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Today’s session

Week 1 Week 2

Theme Bgovernments

Theme Cconsumers

Theme DReform process

Week 3 Week 4 Week 5

RECAPTheme AService

providers

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Theme Four

Process of Reform

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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

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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

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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

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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

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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

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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

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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

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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

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Uganda

Dr. William MuhairweManaging Director, National Water and Sewerage Corporation, Uganda

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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

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Russia

Alexander BazhenovVice-Chairman, Eurasian Water Partnership

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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

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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

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Maintain progress

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3

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Triggers and obstacles to reform

Video clip Muller and Bazhenov5 min

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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

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Key success factors in reform

Video clip Muhairwe5 min

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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

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Taking care of the poor in reforms

Video clip Muller, Muhairwe and Bazhenov10 min

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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

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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

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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

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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