Days after the government announced plans to increase electricity and gas prices, the Holding Company for Water and Waste Water (HCWW) stated that potable water prices will also witness an imminent rise. A spokesperson for the HCWW told the press last week that the decision to lift the prices of drinking water by LE0.01 per cubic metre was taken six months ago by the previous cabinet of prime minister Hazem Al-Beblawi, but was to be implemented in May. The new pinch in prices targeted subscribers with higher consumption, not the lower-income segments of the population, he said. The HCWW spokesperson, who could not be reached for comment, said that more than 60 per cent of the company's 10 million subscribers would not be affected by the price increase. Government subsidies on drinking water currently stand at LE1.2 billion annually. The HCWW generates around 25 million cubic metres of water per day, at an actual cost of LE1.4 per cubic metre, about double the tariff paid by the highest consumption segment. The new tariffs will be imposed on consumers of more than 10 cubic metres of water per month, with the new price being between LE0.36 and LE0.67 per cubic metre. Subscribers consuming over 20 cubic metres will pay LE0.75 per cubic metre. The prices were segmented according to consumption in 2006, with the lowest segment consisting of less than 10 cubic metres per month, at a cost of LE0.23 per cubic metre. Household supply prices have not seen any changes in recent years until the recent hikes. The industrial sector and services sectors will not see any increase to their bills, as the price of water for non-home use was raised a year ago to LE2.4 per cubic metre for the industrial sector, LE1.09 per cubic metre for the services sector, LE0.95 per cubic metre for commercial use, and around LE1.8 per cubic metre for the tourist sector. According to Yehia Kamel, a consumer who has a separate water metre for his apartment, his monthly bill, usually for two months use, is LE35 on average with a consumption of 46 cubic metres over the two-month period. He has a family of four, an automatic washing machine and a dishwasher. This puts him slightly ahead of the second segment, consuming over 20 cubic metres per month, which will pay LE0.75 per cubic metre. “I just can't believe the government intends to increase the prices of all services — electricity, gas and water — in one go,” he said. With the power cuts, there will be no water, he explained, as the water reaches his apartment only if the electric pump in the building works. He wondered how, since the electricity outages usually last for three to four hours a day, the government can expect revenues to increase “if there is no actual utilisation on our part.” The aim of raising energy prices is to increase state revenues and to slim down the budget deficit. “The public budget deficit is now LE240 billion annually,” explained Abdel-Moneim Al-Sayed, director of the Cairo Centre for Economic and Strategic Studies, an NGO. “Restructuring the budget as a whole, rationalising expenses and finding new resources is a must.” Energy subsidies will have to be restructured as well, he said. The subsidies have augmented in the past three years from LE130 billion to LE210 billion, while in the same period poverty has increased from 22 per cent to 26.2 per cent of the population, according to recent figures, indicating that the subsidies do not reach those who need them most. The government has opted to rationalise the part of the subsidies that directly goes to the poor, as it has increased household services of piped gas, electricity and water, though this has done nothing for social justice, Al-Sayed said. “It should have addressed the subsidies to the industrial sector, and especially the energy intensive industries such as cement, steel and fertilisers,” Al-Sayed said. Subsidies on exports should have been tackled seriously. “The state can't just go on paying subsidies to export industries for ever. The subsidies are meant to support Egyptian goods abroad as protection against competition, but if the goods can't compete, the subsidies should be reduced or lifted,” he said. Export subsidies amount to $2.5 billion; while revenues expected from increased household bills will not exceed LE3 billion. Al-Sayed suggested that the government should start by rationalising its expenses, applying maximum payments, and changing old laws, such as the quarries and mines law which dates to the 1960s and could generate billions if amended. “Unfortunately, the state has chosen to depend on levying taxes and tariffs from deprived segments to increase its revenues,” said Soad Al-Deeb, Head of the Federation of Consumer Protection Associations. The consequences of recent price increases in energy and gas prices would not be positive, she said, and would lead to a wave of inflation that would be difficult to control and would severely impact consumer purchasing power. “The government has increased household services bills, without an equal increase in incomes to cover the additional expenses, which will lead to more burdens and pressures on the average citizen,” Al-Deeb said. “The officials didn't even ask for our help to try to find proper mechanisms to fix prices or to control the market after the expected increases in the prices of different commodities as a result of these hikes,” she added. Al-Deeb said that the recent government decisions lacked transparency and social dialogue. “How can the state decide to increase electricity bills when it is providing a terrible service, with outages lasting for hours and the water supply in most areas being contaminated,” she asked.
