## **Table 10. Pricing, Sales and Earnings of SPSPs**

|**Water **|**Electricity**|
|---|---|
|•<br>Across the various types of SPSPs, average prices<br>were fairly consistent across countries although the<br>range of prices charged varied widely— determined by<br>local conditions.<br>•<br>**PNO**’s unit prices ($0.17/m<sup>3</sup>to $0.86/m<sup>3</sup>) compare<br>favorably with utility prices ($0.02/m<sup>3</sup>to $0.79/m<sup>3</sup>).<br>The prices offered by private piped networks are on<br>average 1.5 times those of public utilities, despite<br>higher levels of public subsidies provided to public<br>utilities.|•<br>Electricity SPSPs offer several alternative products,<br>each with a different pricing strategy.<br>•<br>**Grids or networked systems**Electricity from a<br>mini-grid goes from 7cUS$/kWh, when capital costs<br>are co-financed through grants, to cUS$92/kWh for<br>full commercial operations. Electricity sold per<br>appliance ranges from S$5 to US$15 per month<br>depending on the number and kind of appliances. In<br>some communities where the primary use is domestic,<br>a flat rate per month is applied.|
|•<br>**Mobile distributors**: unit prices ranged from<br>$0.17/m<sup>3</sup>to $11.00/ m<sup>3</sup>for vendor-carters, within the<br>category of mobile distributors (MDs). The findings<br>support observations in the literature that water from a<br>mobile distributor may cost as much as 10 times that<br>from apiped supply<sup>12</sup>.|•<br>Individual**home-based systems**such as solar<br>panels range from US$200 to US$500 for sufficient<br>electricity for a few light points up to a mixture of a<br>small television, radio and several lights or other<br>appliances.|

This following section analyses unit prices, price differentials and connection charges<sup>13</sup> .

# **4.6.1. Unit Price Analysis**

The unit price of water per cubic meter was analyzed based on data from 47 countries and 93 locations according to the typology presented earlier in this report. The analysis showed wide variation in the prices offered by the type of small scale private service provider (SPSP) at global level. Unit prices charged by PNOs ($0.17/m<sup>3</sup> to $0.86/ m<sup>3</sup> ) were notably similar to those of formal utilities ($0.02/m<sup>3</sup> to $0.79/ m<sup>3</sup> )— for which data was presented as a benchmark. Despite the fact that many of the formal utilities in the 47 countries for which literature was reviewed, provide highly subsidized services, which may not account for full costs, prices charged by PNOs did not differ greatly<sup>14</sup> .

> 12 As concluded by a study in Manila, Philippines, the poor pay more for water and consume less, however, average prices/m3 reveals that SPSPs do not charge excessive prices. The poor depend more on intermediaries, which appears to have an upward effect on prices. [190] Sohoni, Neera Kuckreja. 2003. Draft. How effective are small-scale independent providers in serving the poor? Experience from the Philippines. Water and Sanitation Program, Department of the Interior and Local Government, and AusAID.

13 The unit price analysis converts the rates obtained from the literature (typically per cubic meter or liter) and converts these rates to US dollars ($) for each type of SPSPs. Price Differential analysis uses the cost price and compares it to the selling price. And lastly, the Connection Charge is the cost the customers/households pay to connect to the Utility or the Private Network Operator (PNO).

14 The unit price of public utility water may only be a fraction of the total cost to society of the provision of the service since tariffs rarely cover capital costs and often fail to cover operations and maintenance. Through budgetary operating subsidies and debt obligations, taxpayers pay the remainder. By contrast, the tariffs of private network operators generally cover all costs, including the amortized capital investments required to build the networks.

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