New Tariff Models to Ensure Commercial Viability for Utilities in Zambia
USAID recently organized a two-day training activity for 45 staff drawn from all the 11 Commercial Utilities (CUs) in Zambia. This is part of the process of enabling water utilities to achieve financial and operational autonomy
through cost recovery.
The training focused on two new models that have been developed by SUWASA with the support of USAID: the cost-of-service model and tariff-evaluation model. The cost-of-service model is a dynamic tool that allows for both comparative cost analysis and cost projections. Its function is to provide NWASCO and the Commercial Utilities (CUs) an opportunity to evaluate key operational costs with respect to comparative data.
In addition, the model allows for detailed projections of each financial account included in the National Information Service (NIS) system.
The tariff-evaluation model, on the other hand, will enable CUs to review their tariffs based on the cost of key inputs in the provision of water service. The model will allow for easy review and approval of tariff proposals, and enable the CUs to achieve financial autonomy.
According to Mrs Josephine Goma, NWASCO Senior Inspector in charge of financial and commercial management, the model will shorten the process of reviewing water tariff proposals greatly, and make it more objective.
A user manual will be developed in the coming months to ensure that the models can be used easily and more widely. This will provide a good basis for dissemination among other utilities in sub-Saharan Africa that currently experience challenges in reviewing their tariffs in a way that enables them to recover costs, and promotes financial sustainability.
This activity complements USAID’s Millennium Challenge Corporation’s US$350 million infrastructure investment in transforming the water, sanitation and drainage sectors in Lusaka by ensuring that infrastructure are maintained and productive through a robust regulatory framework.