Household water only costs NT$10 per tonne in Taiwan. Extraneous figures notwithstanding, this makes the nation’s water prices the third-lowest in the world.
Not only does Taiwan Water Corp (Taiwater) have difficulty covering its costs, but for decades, it has failed to achieve the legal 5 percent minimum rate of return. It must be frustrating for the company not to be able to set its own prices.
Taiwan has a water leakage rate of about 13.9 percent, putting it among the top 10 percent of large metropolises around the world. Although the leakage rate is not particularly serious in itself, low water prices mean that Taiwater lacks the financial resources to upgrade water pipes to more efficient, larger versions made of better quality materials with a longer service life.
This is regrettable in a nation with as few natural water reserves as Taiwan. For decades, Taiwater has found it impossible to turn a profit, or accumulate the funds to effect the needed upgrades. Given the legislative supervision, as well as criticism in the media and among the public, of water leakage, it is time to re-evaluate the policy for setting water prices.
Adjustments to the prices of water, electricity and gas have a direct impact on people’s lives, and always lead to legislative clashes and controversies fanned by the media — to the extent that chief executives resign and finance ministers are asked to step down, regardless of which political party is in power.
The administration of former president Ma Ying-jeou (馬英九) oversaw a sudden hike in gas prices without seeming to consider the condition of the state coffers or the disapproval of the public, which caused support for the Chinese Nationalist Party (KMT), and Ma’s own approval rating, to plummet.
In the immediate aftermath of World War II, a war-ravaged Tokyo was left with a water leakage rate of more than 80 percent. After almost two decades of infrastructure improvement projects, the rate was reduced to 23 percent, in time for the 1964 Tokyo Summer Olympics.
Tokyo has continued to improve its water system and lower the leakage rate. A project over the span of 50 years had by 2019 reduced the rate to 3 percent, the lowest in the world.
Two crucial reasons account for this success.
First, the price of household water was in 1975 raised by 160 percent, improving the finances of the Tokyo Bureau of Waterworks, and allowing it to replace pipes with better quality ones and modernize the water system.
Second, in 1980, the city introduced a program that provided homeowners with stainless steel replacement pipes, using a patented technology, so that pipes would not cause water loss due to earthquakes.
Taiwater is responsible for supplying water to the whole nation through a pipe network that spans more than 64,000km. More than 30,000km of the network is comprised of old polyvinyl chloride pipes, which the company cannot replace due to its financial situation.
If the water problem is to be solved, the low price of water — NT$10 per tonne — must be reviewed.
Kuo Chun-ming is chairman of the Chinese Taiwan Water Works Association.
Translated by Paul Cooper
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