Lagos studying proposals for appropriate water pricing as production cost escalates

Consumers hooked to the grid of the  Lagos State Water Corporation (LSWC) may well have to brace up to pay a little higher as the state government is studying proposals for the appropriate pricing of water in the state, due the to the rising cost of production and supply.
Lagos, Nigeria’s economic which is home to an estimated 21 million people, suffers intermittent water shortages leaving a large chunk of its population drinking from boreholes and wells sunk in homes and offices. In some parts of the state, supply from the LSWC often dries up for months, with the corporation recently attributing this to the challenge of power/gas supply to pump water from its major water works.
According to a ranking government official, at the current tariff of 5 kobo per litre, an equivalent of N50 for five drums of 250 litre capacity, charged by the LSWC, Lagos ranks among the lowest water-tariff mega cities.
“This is certainly not sustainable,” the official said, adding that the LSWC water tariff was last reviewed in the year 2000, about 16 years ago when the population of Lagos was below ten million. The inevitability of the right pricing, the source told BusinessDay, is premised against the astronomical rise in the population of Lagos (estimated 21 million) and the need for the government to pump potable water to homes as a way of protecting the residents against water borne diseases.
BusinessDay learnt that the state governor; Akinwunmi Ambode and the ministry of justice, are looking into proposals by the LSWC and other stakeholders with the view to making some amendments to the laws guiding the operations of the LSWC, and the possibility of inviting the private sector by way of Public Private Partnership (PPP).
“There is no running away from the reality. The truth is that the current tariff is not sustainable. If we are going to have stable water supply to homes inLagos, the pricing must be right.  I agree that the LSWC was not established for profit making but as a service organisation.
“The point that must be stressed though, is that in rendering that service, the corporation should at least recover cost of production and treatment of water to keep the service running while the government can pay the staff salaries and allowances. What we have currently is a situation where the tariff paid by the customers of LSWC cannot even meet production cost, let alone cost of buying necessary chemicals for the water treatment. This is not sustainable anywhere in the world,” said our source.
“The laws must be amended to allow for private involvement in a regulated manner. This is not privatisation per se, as some groups would say, but private collaboration with the government to meet up the water needs of the rising population of Lagos,” said the source.
Shayo Holloway, a former group managing director of the Lagos Water Corporation, says the organisation requires N689.5 billion to execute a state-wide water master plan to increase its current production of 210 million gallons per day to 745 million gallons by 2020.
“That is why the state seeks to partner with the private sector to accelerate the development of water infrastructure with private capital to make water available. Such investments are recoverable over a negotiated concession period of 20 to 30 years, depending on the size of investment and financial model,’’ he said.
Babatunde Adejare, the state commissioner for the environment, said recently that the daily water demand by residents was 500 million gallons per day while daily supply was 210 million gallons per day, leaving a short fall of 290 million gallons per day.
Adejare  added, however, that the government was working to improve production to meet up with rising demand.
“It has been projected that by 2020, the daily consumption demand will be 733 million gallons per day, while the daily supply will be 745 gallons per day, leaving an  excess of 12 million gallons per day. It is expected that the planned expansion of Iju, Adiyan 1-3, Isasi, Ikosi, Odomola 1 and 2 waterworks will ameliorate the situation,” Adejare said.

 

JOSHUA BASSEY