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Putting a Price on Water for All, Namibia


Anna Matros-Goreses, September 2009 Thesis Abstract:

Access to water and sanitation is indeed a human right; however quality water and

sanitation service provision should not be assumed a ‘free service’ as a result. Hence it

is crucial to understand the costs involved of monopoly water service provision to

enable informed decision-making on tariff determination. Namibia, is not only

characterised with extreme conditions of water scarcity and skewed income distribution,

with a history of free water services, but it also is prone to information asymmetry and

lack of transparency (especially financial) challenges in the price-setting process.

Hence, the research aim was to adapt a framework for determining price-setting

processes and to investigate the potential role of an economic regulator to inform the

process and policy accordingly in Namibia. In this regard, the research explores the

price-setting processes of independent economic regulators in England and Wales and

Zambia (as a guide to understand the dynamics and intricacies of setting and enforcing

prices for utilities based on the need for sustainable cost recovery and efficient service

provision) to further investigate possible improvements to the Namibian price-setting

process. The research objectives were explored through descriptive and exploratory case

study approaches, mainly comprising of semi-structured interviews and focus group

discussions.

The research found that the most appropriate regulatory framework for Namibia is an

intermediate framework- a hybrid regulatory body (consisting of a combination between

government and independent expert panels). The research also identifies crucial

operating principles, regulatory tools (with emphasis on accounting separation within

financial models) and consumer involvement as major components for the Namibian

price-setting process. In essence, accountability through transparency (effective

information sharing and stakeholder involvement) is identified by the study to address

the principal-agent challenges faced within Namibia, especially given the extreme

conditions.


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