competing systems, all off-the-shelf, in its pilot study. Unfortunately Harare has not done anything more than try out prepayment in four areas. But those four areas have shown the same effects that Zesa noted: there is cash flow and consumers are taking water a lot more seriously, even redesigning gardens to use less water.

Arguments that water is essential for life and it is unfair to ask for prepayment are answered by the fact that most of those on the test meters buy their water in time, just as they buy their food in time. It is often overlooked that prepaid essentials like water are cheaper than the same product sold on credit, so with proper regulation, as we see with Zesa, it is possible to fix the lowest possible price.

What is now needed is a national programme to roll out prepaid meters to all consumers in all areas of all local authorities. Only when the local authorities are guaranteed payment and cash flow can Zinwa justly demand that it is also paid in advance by local authorities. Water is different from electricity in that the ultimate supplier, Zinwa, does not deal directly with most consumers; it sells to others who treat and distribute the water. This is why the two step process is needed, starting from the bottom.

Irrigation water, where Zinwa is often the direct supplier to the farmer-consumer, may well need a great deal more thought before prepayment is demanded. Irrigation water is an input into the next crop, just as is Zesa power needed to run pumps whether of Zinwa water or from boreholes. Few farmers get bank loans up front to buy inputs. Most are on contract schemes where the contractor supplies seed, fertilizer and chemicals, and even here often in tranches, with accounts settled when the crop is harvested, delivered, graded and the price and deductions sorted out. It would seem that there is a good case to at least debate and discuss when irrigation water should be paid for and if it should not be paid when the crop is sold.

What we are essentially arguing is that any change in payment systems for water needs to be part of a co-ordinated national policy, involving everyone and being implemented in stages that are in the correct order. This is not difficult; you start with the agreement in principle that water will be prepaid and then study the complications and work out the system properly, not just unilaterally start at the top.

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