Governance Principles for successful introduction of PPP in rural water Sector Experiences from Rwanda, Uganda and Senegal Rural Water Symposium, April 13 – 15, 2010 Kampala, Uganda Water and Sanitation Program (WSP) Samuel Mutono and Madio Fall
Nov 14, 2014
Governance Principles for successful introduction of PPP in rural water Sector
Experiences from Rwanda, Uganda and Senegal
Rural Water Symposium, April 13 – 15, 2010Kampala, Uganda
Water and Sanitation Program (WSP)
Samuel Mutono and Madio Fall
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Presentation outline
• Good Governance – Why / Key Principles
• What are the PPPs and Why
• Experiences of Public Private Partnerships (PPPs) in Rwanda, Uganda, and Senegal
• Benefits of PPP in the 3 countries
• challenges
• Lessons and Recommendations;
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Good Governance
What is Good Governance-Process in government actions and how things are
done-Quality of institutions and their effectiveness in
implementing policies.
Why: - Important for economic development. Service
delivery to the poor/vulnerable/less privileged.- Corruption increases costs, reduces efficiency
and threatens the ability to deliver required results.
- Effective water provision depends more on the quality of governance.
- To deliver services to the poor, PPPs have to take into account Good Governance
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What are Public-Private Partnership (PPPs)?
• Public-Private Partnerships (PPPs): Form of legally enforceable contracts between the public & private sectors
• Require new investments by the private contractor (time/expertise, technology, money, reputation, e.tc)
• Transfer risks to the private sector ( operation, service delivery, design, construction, e.t.c.),
• Payments are made in exchange for performance for the purpose of delivering a service traditionally provided by the public sector
PPPs are output-based- Publicly-provided services, the Govt decides the inputs- PPP the private operator is told the outputs to meet
- Value comes from telling the operator “WHAT needs to be achieved” and NOT “HOW to achieve
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Overview of Reasons for PPPs
1. Improving the value for money that end-users receive from their services
2. Additionality: More public services are available than without PPPs
3. Avoided Public Borrowing: Attracting new private investments into public services sectors
4. Improved management, technology, & performance: clear standards and force of contracts
5. But, the private sector is NOT always more efficient & effective than the public sector.
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Reform of the management of the RWSS - Rwanda
• 2002: First experience of Public Private Partnership developed spontaneously by Districts (in Byumba districts)
• 2004: Community management is recognised as a failure based on a specific extensive field survey ( over 30% of facilities non functional)
- 2004: Decision to move from community O & M to towards PPP. New Approach: A PPP approach introduced to shift management from communities to the local private sector.
• 2007: 30% of the RWS piped systems (#172) are managed through PPP by 21 operators;
• Association of POs formed: Weak technical and financial management skills in WSS schemes management
- Rwanda on track to transfer the management of 50% of the systems to the private sector by 2012
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Results of PPP - Rwanda
• 42 POs now manage over 25% of the RWSS in Rwanda. • A forum for POs has been established – Association• Functionality of RWSS increased from 30% to 75% by
2007• Improved efficiency of the systems: POs able to control
water losses, pay maintenance costs and create jobs• PPP contributing to sustainability
• Increased number of connections• Job creation ( water saler, fontainers & technicians,
water meter readers)• Fiscal revenue to districts & benefits to the PO
(monthly rent)
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Uganda reforms in small towns Water Supply systems
• Previously, Central & Local Governments used to run small towns WSS using own staff, but this was found to be not sustainable and efficient
• Reforms were initiated to improve efficiency and effectiveness and reduce burden on government.
The Reforms early (2000) emphasized the need for:
• Separation of asset ownership and operations• Commercialization of service delivery• Establishment of an effective regulatory framework.• Engagement of most appropriate form of PSP
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Framework of operation Uganda
Performance ContractAssets Delegation
Customer Contract
Management Contract
Water Authority(Assets Management)
Users/Clients
Ministry of Water & Environment
Private Operator(Management of Technical, Financial and Commercial Operations)
5 Member WSS Board• Town clerk• Chair Social Services Committee• Rep of domestic consumers• Rep of institutional consumers• Rep of Other Consumers
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RESULTS OF THE REFORM- UGANDA
INDICATORSVALUE
(BEFORE PPP)
VALUE (AFTER 5YRS OF
PPP)
Average Billing Efficiency (%) 50 95
Collection Efficiency (%) 40 85
Unaccounted For Water (UFW) (%)
>50 21
%age of Total Costs of O&M for all towns combined financed by revenue (%)
<50 84
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Challenges & Emerging Issues - Uganda
• Rapid increase of small towns WSS, hence increased problems of monitoring & regulation
• High rate of urbanisation, increased pressure on available capacities/need for system expansions.
• Equipment is growing old, need for a budget for assets renewal.
• Growth and changing environmnet, need review of Performance & Management Contracts
• Low capacities especially of the WA and POs • Sanitation & Hygiene issues need appropriate attentionBaseline Survey on integrity in WSS:• Private Operators: -High levels of political
interference in selection of POs, -10% of contract value estimated to be lost to corruption
• Water Authorities: - Only 50% had business plans
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Conclusions - Uganda
• POs are established, their role is clearly understood and appreciated by all stakeholders.
• Government’s major challenge is to improve on their Regulation (which is under way) and regular audits.
• Growing number of Small Towns calls for clustering to enhance economies of scale.
• Higher levels of PPP are now being piloted, in partnership with GPOBA, 10 schemes are being implemented, with pre-financing by the PO.
• Key consideration include selection of appropriate type and size of PSP interventions, stakeholder consultation and effective Regulation.
• Use of community score cards & citizens report cards is being piloted to improve service delivery
• Association of Private Water Operators (APWO) set up
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Reforms in Senegal
RWS PPP experience from Pilot
The GoS promoted a phased approach:- Up to 1984 water supply was free of charge- From 1984 tp 1996, all the boreholes managed by
committees, including fixed charges- From 1996 Pilot project (REGEFOR)
- Precondition for borehole construction
• To pay water by volume• To form an ASUFOR (water user association)• To open a bank account
• Plus To transfer of maintenance activities to a private operator.
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Current situation of RWSSS management, the players – Senegal
• Public:- ASUFOR (Water User association): Responsible for
water supply management- DEM (operating & Maintenance directorate) for borehole
maintenance
• Private sector: .- Borehole operator- EQUIPLUS (REGEFOR) for borehole maintenance- The public standpipe keeper + meter reading person
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Stakeholder Capacity building – Senegal
1) Training; organisation of users for ASUFOR:- Democracy & transparency in management- Implication of different types of users- Collective decision making2) Training: Financial management for ASUFOR:- Financial autonomy of ASUFOR- Saving account opened in local banks,- Transparency in expenses allocation and use of money- Follow-up balances by users during regular meetings3) Training: Maintenance for ASUFOR, Maintenance
Operator and GERANT- Technical documents - Operation oif equipment- Contract managment.
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RESULTS : Improved maintenance of 80 RWSS serving about 240,000 people -
Senegal
Effective PPP in the REGEFOR area enabled
1. Better quality of services,
-Borehole availability rate of 98%
-Waiting time for borehole repair< 48 hours
2. Enhancement of ASUFOR’s finacial capacity
- Average saving per ASUFOR # $ 10,000
Rest of the Country:
-Borehole functionability rate of 80%
-Waiting time for borehole repair # 4 days
-Average savings by each Water Committee or ASFOR of # $ 5000 to $ 0.000
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General benefits of PPP in the 3 Countries
• Improved quality of service – functionability
• Increased access to services (connections) – Expansion
• Improved financial standing of WSS
• Better management and at lower levels.
• Enhanced participation of users
• Job creation
• Greater opportunity for checks and balances
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Key challenges of water PPPs – 3 countries
• Water’s key role in public health, a “public good” - should be provided free
• Water as a “local-level” service:- Limited local funds to prepare PPPs-Limited local-level capacity to administer PPP contracts
• Attracting long-term private investment will require more risk-sharing ($) by Govts. Water user-fees will not be enough
• Benchmarking & monitoring sector performance• Funding environmental challenges
- The need to pay for more water treatment- Limited water resources available-The need to pay for water source catchment protection-The need to pay for more wastewater treatment
• Improving Hygiene and sanitation.
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Lessons and recommendations for PPP from the experience of the 3 countries
• An enabling policy and legislation is required
• Start on a pilot basis• Build capacity of the actors in their respective roles –
Including governance. • Promote POs association – Codes of conduct
• Set up/ stregthen Monitoring and evaluation systems • Benchmarking, performance indicators & clear targets • Set up/stregthen regulation and audit functions
• Strengthen consumer voices• Gradually move to higher levels of PPP -= e.g. Build-
operator and transfer contracts
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Lessons and recommendations for PPP from the experience of the 3 countries
• An enabling policy and legislation is required• Take time to consult with stakeholders
• Promote POs association – Codes of conduct• Encourage each RWSS to have a business plan• • Benchmarking, performance indicators & clear targets
• Plan for Incentives and sanctions• Plan for Clustering for economies of scale
• Gradually move to higher levels of PPP -= e.g. Build- operator and transfer contracts
• Assist POs to access financing for improving and expansion of service delivery
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Good Governance – Key principles
1. Accountability: the extent to which political actors are responsible to society for what they say or do
- An enabling policy and legislation is required- Benchmarking, performance indicators & clear
targets- Set up/strengthen regulation and audit functions- Plan for Incentives and sanctions2. Transparency: the degree of clarity and openness
with which decisions are made:- Set up/ strengthen Monitoring and Evaluation
Systems3. Participation: Degree of involvement of all
stakeholders- Take time to consult with stakeholders4. Fairness: the degree to which rules apply equally to
everyone in society; and- Strengthen consumer voices
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Good Governance – Key principles
5. Efficiency: the extent to which human & financial resources are applied without waste, delay or corruption or without prejudicing future generations.
- Start on a pilot basis- Build capacity of the actors in their respective
roles – Including governance.- Encourage each RWSS to have a business plan- Plan for Clustering for economies of scale- Assist POs to access financing for improving
and expansion of service delivery6. Decency: degree to which information &
stewardship of the rules is undertaken without harming or causing grievances to people.
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Thanks