Court raps ‘shameless’ ZINWA
The High Court of Zimbabwe.
THE High Court has described as shameless the move by the Zimbabwe National Water Authority (ZINWA) to increase raw water tariffs for Hippo Valley and Triangle Estates by a massive 27 percent, in violation of existing supply agreements.
High Court judge, Justice David Mangota, expressed revulsion at the manner in which ZINWA tried to justify the decision to increase water tariffs by a huge margin without consulting the two sugar estates and in violation of valid water supply agreements.
ZINWA had also sought to apply the new tariff retroactively.
On December 17, last year, ZINWA wrote to Hippo Valley and Triangle notifying them of an arbitrary increase in water tariffs.
“This serves to advise that government through the recent National Budget pronouncement has reviewed raw water tariffs for commercial agriculture (estates) from US$9,45 per mega litre to US$12 per mega litre. The new tariffs are with effect from December 1, 2015. You are therefore advised to take note of this development in your plans,” wrote ZINWA.
Because the two firms have water supply agreements with ZINWA, which provide for negotiation before any tariff reviews are effected, Hippo and Triangle decided to challenge the unilateral decision on the basis that it was unlawful, grossly unfair, irrational, irregular and discriminatory.
The firms argued that in terms of existing supply agreements they have with ZINWA, they should have been consulted before a decision that has a serious bearing on their operations was taken.
They said ZINWA’s failure to consult and offer them an opportunity to make representations constituted a breach of the agreements.
They insisted that the retrospective application of the tariff showed that the respondent’s conduct was not lawful, reasonable or fair.
They were convinced that government, and not the respondent (ZINWA), made the decision to hike the water tariff by 27 percent.
They said the discriminatory nature of the decision was evidenced by the fact that all other users of raw water got a reduced tariff or no tariff at all.
In response, the authority argued that it had acted within the provisions of the ZINWA Act and the Water Act and therefore had no obligation to consult the affected parties whenever it sought to increase the water tariffs.
It added that the provisions of the said Acts had superseded the agreements that the two firms were referring to.
ZINWA also urged the court to dismiss the case as misplaced because the two companies had rushed to the court without exhausting local remedies available, including making an appeal to the Minister responsible for the administration of the ZINWA and Water Acts.
However, the court rejected one after the other, all the arguments that ZINWA made, starting by quoting the provisions of the ZINWA Act which provide for checks and balances to ensure that the authority complies with clearly defined processes and procedures, which ensure fairness, reasonableness and rationality when tariffs are reviewed.
“The respondent violated the agreements which defined its relationship with the applicants (Hippo and Triangle) in a most shameful manner,” Justice Mangota said in a ruling in which he nullified the purported tariff hike.
“The court noted, with disquiet, that the respondent made up its mind to, and did actually, flout the agreements which it concluded with the applicants. A fortiori (from the stronger arguments) when those agreements were both subsisting and valid. Its statement, which was to the effect that the agreements were superseded by provisions of the Water Act, remained anyone’s guess.
“The respondent’s assertion, which was to the effect that it had no obligation to consult the applicants when it increased the water tariff in a manner which adversely affected the applicants’ budget was misplaced. It had a contractual obligation to consult, at least, the first applicant.
“It had a clear duty not to make the increase, which it imposed upon the applicants to operate retrospectively as it did.”
The court noted that according to the law, ZINWA is obligated to consult stakeholders before applying to the Minister (of Water) for permission to review water tariffs. In this case, the process had been done in reverse, as it was government that had initiated the tariff hike, not ZINWA.
“There is no doubt that the respondent acted irrationally, unfairly and unreasonably when it increased the water tariff for the applicants by a margin of 27 percent. It clutched on straws to prop up a defenceless situation. It failed, in a dismal way, to justify its conduct,” the judge said.
Hippo and Triangle also cited the discriminatory nature of the move as at the time ZINWA announced the 27 percent hike, it was cutting the tariffs for other agro water consumers by between 26 percent and 56 percent.
With the reduction, A2 farmers now pay US$5 per mega litre of raw water from US$6,82, while A1 farmers pay US$3 from US$5.
Communal farmers are now paying US$2 from US$4,50.