Water Supply and Sanitation in Panama - Tariffs and Cost Recovery

Tariffs and Cost Recovery

Neither the tariffs of IDAAN, nor rural tariffs are sufficiently high to cover investment costs. In 2011 IDAAN incurred operating costs (including depreciation) of 131 million Balboas (one Balboa equals one US dollar) and had operating revenues of only 104 million Balboas, resulting in an operating deficit of 27 million Balboas. This was the second-highest annual operating deficit since 1994. Prior to 1994 IDAAN had a small operating surplus in most years. The tariff structure does not provide incentives to save water. Since half of urban and almost all rural users don't dispose of water meters, those users do not receive bills based on consumption. In addition, even those who have meters pay a fixed tariff for the first 8,000 gallons (30 cubic meter) each month in Panama City and for 6,000 gallons (23 cubic meter) in other cities and towns. These consumption levels are far above a basic water need of 50 liter per capita per day which corresponds to 6 cubic meters per month for a family of four. In 2012 the monthly residential water and sewer bill for a consumption of 30 cubic meters was 7.92 Balboas in Panama City (0.26 Cents per cubic meter) and 6.56 Balboas in other cities (0.29 Cents per cubic meter). This compares to USD 3 per cubic meter for residential water use in, for example, Chicago.