In the matter of an Application by the DAR ES SALAAM URBAN WATER SUPPLY AND SEWERAGE AUTHORITY (DAWASA) For a Tariff Adjustment, Submitted on January 8 th, 2008 (TR-W-08-001) ORDER NO. 08-001 1.0 BACKGROUND On January 8 th, 2008 the Energy and Water Utilities Regulatory Authority ( EWURA ) received an application from the Dar es Salaam Urban Water Supply and Sewerage Authority ( DAWASA ) for a tariff increase of 22 percent for water supply and 18.5 percent for sewerage services. In this application, DAWASA requested the proposed increase to take effect on January 1 st, 2008. DAWASA s basis for the tariff increment was due to the recent increase in electricity costs and inflation. The last tariff adjustment for DAWASA was made in July 2006, with an increase of 35.9 percent and 29.2 percent for band 1 and 2 respectively, for water supply. Sewerage service tariff was increased by 19 percent. In evaluating the application EWURA has, Pursuant to Section 50 of the EWURA Act, Cap 414, taken into consideration, among other things, the terms of the Lease Agreement signed on December 12 th, 2005 between DAWASA (the Lessor), and the Dar es Salaam Water and Sewerage Corporation (DAWASCO) (the Operator), which provides a mechanism for periodic adjustment of water and sewerage tariffs. The proposed tariff increase for water supply and sewerage services as submitted by DAWASA is as shown in tables 1 and 2 below: 1
Table 1: Current and Proposed Water and Sewerage Tariffs Tariff Current (TZS/M 3 ) Proposed (TZS/M 3 ) % Change (TZS/M 3 ) Water Tariff Operator tariff 488 588 20.5 FTDWSCF 29 37 28.3 Lessor tariff 137 174 26.7 Total Customer water tariff 654 799 22.1 Sewerage tariff Operator tariff 133 160 20.0 Lessor tariff 41 46 12.7 Total Customer sewerage tariff 174 206 18.5 Table 2: Current and Proposed Flat Rate Charges per Month (by Zone) S/N Area Specified Old Proposed % Consumption Charges Charges Change (M 3 ) TZS TZS Remarks (a) Domestic Customers 1 Tabata 20 13,080 15,980 22.17 Receive water by rationing 2 Magomeni 36 23,544 28,764 22.17 Receive water 18 3 Ilala 36 23,544 28,764 22.17 Receive water 18 4 Temeke 43 28,122 34,357 22.17 Receive water 20 5 Kibaha 43 28,122 34,357 22.17 Receive water 20 6 Bagamoyo 31 20,274 24,769 22.17 Receive water 16 7 Kimara 36 23,544 28,764 22.17 Receive water 18 8 City 52 34,008 41,548 22.17 Receive water 24 Centre 9 Boko 52 34,008 41,548 22.17 Receive water 24 2
S/N Area Specified Old Proposed % Consumption Charges Charges Change (M 3 ) TZS TZS Remarks 10 Kawe 52 34,008 41,548 22.17 Receive water 24 11 Kinondoni 43 28,122 34,357 22.17 Receive water 20 (b) Non- Domestic Customer Any 147 106,575 117,453 10.21-2.0 CONSULTATION OF STAKEHOLDERS A Public hearing meeting was held in Dar es Salaam at Karimjee Hall on February 22 nd, 2008 as part of an inquiry into the reasonableness of the proposed tariff adjustment. The Consumer Consultative Council (CCC) and the Government Consultative Council (GCC) raised their concern on unsatisfactory services rendered by the Operator (DAWASCO). Issues raised by CCC included high un-metered customers often paying for services that are not provided; very low collection efficiency by 50 percent; high unaccounted for water; high number of complaints reported to DAWASCO that are not resolved; failure to embark on cost cutting measures by DAWASCO and the current organizational structure of having the Operator (DAWASCO) and the Lessor (DAWASA) which is counter - productive and burdens Consumers. GCC raised concerns on the failure by the Operator to achieve performance targets; low metering ratio; high unaccounted for water and unreasonable estimated bills to un-metered customers. The opinion of other stakeholders included unjustifiable tariff increase while the service is not available or available only to few consumers, inefficient organizational structure of having DAWASA and DAWASCO; and the unreasonably high estimated bills by the Operator. 3
3.0 BASIS OF THE RULING The Lease Agreement provides that computation for tariff adjustments shall be subjected to a pre-determined indexation formula. DAWASA correctly applied the relevant economic changes in the indexation formula to come up with the requested tariff. Although DAWASA correctly computed the requested tariff, EWURA has determined that the requested tariff increase is unreasonable and un-enforceable based on the following findings: (i) With the current tariff DAWASCO is able to meet its planned expenditure for the financial year 2007/2008, with a surplus of TZS 2.78 billion equivalent to 8.06 percent. Section 40.1(a) (iii) of the Lease Agreement gives DAWASA powers to review both the operator s tariff and the indexation formula to ensure that it represents the actual cost changes and takes into account the changes and trends in economic and technical conditions. Inaction on part of DAWASA does not encourage the operator to improve its operational efficiency. In short EWURA finds that an increase to the existing tariff which already produces a surplus is unreasonable. (ii) EWURA Order No. 06-001 of July 13 th, 2006 to DAWASA directed that: Failure in meeting performance targets (as specified in the Lease Agreement) shall be considered by EWURA in evaluating the reasonableness of all future requests for tariff adjustment. Most of key performance targets were not achieved by DAWASCO and no corresponding action was taken by DAWASA as per the Lease Agreement. Also DAWASCO s non attainment of the performance targets set in the Lease Agreement is a major Auditor s qualifying note in its Audited Accounts for year 2006/2007. EWURA is of the opinion that non achievement of performance targets by DAWASCO and the laxity of DAWASA in taking appropriate measures as per the Lease Agreement is at the expense of (i) the customers - who end up receiving poor services which do not reflect value for money; and (ii) the 4
Government (the investor) by failure to achieve the intended national targets of improving water services to the population in the designated areas. (iii) Section 33.5 (a) of the Lease Agreement requires the operator to charge unmetered customers based on current assessment of consumptions. However, the submitted un-metered assessed consumptions were conducted before July 2006, which may misrepresent the present consumption thus leading to inappropriate flat rate charges in the respective areas. DAWASA also failed to submit to EWURA a methodology used for assessing the submitted consumption for un-metered consumers (which are more than 50 percent of all customers), thereby rendering it difficult for EWURA to confirm the assessment proposed in the application. EWURA finds the requested flat rate tariff increase to be unenforceable since the basis for charging unmetered customers was not established. 4.0 RULING OF THE WATER AND SEWERAGE TARIFF APPLICATION The Board of Directors of EWURA having met on April 8 th, 2008 to consider this matter decided as follows: 4.1 Subject to Section 40.6 of the Lease Agreement between DAWASA and DAWASCO; arguments raised in Section 3 above; comments given by the stakeholders; and the justifications and arguments advanced by DAWASA in support of its application, EWURA has determined that the tariff increase requested by DAWASA is unreasonable and unenforceable, hence disallows the requested tariff increase. 4.2 On or before the earlier of September 30 th, 2008 or the date on which DAWASA submits its next application for tariff adjustment, in collaboration with DAWASCO, DAWASA shall: 4.2.1 review the operator tariff and the indexation formula to reflect the actual cost of service and other conditions as specified in Section 40.1 (a) of the Lease Agreement; 5
4.2.2 present to EWURA for review and approval a detailed updated assessment of water consumptions for un-metered customers in the designated areas; and 4.2.3 review the Lease Agreement to EWURA s satisfaction to ensure that the performance targets set therein are updated accordingly. 4.3 DAWASA shall ensure that satisfactory progress is made towards the attainment of the performance targets stipulated in the Lease Agreement by June 30 th, 2009. 4.4 DAWASA shall continue to provide EWURA with information about its financial and operating condition in accordance with the requirements of EWURA. This information will be used by EWURA to evaluate DAWASA s performance in comparison with other utilities and the improvement of its performance over time. This evaluation will also be considered by EWURA in evaluating the reasonableness of all future requests for tariff adjustment. Simon F. Sayore Chairman of the Board of Directors EWURA Haruna Masebu Director General EWURA Dar es Salaam, 8 th April 2008 6
Ombi la Mamlaka ya Majisafi na Majitaka Dar es Salaam ( DAWASA ) la Kurekebisha Bei ya Huduma za Majisafi na Majitaka Lililowasilishwa Januari 8, 2008 (TR-W-08-001) Agizo Namba 08-001 1.0 UTANGULIZI Tarehe 8 Januari 2008, Mamlaka ya Udhibiti wa Huduma za Nishati na Maji ( EWURA ) ilipokea ombi kutoka kwa Mamlaka ya Majisafi na Majitaka Dar es Salaam ( DAWASA ) la kuongeza bei ya huduma za majisafi kwa asilimia 22.1 na majitaka kwa asilimia 18.5. Katika ombi hilo, DAWASA ilipendekeza bei hizo kuanza kutumika rasmi kuanzia Januari 1, 2008. Kulingana na DAWASA, madhumuni ya kuomba marekebisho ya bei kunatokana na ongezeko la bei ya umeme na mfumuko wa bei. Mabadiliko ya bei yalifanyika kwa mara ya mwisho Julai 2006 ambapo bei ya huduma ya majisafi ilipanda kwa asilimia 35.9 kwa wateja wa kundi la kwanza ( Band 1 ), na asilimia 29.2 kwa kundi la pili ( Band 2 ). Vilevile bei ya huduma ya majitaka ilipanda kwa asilimia 19. Kulingana na kifungu cha 50 cha Sheria ya EWURA, Energy and Water Utilities Regulatory Authority Act (Sura ya 414), tathmini ya EWURA ya maombi ya DAWASA, pamoja na mambo mengine, imezingatia masharti ya Mkataba wa Ukodishaji kati ya DAWASA ( mkodishaji ), na Dar es Salaam Water and Sewerage Corporation ( DAWASCO ), ( mwendeshaji ), uliotiwa saini Desemba 12, 2005. Mkataba huo unaainisha utaratibu utakaotumika katika kushughulikia maombi ya marekebisho ya gharama za huduma za majisafi na majitaka. Maombi ya bei ya huduma ya majisafi na majitaka yaliyowasilishwa na DAWASA yanaonyeshwa katika jedwali namba 1 na 2 hapa chini: 1
Jedwali 1: Bei ya sasa na ile iliyoombwa ya Huduma ya Majisafi na Majitaka Dar es Salaam Aina ya Bei (Tariff) Bei ya Sasa Bei Iliyoombwa Ongezeko (TZS/M 3 ) (TZS/M 3 ) (Asilimia) Majisafi Gharama ya Mwendeshaji 488 588 20.5 Gharama ya Kuunganisha Huduma ya 29 37 28.3 Maji katika Makazi kwa mara ya kwanza Gharama ya Mkodishaji 137 174 26.7 Jumla ya Bei kwa Mteja 654 799 22.1 Majitaka Gharama ya Mwendeshaji 133 160 20.0 Gharama ya Mkodishaji 41 46 12.7 Jumla ya Bei kwa Mteja 174 206 18.5 Jedwali 2: Bei ya kukadiria ya sasa na iliyoombwa kwa mwezi ( kulingana na eneo) Matumizi ya Bei ya Sasa Bei Ongezeko Upatikanaji Na. Eneo Maji Iliyoombwa wa Maji Mita za Ujazo Shilingi Shilingi Asilimia Saa kwa Siku (a) Wateja wa Majumbani 1 Tabata 20 13,080 15,980 22.17 Mgao 2 Magomeni 36 23,544 28,764 22.17 18 Saa/Siku 3 Ilala 36 23,544 28,764 22.17 18 Saa/Siku 4 Temeke 43 28,122 34,357 22.17 20 Saa/Siku 5 Kibaha 43 28,122 34,357 22.17 20 Saa/Siku 6 Bagamoyo 31 20,274 24,769 22.17 16 Saa/Siku 7 Kimara 36 23,544 28,764 22.17 18 Saa/Siku 8 City Centre 52 34,008 41,548 22.17 24 Saa/Siku 9 Boko 52 34,008 41,548 22.17 24 Saa/Siku 10 Kawe 52 34,008 41,548 22.17 24 Saa/Siku 11 Kinondoni 43 28,122 34,357 22.17 20 Saa/Siku (b) Wateja wasio wa Majumbani Mteja Yeyote 147 106,575 117,453 10.21-2
2.0 USHIRIKISHWAJI WA WADAU Mnamo tarehe 22 Februari 2008, EWURA ilifanya mkutano wa taftishi kwenye ukumbi wa Karimjee jijini Dar es Salaam kama sehemu ya kupata maoni kutoka kwa wadau kuhusu uhalali wa ombi hilo la kuongeza bei za huduma za majisafi na majitaka. Hoja za Baraza la Watumiaji Huduma zinazodhibitiwa na EWURA (CCC) na Baraza la Ushauri la Serikali (GCC) zililenga kwenye huduma isiyoridhisha inayotolewa na DAWASCO kwa wateja wake. Hoja za CCC zilihusu wateja wasiokuwa na dira ambao mara nyingi hulipia huduma ambazo hawazipati; kiwango kikubwa cha upotevu wa maji; idadi kubwa ya malalamiko ya wateja ambayo bado hayajatafutiwa ufumbuzi; kukosekana kwa mikakati ya kubana matumizi; na muundo wa DAWASA na DAWASCO ambao unamwongezea mzigo mteja wa maji. Hoja za GCC zilihusu mwendeshaji kushindwa kufikia malengo yaliyowekwa; kiwango kidogo cha ufungaji dira; upotevu mkubwa wa maji; na makadirio yasiyo halali ya ankara za wateja wasio na dira. Wadau wengine walihoji uhalali wa kupandisha bei za majisafi na majitaka kwa vile huduma zinazotolewa hazina ubora unaotakiwa na vilevile ni wateja wachache tu ndio hupata huduma toka DAWASCO; muundo usiofaa wa kuwa na mkodishaji (DAWASA) na mwendeshaji (DAWASCO); na makadirio yasiyo halali ya ankara za wateja wasio na dira. 3.0 MSINGI WA UAMUZI Mkataba wa Ukodishaji unaainisha kuwa mchakato wa urekebishaji bei za maji za DAWASA utazingatia Kanuni ya Kimahesabu ya Kurekebisha Bei ( Indexation Formula ) iliyowekwa kwenye mkataba huo. DAWASA imekokotoa kwa usahihi mabadiliko ya kiuchumi katika kanuni hiyo ya kimahesabu ambayo imefikia kupata kiwango cha ongezeko la bei za huduma za majisafi na majitaka. Pamoja na usahihi huo wa kimahesabu, EWURA imebaini masuala yafuatayo ambayo ni muhimu yazingatiwe katika kuidhinisha bei ya maji: (i) Bei za huduma zinazotumika sasa zinaipa uwezo DAWASCO kukusanya mapato ya kutosha kugharamia mipango yote ya DAWASCO kwa mwaka 2007/08, na kutengeneza ziada ya Shilingi bilioni 2.78, sawa na asilimia 8.06 ya mahitaji yake. Kifungu cha 40.1(a) (iii) cha Mkataba wa Ukodishaji kinaipa DAWASA uwezo wa kurekebisha bei ya mkodishaji pamoja na Kanuni ya Kimahesabu ya Kurekebisha Bei, ili kuhakikisha kuwa kanuni hiyo inawasilisha mabadiliko halisi 3
ya gharama na kwamba inazingatia mabadiliko ya kiuchumi na kiufundi. Kwa kutofanya marekebisho hayo, DAWASA haitoi motisha kwa DAWASCO kuongeza ufanisi wa kiutendaji. Hivyo, EWURA inaona ombi la kuongeza bei ambayo tayari inatoa ziada siyo sahihi. (ii) (iii) Agizo la EWURA lenye namba 06-001 la Julai 13, 2006 kwa DAWASA lilitoa mwongozo kuwa kufanikiwa au kushindwa kufikiwa kwa malengo ya utendaji yaliyoainishwa kutazingatiwa kama kigezo muhimu katika tathmini za maombi yote yatakayowasilishwa baadaye kuhusu marekebisho ya gharama za huduma. Malengo ya utendaji hayakufikiwa na DAWASCO na hakuna hatua yoyote iliyochukuliwa na DAWASA. Mwendeshaji hakufikia malengo yaliyowekwa na Mkodishaji, lakini hakuchukua hatua yoyote kama Mkataba wa Ukodishaji unavyoainisha. Ukiukaji wa Mkataba wa Ukodishaji wa DAWASCO vilevile ni moja kati ya maoni ya Mkaguzi wa Fedha katika taarifa za fedha za DAWASCO za mwaka 2006/07. Kushindwa kufikia malengo kwa DAWASCO na kushindwa kwa DAWASA kuchukua hatua mwafaka kadiri zinavyoainishwa na Mkataba wa Ukodishaji kunaleta athari kwa wadau mbalimbali, kama vile (i) wateja kupata huduma zisizoridhisha na zisizoendana na thamani ya fedha wanazolipa; (ii) Serikali kama mwekezaji kutofikia malengo yake ya kuboresha upatikanaji wa huduma ya maji kwa wananchi katika maeneo waishiyo. Kifungu namba 33.5 (a) cha Mkataba wa Ukodishaji kinataka Mkodishwaji kuwatoza wateja wasio na dira kufuatana na makadirio ya sasa ya matumizi ya maji. Hata hivyo, makadirio yaliyowasilishwa ya matumizi ya maji kwenye maeneo mbalimbali yalipatikana kwa tathmini iliyofanyika kabla ya Julai 2006. Kuna uwezekano mkubwa makadirio hayo yakawa tofauti na matumizi ya sasa ya maji, hali inayoweza kusababisha watumiaji kulipia bei zisizo sahihi kwa wateja wasio na dira. DAWASA imeshindwa pia kuwasilisha kwa EWURA taarifa ya mbinu iliyotumia kutathmini matumizi ya maji kwa wateja wasio na dira (ambao ni zaidi ya asilimia 50 ya wateja wote), hivyo kusababisha ugumu kwa EWURA kuthibitisha takwimu za matumizi ya maji zilizo kwenye maombi. EWURA inaona kuwa bei ya kukadiria inayoombwa na DAWASA haiwezi kuidhinishwa kwa vile viwango vilivyoombwa kwa wateja wasio na dira havikuthibitishwa. 4
4.0 UAMUZI WA MAOMBI YA ONGEZEKO LA BEI YA MAJISAFI NA MAJITAKA Bodi ya Wakurugenzi ya EWURA katika kikao chake cha tarehe 8 Aprili 2008 ilijadili maombi hayo ya DAWASA na kutoa maamuzi yafuatayo: 4.1 Kulingana na Kifungu namba 40.6 cha Mkataba wa Ukodishaji kati ya DAWASA na DAWASCO; tathmini iliyoonyeshwa katika Sehemu ya 3 hapo juu; maoni yaliyotolewa na wadau mbalimbali; na hoja zilizotolewa na DAWASA kutetea uhalali wa maombi yao, EWURA imeona kuwa nyongeza za bei inayoombwa na DAWASA haina mantiki na haiwezi kutekelezwa, na hivyo hairuhusu ongezeko hilo la bei. 4.2 Ifikapo Septemba 30, 2008, au kabla ya kuwasilisha maombi mapya ya kurekebisha bei ya huduma zake (chochote kitakachotangulia katika haya), kwa kumshirikisha Mwendeshaji, DAWASA inatakiwa: 4.1.1 kupitia Gharama za Mwendeshaji na Kanuni ya Kimahesabu ya Kurekebisha Bei ( Indexation Formula ) ili bei hizo ziendane na gharama halisi ya kumpelekea maji mteja na masharti mengine kama yalivyoainishwa katika Kifungu na. 40.1 (a) cha Mkataba wa Ukodishaji; 4.1.2 kuwasilisha EWURA kwa ajili ya kuidhinisha tathmini ya kina ya matumizi ya maji kwa wateja wasio na dira katika maeneo mbalimbali; na 4.1.3 kupitia Mkataba wa Ukodishaji, kwa kiwango kitakachoridhiwa na EWURA, kwa ajili ya kuhakikisha kuwa malengo ya kiutendaji yaliyowekwa yanafikiwa. 4.3 DAWASA itahakikisha kuwa malengo ya kiutendaji kama yalivyoainishwa kwenye Mkataba wa Ukodishaji yanafikiwa kabla ya Juni 30, 2009. 5
4.4 DAWASA itaendelea kuwasilisha kwa EWURA taarifa zake za fedha na za utendaji kwa mujibu wa mwongozo wa EWURA. Taarifa hizi zitatumiwa na EWURA katika kufanya tathmini ya utendaji wa DAWASA ikilinganishwa na vyombo vingine vya utoaji wa huduma za maji na uboreshaji wa huduma zake. EWURA itazingatia tathmini hii katika kufanya uamuzi wa maombi yatakayowasilishwa na DAWASA katika siku zijazo. Simon F. Sayore Mwenyekiti wa Bodi EWURA Haruna Masebu Mkurugenzi Mkuu EWURA Dar-es-Salaam, 8 Aprili 2008 6