BIDPA recently hosted a breakfast seminar on Water Pricing and Policy at Gaborone Sun. The purpose of the seminar was to disseminate findings of a working paper on Water Pricing and Policy in Botswana by Professor Roman Grynberg and Ms Kedibonye Sekakela.
When officially opening the seminar, Permanent Secretary Permanent Secretary in the Ministry of Ministry of Energy and Water Resources, Mr. Boikobo Paya, applauded the initiative by BIDPA which came at time when the water sector is undergoing structural reform.
In his presentation, Prof Grynberg discussed Water Pricing and Policy in general, pricing of groundwater and policy towards low income groups. He argued that the legal structure has created an attitude to water which remains based on colonial system. He mentioned that the Water Act provides no fees for underground water except for those related to the administrative cost of the application (Pg 60) and Article 7 (1) allows unlimited use by mining companies of water found in areas where they hold rights under the minerals Act.
Prof Grynberg highlighted the fact that the government is intending to abstract water from Zambezi which comes at a higher cost. He pointed out that since the government is going to price water at a long run marginal cost, the biggest potential consumers may opt out of buying sustainable surface water given that groundwater is free. He also discussed different forms of pricing for the poor and highlighted that Botswana now has the lowest 1st block tariff of all SADC countries after South Africa.
In his conclusion, Prof Grynberg proposed for;
i. A further modification of the existing Increasing Block Tariff (IBT) system by eliminating subsidies available to high income groups from the IBT by using a system based on the density of populations;
ii. Encouragement of non-water intensive industry (with the exception of irrigation water for agriculture which creates external economic benefits ) and IBT with a low tariff for normal business water users and a higher tariff at long run marginal cost for the rest;
iii. Considering pricing groundwater especially for the biggest potential consumers.