Residents wait to buy water on Huynh Tan Phat St., Ho Chi Minh City.

A proposal to increase Ho Chi Minh City water prices by between 35 and 89 percent has been met with staunch opposition from experts and officials.

Speaking at a conference held by the municipal Fatherland Front Committee (FFC) on monday, Nguyen Quoc Chien from HCMC Department of Finance said the increase was acceptable as citizens’ per capita income had gone up from nearly VND1.2 million a month in 2004, when the current prices were fixed, to nearly VND2.3 million a month last year.

“Water payment under the new plan accounts for just 0.9 percent of average household income,” the official said.

“Water experts from Asia Development Bank say consumers can spend up to 3 percent of their monthly income on water fees,” he added.

However, Truong Van Da, vice chairman of HCMC People’s Council, didn’t agree. He said the prices would be a burden as electricity, telephone and tuition fees were also rising.

FFC representative Dang Duc Dung said the poor would not be able to afford water after the increase and would instead dig for well water, which can contaminate crucial supplies of groundwater.

“High water prices will also push up the prices of many other goods,” said Le Hieu Dang, vice chairman of the city’s FFC. The FFC is an umbrella organization of political and social groups.

Many FFC representatives at the meeting suggested water prices should be increased by no more than 10 percent a year.

The FFC also suggested that SAWACO keep water usage limits at four cubic meters per person instead of increasing the threshold to 16 cubic meters per family per month as proposed. FFC representatives argued that many families were too large for just 16 cubic meters. Water usage limits force people who breach the threshold to pay higher water fees.

SAWACO Director General Tran Dinh Phu argued that limits of around 16 cubic meters per household were being applied in many other countries and had been recommended by the Asia Development Bank.

Phu said that if water prices are too low, the city will have to compensate the water company for losses.

The company has argued in the past that it was suffering financial losses caused by higher production costs against unchanged retail prices.

SAWACO was criticized heavily in March when it originally submitted the proposal to raise prices by 86 percent. The plan has been approved in principal by the HCMC Finance Department and is now waiting official approval from the Ho Chi Minh City People’s Committee.

In September, SAWACO again suggested increasing water prices at a city conference on traffic and water supplies, saying it would need over VND5.7 trillion (US$319.68 million) to revamp its distribution system and cut HCMC’s clean water loss rate from more than 40 percent at the moment to 25 percent by 2025. The losses are due mainly to leaky pipes.

Source: Thanh Nien, Tuoi Tre