Taiwan Water Corp (Taiwater, 台灣自來水) yesterday said that its board of directors would next month begin reviewing proposed price increases to match international norms and cope with mounting costs.
The company plans new price brackets for industrial users that use a lot of water and households that use more than 50,000 liters per month, Taiwater chairman Kuo Chun-ming (郭俊銘) told a news conference in Taipei, adding that the proposed changes would only affect the heaviest users.
Most households that use 10,000 liters to 20,000 liters per month would see minimal price changes, Kuo said.
While water prices in the nation are lower than in many developed economies and have remained unchanged for the past 23 years, the state-run company is facing a 3.2 percent increase in payroll expenses due to a government-mandated wage hike, as well as higher electricity costs following the cancelation of Taiwan Power Co (台電) discounts, Kuo said.
Including infrastructure development and upkeep, the company’s costs have surged by between NT$700 million and NT$800 million (US$22.7 million and US$26 million) this year, creating urgency for a price hike, he said, adding that for years, the company has provided water at below cost for industrial and household customers.
Ongoing projects to increase water capacity and pipelines are expected to be completed in the next two to three years and should prevent water shortages in the decade to come, barring incidents arising from extreme weather conditions, Kuo said.
Furthermore, trade tensions and slowing global economic growth have caused Taiwater’s largest industrial customers to lower water consumption, which is also expected to affect revenue, he said.
USAGE DECLINES
Although Taiwater has reported pretax profit of about NT$283 million for the first 11 months of the year, industrial water usage slipped 8 percent in October from a year earlier and further declines could put Taiwater in the red, Kuo said.
The Taiwan Research Institute was commissioned by Taiwater to assess the proposed price hikes and a report is expected to be published soon, which would bolster Taiwater’s position, Kuo said.
Increasing the price of water is a sensitive issue and will ultimately be determined by governing bodies, such as the Ministry of Economic Affairs and the Executive Yuan, Kuo said.
“Having exceedingly low water prices is not always held in high regard among our peers around the world, as they raise doubt whether a utility could maintain high standards,” he said, citing reports at International Water Association conferences.
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