A Water Supply Company in Mogadishu Contemplates Acquisitions

[Deeq A.]

Banadir Water Development Company publishes customer satisfaction survey results.

Mogadishu (PP Report) — Before the privately owned water companies emerged in 1994, Mogadishu had been without running clean water for several years due to the destruction of the water infrastructure of the capital city that was dependent on the the state-owned former Water Development Agency. The Water Development Agency ran the two main sources of water — one located in El Irfid, 17km north of Mogadishu, and the other in Elasha Biyaha, approximately 18km southwest of Mogadishu. However, all facilities used for water distribution, including underground pipes supplying households in Mogadishu, were looted. The task to rebuild water infrastructures had been shouldered by businesses who created hand-dug wells in villages while consumers’ demands for water was met by water sellers using donkey carts to transport water barrels for distribution. Despite being unhygienic, this water supply solution became necessary but had to be replaced by proper water supply based on pumps and water supplied by companies.

Small water supply companies continued efforts to maintain and develop water supply services in an environment of intense competition landscape. They introduced a meter system with unit pricing based on residential consumption.

Water supply companies operate independently across the Mogadishu. Customers frequently complain about sudden price increases that do not take into account consumers’ economic conditions. Company owners cite fluctuations in international oil prices to justify price increases to cover operational costs for fuel used in water pumping generators and other facilities. When oil prices go down customers noted that water supply companies never reduce their water supply rates.

Due to stiff competition in the water supply sector in Mogadishu some water supply companies allow to be acquired or merged with bigger utility companies. This corporate business practice affects consumer rights as some companies feign unprofitability to agree to consolidation deals. There is no a regulator to determine if mergers or acquisitions in the water supply sector are driven by justifiable economic imperatives. Despite water supply companies in Mogadishu publishing results of customer satisfaction surveys, customers have no the privilege to change the water supply company if they are unsatisfied with the quality of service. A bona fide agreement among water supply companies prevent a water supply company from operating in an area designated for another water supply company. This agreement limits the opportunity for companies to expand and provide customers with choices.

The receipts issued to customers by New Banadir Water Development Company hint at acquisitions that might have happened quietly.

Despite water supply companies in Mogadishu publishing results of customer satisfaction surveys, customers do not have the privilege to change the water supply company if they are unsatisfied with the quality of service. A bona fide agreement among water supply companies prevents a company from operating in an area designated for another water supply company. This agreement limits the opportunity for companies to expand and provide customers with choices.

“The reason a water supply company acquires another company is to continue water supply provision when a company becomes economically unviable. A government cannot put such a company into administration. Without abolishing the rules that limit a water supply company to operate in one area in Mogadishu, consumer rights will be continued to be violated. When a water supply company acquires other companies the water rate increases ” said a professor of business law in Mogadishu who spoke to Puntland Post on the condition of anonymity.

New Banadir Water Development Company is planning acquire several water supply companies. The company website still features its old name Banadir Water Development Company but receipts issued to customers in Mogadishu reflect a name change: New Banadir Water Development Company. “The acquisition might have already happened quietly. The customer receipts I have seen raise questions about the reliability of New Banadir Water Development Company customer satisfaction survey results” said Adan, a management consultant in Mogadishu.

New Banadir Water Development Company is planning to acquire several water supply companies in Mogadishu. The company’s website still features its old name, Banadir Water Development Company, but receipts issued to customers in Mogadishu reflect a name change: New Banadir Water Development Company. “The acquisition might have already happened quietly. The customer receipts I have seen raise questions about the reliability of Banadir Water Development Company’s customer satisfaction survey results,” said Adan, a management consultant in Mogadishu.

© Puntland Post, 2024

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