Amatola Water finance director Craig Step says the proposed increase should be viewed in the context of increases in major inputs such as electricity, bulk water purchases from the Department of Water Affairs and salaries. Electricity is to rise by nearly 28 percent in the 2010/11 financial year.

Responding to media reports that proposed water tariff increases could push end user water costs higher, Step says this could well be the case.

“The tariff increases could have some impact on the final pricing by municipalities, which could then be projected to the end user. As water boards are part of the water value chain, any changes effected would have a domino effect on the rest of the components of this value chain.”

Amatola Water supplies water to the Buffalo City Municipality (BCM) and Amathole District Municipality (ADM) as well as industrial clients, police stations, clinics, schools and a few farmers.

“The proposed tariff increases relate to bulk water supply to municipalities. In our case the end consumer is only 2- 3 percent of our business.

Last year bulk water sales were R143 million and this year we have budgeted for R155 million,” explains Step.

Step adds that the proposed tariff increases were in line with pending price increases in electricity as well as labour costs.

“Some of our input costs jump higher than the expected consumer price index (CPI), for example electricity price is expected to increase by 28 percent. We’ve got to manage the costs that are higher than CPI.” Step says.

“We are also affected by what happens at municipal level in terms of staff salary increases which have an impact on us because Amatola Water staff belong to the same union.”

For more information:

Connie Buso

Amatola Water

Tel. 043 707 3700

For Amatola Water media relations:

Lunga Mtshizana

SMG Africa

Cell. 083 618 7557