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Perspectives on the market processes followed in setting South African water services tariffs
Expanded Title:South Africa’s private sector and market processes are often dismissed by the government as a service providing option because they increase costs and fail the poor population. There is some substance to the government’s position, given that there is a natural monopoly advantage in water service production, it would be expected that a single firm would emerge as dominant in the provision of these services to urban customers. On its own this outcome would not necessarily be undesirable, but were this firm to be a private one, and unregulated, it could be expected to practice exploitative pricing, make excess profits and undersupply waste water management service. A private firm would also not provide services to the poor unless their service was subsidised. However most of these deficiencies can be regulated, and also occur under public sector provision Are the private sector failures sufficient reasons to abandon the market and private sector as mechanisms to deliver water service in South Africa? This report explored why little use is made of market processes and the private sector in water service provision, despite there being legal provision for such involvement. The study found that public water service providers are not subject to competition policy and consumer protection provisions, whereas private sector providers are. The administration of questionnaires to municipalities and the DWA showed that the various water service providers often operate under unique circumstances, making it difficult to extrapolate from one to another. The case study on Nelson Mandela Bay Municipal tariff setting revealed a mismatch between economic principle and policy practice, and indicates that economic principle plays a lesser role in the design of tariff structures than other factors. Given the problems of public sector water service provision, the report concludes the case for dismissing private sector or public utility models for water service delivery may be weaker than a is believed by the South African government.
Date Published:01/04/2013
Document Type:Research Report
Document Subjects:Wastewater Management - Sewers, Sanitation - Waterborne sanitation
Document Keywords:Municipality
Document Format:Report
Document File Type:pdf
Research Report Type:Standard
WRC Report No:2087/2/13
ISBN No:978-1-4312-0407-6
Authors:Hosking SG; Norden R
Project No:K5/2087
Organizations:Departments of Economics, Nelson Mandela Metropolitan University
Document Size:579 KB
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