1 Today’s session Week 1 Week 2 Theme B governments Theme C consumers Theme D Reform process Week 3 Week 4 Week 5 RECAP Theme A Service providers
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1
Today’s session
Week 1 Week 2
Theme Bgovernments
Theme Cconsumers
Theme DReform process
Week 3 Week 4 Week 5
RECAPTheme AService
providers
2
Theme Four
Process of Reform
3
Overview
Introduction by Meike van Ginneken∼ Key steps in reforms∼ Balancing progress in utility and environment
Video interviews with three speakers∼ Triggers and obstacles to reform ∼ Key success factors in reform∼ Taking care of the poor in reforms∼ Role of central government in reforms∼ Leadership
4
Planning reforms
Identify what the problems are…∼ Inefficient planning and project implementation∼ Water availability, water quality, energy supply ∼ Staff motivation, capacity, efficiency∼ Tariff level and structure∼ Corruption∼ Commercial operation
5
Key steps for successful reforms
Planning the process of introducing reformInvolving stakeholdersSetting upstream policySetting service standards, tariffs, subsidies, and financial arrangementDeveloping institutional model ∼ Utility: public or PSP∼ Non-utility services: small scale providers∼ ‘Environment’: policy maker; asset holder; regulator∼ Legal instruments for the arrangement
6
Involving stakeholders
Politicians: local and national levelsManagement and staff of public utilityConsumer associationsNGO: national and int’l (service to the poor, environment, governance…) Financiers: multi and bi-lateralAlternative suppliers (tankers, drilling companies…) Media: national and int’lPrivate sector: local and int’l
7
Sustainable utility reform and reform of the environment have to go hand-in-hand
Our goal
utilitypoor good
poor
good
Typical reform path
envi
ronm
ent
Possible combinations environment status/utility
provider status
8
How Uganda combisequenced the reforms of NWSC, its national utility
Utility reform
Ref
orm
of t
he e
nviro
nmen
t
70s political turmoilmid 80s new government
end 80s & 90s Major rehab95 new statute
97 new Board98 new MD
98-00 service & revenue enhancement programs
00 ext & int performance contracts
02 automatic tariff indexation
03 staff performance contracts
97 corporate plan
9
Overview
Introduction by Meike van Ginneken∼ Key steps in reforms∼ Balancing progress in utility and environment
Video interviews with three speakers∼ Triggers and obstacles to reform ∼ Key success factors in reform∼ Taking care of the poor in reforms∼ Role of central government in reforms∼ Leadership
10
South Africa
Mike MullerFormer Director General, South African Department of Water Affairs &Forestry
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South Africa
Total pop - 45.2 Million (2005)Urban pop (% of total) –59%Surface area - 1,221,037 sq milesLife expectancy – 45 yearsGDP (US$ billions) – 240.2Access to water supply –88%Access to sanitation – 65%
Trigger: the end of apartheidVertical unbundling: bulk utilities and end providersMost utilities are corporatizedSubisidies: Free basic water 25 l/p/dBasic water supplies to nearly 15 million people in 10 years; Sanitation much slower‘applying good old-fashioned public finance principles’Ongoing decentralization process – after establishment of democratic municipalities in 2001
12
Uganda
Dr. William MuhairweManaging Director, National Water and Sewerage Corporation, Uganda
13
Uganda
Total pop - 28.8 Million (2005)Urban pop (% of total) –13%Surface area - 241,038 sq milesLife expectancy – 49 yearsGDP (US$ billions) – 8.7Access to water – 60%Access to sanitation – 43%
Utility reform
Ref
orm
of t
he e
nviro
nmen
t
14
Russia
Alexander BazhenovVice-Chairman, Eurasian Water Partnership
15
Russia
Total pop - 143.2 Million (2005)Urban pop (% of total) –73%Surface area - 17,075,200 sq milesLife expectancy – 65 yearsGDP (US$ billions) – 763.7Access to water – 97%Access to sanitation – 87%
Trigger: the end of communismSubsidies: l’goti and maximum % expenditureWSS part of broader Housing and Communal Services sector –centralized billing and collection Mostly municipal departments with little autonomyHistory of focus on infra: low efficiencyRegulation is regional ‘oblast’responsibility Boom & bust of PSP in 03/04; now 2nd generation PSP
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Overview
Introduction by Meike van Ginneken∼ Key steps in reforms∼ Balancing progress in utility and environment
Video interviews with three speakers∼ Triggers and obstacles to reform ∼ Key success factors in reform∼ Taking care of the poor in reforms∼ Role of central government in reforms∼ Leadership
17
The first challenge: how to trigger reform
Droughts, floods & epidemics
Unacceptable levels of service
Political shifts & pressures
financial crises
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The constant challenge to maintain progress….
time
performance
Pressure to improve
Broad sector reform
Utility reform
21
Maintain progress
4
3
19
Triggers and obstacles to reform
Video clip Muller and Bazhenov5 min
20
Owners
Customers
Regulators
Policy makers
Financiers
Maintaining progress: Balancing external accountabilities
The unserved?
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Overview
Introduction by Meike van Ginneken∼ Key steps in reforms∼ Balancing progress in utility and environment
Video interviews with three speakers∼ Triggers and obstacles to reform ∼ Key success factors in reform∼ Taking care of the poor in reforms∼ Role of central government in reforms∼ Leadership
22
Key success factors in reform
Video clip Muhairwe5 min
23
Overview
Introduction by Meike van Ginneken∼ Key steps in reforms∼ Balancing progress in utility and environment
Video interviews with three speakers∼ Triggers and obstacles to reform ∼ Key success factors in reform∼ Taking care of the poor in reforms∼ Role of central government in reforms∼ Leadership
24
Taking care of the poor in reforms
Video clip Muller, Muhairwe and Bazhenov10 min
25
Existing quantity-targeted subsidies are regressive
% of poor hhs receiving subsidy vs. benefit targeting performance
India, State IBTs, 0.56
Cape Verde, 0.48Sao Tome, 0.41
Peru, 0.82Honduras, 0.49
Guatemala, 0.20
Hungary (S), 0.98
Rwanda (S), 0.35
Kathmandu, 0.56
Bangalore, 0.66Sri Lanka, 0.83
Cape Verde, 0.240.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
0.00 0.20 0.40 0.60 0.80 1.00 1.20
Benefit targeting performance indicator
Shar
e of
poo
r hhs
rece
ivin
g su
bsid
y
Electricity
Water
Source: Water, Electricity, and the Poor: Who Benefits from Utility Subsidies? – Komives et al.
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Who are the urban poor?
Typically use multiple sources and differentiate drinking from other uses - purchase small quantities if a free source is available:May share a house or yard tap with multiple families – design standards underestimate number of usersMay purchase from a neighbor – poor households are often heterogeneous; differentiate demand as slums may have mixed densities, income levelsMay use a public standpipe/standpost/kiosk – the level of consumption is constrained by distance traveled, time spent collecting water May rely on small-scale private sector when services do not meet their needs – choose to have water delivered to house rather than walking to and queuing at the standpipe
BUT: poor households do pay for water often at higher rate (per cubic meter) than wealthy households
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How to improve services for the poor?
The long term utility solution: a private -house/yard -connection for allStandpipes – from free to paid serviceAugmenting small-scale service providers How to deal with self provisioning?
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Overview
Introduction by Meike van Ginneken∼ Key steps in reforms∼ Balancing progress in utility and environment
Video interviews with three speakers∼ Triggers and obstacles to reform ∼ Key success factors in reform∼ Taking care of the poor in reforms∼ Role of central government in reforms∼ Leadership
29
The role of the central government
Video clip Muller4 minutes
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Overview
Introduction by Meike van Ginneken∼ Key steps in reforms∼ Balancing progress in utility and environment
Video interviews with three speakers∼ Triggers and obstacles to reform ∼ Key success factors in reform∼ Taking care of the poor in reforms∼ Role of central government in reforms∼ Leadership
31
The political economy of reform
Reforms must provide returns for the political decision makers who are willing to make the changes….Initiate reform where there is a powerful need, and demonstrated demand, for change Nothing succeeds like successBest fit rather than best practice∼ Realistic goals and timeline∼ Develop a sequenced, prioritized list of reforms…∼ Match available human, financial and knowledge resources∼ Take one step at a time, but lock in progress
32
The importance of leadershipVideo clip Muhairwe
3 minutes
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In-country Discussion
Who would gain and who would loose from change in the WSS sector?Politicians: local and national levelsUtility management Utility staff Existing consumer served by utilityThe unservedAlternative suppliers (tankers, drilling companies…) Financiers: multi and bi-lateralPrivate sector: local and international
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