Wednesday, November 4, 2015

50% Increase in Water Tariff from December 2015 and its impact on House Rents

All around the world, in different countries that have almost nothing in common, there is still something that they do have in common. Each and every country on this planet supports industries and business so that they may flourish and in return pay higher taxes to the government of that specific country. Now this seems perfectly normal and reasonable, and it is, since some of the biggest countries in the world have governments that are supported by big businesses such as Pharmaceuticals etc. if you might not know why Pharma is such big business all over the world, well that’s an entirely separate debate which I will dwell into when the need arises.

Governments offer several facilities and incentives not only to big businesses, but to all businesses, industries and other sources of income for the government. These incentives can include tax wavering, decreased taxes, subsidies on important things like energy bills, water bills and other major expenses of running a business. These subsidies which are provided by the Government are what truly benefit the businesses during the financial year, allowing them to keep higher cash reserve and subsequently do more business. Governments usually allot an industrial zone, such as those found in almost all developing or developed countries around the world, where businesses are also given incentives to relocate or startup.

Although the industrial zone is there for an indefinite amount of time, the incentives and benefits are not and are usually offered for a limited time, such as a period of 3, 5 or 10 years. Similarly in the Kingdom of Saudi Arabia, the Ministry of Water and Electricity has announced that they would be increasing the tariff for sanitation and water services by a whopping 50 percent. This raise will be affecting all government institutions, commercial establishments and industrial establishments. This raise will officially be made as of the 16th of December.

The Ministry has however also set up a special price for the water for those people who only use the water service, and a separate price for those who use both of the services. The prices of the two services will be calculated in accordance to the water meters when an additional SAR 3 has been charged to those who benefit from these services. The receipt fee will not be changed.

A ministry official stated that the residential buildings will not be charged an increased tariff hence you should not expect any increase in the rent from your landlord.  The official stated that the Ministry has planned to apply this new tariff and subsequently improve the sanitation services as of 16th of December all across the Kingdom. This has been done to reduce the exceptionally high water consumption rate in the Kingdom. The increased tariff will also be dependent on the water consumption per month. The new tariff is to be set at SAR 9 / cubic meter in the case of users benefitting from both the services, while only SAR 6 per cubic meter for those who only use water services. The Ministry has laid great emphasis that this re pricing policy has been carefully prepared after much consideration.

Source: Arab News

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