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Changing the Rules to RewardChanging the Rules to Reward
Efficiency: Linking Formal and InformalEfficiency: Linking Formal and InformalProvidersProviders
Almud WeitzUrban Economist, ADB
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They service:They service:
A total of 7 million people in 8 Asian citiesA total of 7 million people in 8 Asian cities
1 million in1 million in CebuCebu, Philippines, Philippines
5 million in metro Manila, Philippines5 million in metro Manila, Philippines
19% of the population in Ho Chi19% of the population in Ho Chi MinhMinh City, VietnamCity, Vietnam
6% of the population in Kathmandu, Nepal6% of the population in Kathmandu, Nepal
Small Scale Water Providers (Small Scale Water Providers (SSWPsSSWPs) are) area Fact of Life for Millions of Customers ina Fact of Life for Millions of Customers in
Asian CitiesAsian Cities
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They areThey are responsiveresponsive to their customer needs, deliveringto their customer needs, delivering
water at the doorstepwater at the doorstep
Where they manage small piped networks, they haveWhere they manage small piped networks, they have flexibleflexible
arrangements for connectionsarrangements for connections They provide theThey provide the linkage between the utility and thelinkage between the utility and the
customerscustomers that the utility does not servethat the utility does not serve
Their margins are lowTheir margins are low
Where they link officially with a major supplier,Where they link officially with a major supplier, water qualitywater qualitysupplied is goodsupplied is good
SSWPsSSWPs Provide a Good ServiceProvide a Good Serviceto Their Customersto Their Customers
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Administrative regulations hamper their operations
To ply their trade, they often have to bribe officials, adding totheir costs
Their access to credit is limited because their business is seenas risky and non-profitable
They can be subject to political interference and politicalownership
They lack information about future water planning in theirservice area, discouraging investment
SSWPsSSWPs Struggle in an UnfavorableStruggle in an Unfavorable
Business EnvironmentBusiness Environment
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A conducive legal framework would recognize the importantpart SSWPs play in water provision
Recognition could translate into better information andpossibly benchmarking of SSWPs
Public suppliers should recognize SSWPs as legitimate bulkcustomers
Policy regarding tariff setting should recognize that SSWPspredominantly service the poor
SSWPs should be Officially Recognizedas Part of The Water Sector
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Medium term licenses would provide SSWPs with securityneeded for expansion planning
Licenses and contracts would help SSWPs in getting accessto commercial, long-term finance
Licenses specifying SSWP coverage expansion wouldintegrate them into water sector investment strategy
Licenses specifying minimum levels of service can improveproper monitoring of SSWPs and thus improve their services
Recognition and Licenses wouldEncourage SSWPs to Expand and
Improve their Services
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CebuCebu, Philippines, Philippines
$100 connection fee plus legal document requirements$100 connection fee plus legal document requirementsprevent poor citizens from connecting to the public utilityprevent poor citizens from connecting to the public utilitysswater systemwater system
SSWPsSSWPs provide water through cheap piped systems orprovide water through cheap piped systems orpolyethylene hoses at connection fees of $20polyethylene hoses at connection fees of $20--6060
Ho ChiHo Chi MinhMinh City, VietnamCity, Vietnam
Legal Framework developed to promote involvement ofLegal Framework developed to promote involvement ofSSWPsSSWPs
Regulation of 2002 specifies types of services, selectionRegulation of 2002 specifies types of services, selectionprocedure forprocedure for SSWPsSSWPs, rights and responsibilities, and hand, rights and responsibilities, and hand--over processover process
SSWP tariffs are significantly lower than in other citiesSSWP tariffs are significantly lower than in other cities
Examples of Good PracticeExamples of Good Practice
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ConclusionConclusion Reaching the Millennium Development GoalsReaching the Millennium Development Goals
cannot happen without addingcannot happen without addingSSWPsSSWPsto theto theequationequation
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Thank youThank you