Red Sea Water and Wastewater Company intends to increase the price of insuring one cubic metre of water supplied to hotels and tourist resorts from EGP 3 to EGP 6, in addition to increasing the insurance period from three to six months, according to official in the company.
Hotels and tourist resorts pay insurance deposits for consuming water for three months, at EGP 3 per cubic metre, according to the official.
An official in the Egyptian Chamber of Hotels-Red Sea, who preferred to remain anonymous, believes that increasing the value of the deposit and extending it to six months will put more financial burdens on the hotels and tourist resorts.
The Red Sea area includes 69,000 working hotel rooms, out of 225,000 rooms in Egypt, according to the Chamber of Hotels.
Tourist resorts threatened to build private water desalination plants away from the drinking water network in the area, under the water company’s plan to increase the prices, according to the official.
The official admits that the water company is owed financial dues from some hotels. However, “the solution is not to increase the value and period of the deposit, which harms the rest of the tourist hotels and resorts that pay the water bills every month”.
According to the official, paying a six-month deposit for an amount of water pumped over a long period of time would significantly drain the available liquidity in the hotels, especially as the price of one tonne of water determined for the hotel establishments in the Red Sea is far more than the price determined for the residential buildings, according to the official.
The amounts paid as deposits for pumping water for six months are huge, and create accumulated bank interests for the party that acquires them, according to the official.
“These deposits are deducted from the hotel’s liquidity, which helps them meet their commitments, and on the other hand, they lose these bank interests annually,” the official said, adding that the hotels pay the water bills, despite the deposits paid to the company.
Tarek Adham, member of the Tourism Investors’ Association in the Red Sea, believes that the water companies can stop the water supplied to the hotels within minutes if they refuse to pay the water bills, which makes the deposits unnecessary in the first place.
According to Tarek, there are crises in providing the drinking water agreed upon with the water company, which forces the hotels to buy the water transported by cars at much higher prices.
Although the desalination plants do not run at full capacity, the water company did not pay any compensation for the losses the hotels suffered in order to obtain amounts of water instead of the amounts that the water company did not supply, according to the official at the Chamber of Hotels.
“This is not the right time for adding financial burdens on the hotel sector, especially after four years of continuing losses,” the official noted.
Egypt’s tourism income amounted to $7.3bn during last year, compared to $5.9bn during 2013.