Module-c community Based Financial Management

Services’ Commercialization of water services implies operating the water 
project on commercial principles i.e. with the intention of offering good quality 
service at an affordable price. This is NOT the same as being profit driven. 
WASREB is there to make sure that water service providers do not exploit the 
consumers. 
 
Step 
– 4: 
Discussion on 
Tariff Setting 
The main consideration in setting tariffs must be to ensure that revenue at least 
covers operational costs and from a public health/social perspective that each 
person can benefit from access to sufficient water to meet basic human needs. 
Reflect on whether it is wise and cheaper to set low tariffs that result in 
For a water supply schemes to be financially self-reliant, the tariff should 
be set according to one of these two scenarios: 
i) Full cost recovery:- The tariff is set to generate sufficient revenue to meet 
operational and capital replacement costs. 

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Ministry of Water, Irrigation and Electricity 
 Operation and Maintenance Management Manual 
Training Module - D 
Community Based Financial 
Management 
 
DEMEWOZ CONSULTANCY 
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insufficient revenue to operate the project properly. 
Many community managed water projects do not meet the minimum 
requirements of partial cost recovery. 
It is recognized that many projects need to change their tariffs to meet a partial 
cost recovery basis and then move gradually more towards full cost recovery. 
For community water schemes we will consider the tariff calculation that is based 
on cost recovery on operations and maintenance plus replacement of pumping 
equipment (e.g. hand-pump, genset) where the life expectancy is less than 10 
years. 
Good tariff setting usually differentiates between: 
 Communal water point or hand pump 
 Individual private household connections 
 Connections to institutions (schools, health centers, church/mosque) 
 Connections to business premises/commercial enterprises/agricultural use 
 
Animal watering