Water - A Key To Sustainable Development 3

Division Environment and Infrastructure

Casesheet

Focus: Jordan

Regulation and Supervision in Water Supply and Sanitation (WSS) Key Facts Jordan Population

5.4 million

Urban population as a percentage of total population

78%

Population with access to water supply

98%

Population with access to waste water collection and treatment systems

63%

Regulatory framework

Ministry of Water and Irrigation (MWI), Water Authority Jordan (WAJ), Programme Management Unit (PMU)

Service providers

National public providers with regional administrations as well as private operators

Situation in the country with regard to WSS Jordan is one of most water-scarce

the municipal network are high, at

power from the centrally controlled

countries in the world and the lack of

more than 98%, but water supply is

WAJ to regional units operating on a

water will be a serious challenge to

intermittent. Around 63% of the ap-

commercial basis.

its future economic growth. Despite

proximately 5.4 million inhabitants of

scarcity, water use is not efficient,

Jordan have access to wastewater

with high levels of Non Revenue

collection and treatment systems.

Water (NRW) in the range of 47% in

Private Sector Participation (PSP) went underway in 1999 with the signing of a Management Contract be-

the Amman region. Agriculture, which

Service provision in the Sector. ­The

tween the WAJ and the private joint

contributes about 5% to GDP, uses

Water Authority of Jordan (WAJ) is re-

venture LEMA (Ondeo and Mont-

around 63% of water resources,

sponsible for WSS service provision in

gomery Watson Arabtech Jardaneh)

again with high NRW-levels, low tar-

the Kingdom. Over the past years an

for the Amman Greater Area serving

iff, and low cost recovery. As a con-

ambitious restructuring programme

2.2 million customers (set to expire by

sequence, Jordan suffers chronic

was implemented, including the de-

the end of 2006). Additional PSPs

imbalances in its water supply-de-

centralization and commercialisation

were considered but not carried out.

mand equation. Connection rates to

of services as well as the delegation of

The tender of a Management Contract

commissioned by:

WSS regulatory ­framework in Jordan

Minister of Water and Irrigation Sector policies MWI Ministry of Water and Irrigation

Central oversight

Sector policies Tariff setting

PMU (Programme Management Unit )

WAJ (Water Authority of Jordan)

Local WSS Administrations under central control

Ä Ä Ä

Customers A

Contract monitoring

Monitoring

Decentralised/commercialised WSS Administration (NGWA)

Ä Ä Ä

Customers B

Private operator (LEMA)/ Aqaba Water Company (AWC)

Ä Ä Ä

Customers C

Northern Gouvernorate Water Admin-

Ministry of Water and Irrigation (MWI),

tation of further PSP projects. It oper-

istration (NGWA) was cancelled. As a

the WAJ, as well as a Programme

ates under the supervisory control of

consequence, it was decided to ten-

Management Unit (PMU) carry out

an Executive Management Board,

der a three-year Managing Consultant

regulatory tasks (see chart above).

which is headed by the Minister.

Contract (MaCo), which will give way Regulatory

Tasks,

Powers

and

to the establishment of a commer-

The MWI was established in 1988 to

cially operating public company. The

improve the coordination in the sector.

Tools. Within the regulatory frame-

negotiations for a Build Operate Trans-

Since 1992 the MWI is in charge of the

work, the MWI is responsible for mon-

fer (BOT) tender on Disi water supply

development of sector policies and

itoring, planning, management and

were stopped while the BOT Asamra

the overall management of the scarce

the formulation of strategies and poli-

wastewater treatment plant is cur-

water resources. The WAJ is the cen-

cies in the water sector. Price regula-

rently under implementation. In the

tralised authority responsible for WSS

tion is also done by the MWI, which is

future further BOTs as well as the pub-

services. WAJ is working under the

committed to set tariffs at operation

licly owned water company approach

WAJ law which regulates current op-

and maintenance (O&M) cost recovery

and Micro-PSP options (PSP of local

erations. The regional administrations

at minimum. However, decisions of a

private companies in selected busi-

of WAJ in the Gouvernorates are fully

financial nature require the approval

ness activities such as billing and col-

dependent on headquarters with the

by the cabinet.

lection) are sought for Jordan’s water

exception of the Northern Governo-

sector. The first Micro-PSP contract

rates Water Administration. Authorities

WAJ is a semi-autonomous body

has been awarded to a local Jordani-

have been delegated from WAJ to

within the ministry, carrying full re-

an Engineering consultant in 2005.

NGWA to support the decentralisation

sponsibility for WSS nationwide as

process (e.g. financial planning, hu-

well as for regulatory oversight. WAJ,

man resource development, procure-

in coordination with MWI, is also re-

Regulatory Framework

ment and capital investment pro-

sponsible for the groundwater moni-

grammes). PMU was created in 1997

toring and control. In future WAJ is

Institutional Structure of the Sector.

to manage a comprehensive pro-

sought to be mainly responsible for

Within the existing setting there is no

gramme of restructuring and rehabili-

bulk water supply to the providers and

clear separation of the roles of agen-

tation of the water supply system in

the WSS services in the remaining

cies with regard to regulatory and su-

Amman and to administer the Man-

Gouvernorates. The PMU is responsi-

pervisory and operational tasks. The

agement Contract and the implemen-

ble for the regulation of the Amman

Management Contract and other PSP initiatives in the Gouvernorates. However, its regulatory functions remain limited to sector monitoring with a focus on performance improvement and asset management. Over time, PMU gradually expanded its field of intervention to include PSP-promotion, introduction of modern management tools and monitoring and reporting of the water operators. In the future PMU will become the monitoring and auditing unit of the water sector. Incentives for Service Providers. There are no real market-based incentives for performance in place. Per-

difficult to differentiate and coordinate

tion by way of focus group discus-

formance indicators were used in the

between the responsible agencies.

sions in Amman. In Aqaba stake-

Amman Management Contract, as

holder consultations took place guarTransparency in Decision-making.

anteeing the smooth transition to-

Since the first PSP activities in 1996

wards a water company. But in

Dispute Prevention and Resolution.

(preparation of the Amman Manage-

general low trust in authorities and

There are no institutionalised dispute

ment Contract), transparency and co-

the absence of non-governmental

prevention and resolution mechanisms

operation between the public and

organisations are impediments to

in place. Conflicts with regard to the

private sector has considerably im-

taking the poor consumers’ views

Amman Management Contract were

proved. Today, the public as well as

forward.

carried out between the private opera-

the private sector perceive the Am-

tor LEMA, the PMU and the MWI.

man Management Contract as a suc-

Promotion of Competition. Initially,

cess. The large number of interna-

there was a strong drive towards PSP.

Pro-poor Provisions. A well-estab-

tional companies willing to bid for re-

However, due to changing markets it

lished tariff structure exists for do-

cent tenders has shown that the trust

became apparent that complex PSP

mestic water use (progressive system)

of the international market in the pro-

models would not be sought anymore

with subsidised lifeline tariff for poorer

cedures in Jordan is relatively strong.

and that alternative approaches, such

well as in the Micro PSP contracts.

communities, generally guaranteeing

as Micro-PSP and the concept of a

affordability. Intermittent supply proofs

Stakeholder Involvement. There is

public company, would be promoted.

to be a larger burden on the shoulders

no institutionalised consultative proc-

WAJ supports decentralisation as a

of the poor.

ess. Even though WAJ law envisages

first step towards PSP through delega-

the participation of citizens and local

tion of authority and also the imple-

Assessing Results

authorities there is little evidence of

mentation of different forms of PSP

stakeholder engagement. With re-

(Amman Management Contract, Man-

Regulatory Independence. Although

gard to the Amman PSP-preparation

aging Consultant Contract for the

WAJ and PMU are semi-autonomous

process and other intended PSPs,

NGWA, Aqaba Water Company, BOT

bodies, the degree of political interfer-

there was no stakeholder involve-

Asamra wastewater treatment plant)

ence in Jordan’s WSS sector contin-

ment. The private operator LEMA, on

and other PSP measures.

ues to be an important factor in regula-

the other hand, has made positive

tion. Within the current structure it is

experiences with customer consulta-

Conclusions and Outlook Impact of Regulatory Reform on

Urban water demand is projected to

ture. However, an agency with a cer-

Sector Performance. NRW contin-

almost double by 2020. To increase

tain degree of independence could

ues to be rather high and service

supplies and service efficiency, the

be formally introduced as a mediator

provision is not satisfactory. However,

government has already launched an

between all stakeholders to promote

the overall performance in the WSS

ambitious investment programme.

high quality service provision, trans-

sector has improved. The achieve-

Key measures in order to meet the

parency, legitimacy and equality in a

ments of the first Amman Manage-

challenges are the institutional and

politically and economically uncer-

ment Contract became apparent after

the regulatory reforms. The principal

tain environment. There is also a

five years. The highest cost recovery

regulatory functions are not likely to

pressing need to get consumers

in Jordan is achieved by Aqaba Water

be carried out by an independent

more involved and to raise their

Company, which is benefiting from its

regulator within the foreseeable fu-

awareness.

location, a small service area with some major consumers. The Northern Gouvernorates Water Administration (NGWA) can be considered as the best performing utility managing to reduce its operational deficit by more than 30% within just four years.

Role of German Development Cooperation. German Development Cooperation has

Management Support (OMS) compo-

nates with USAID, JICA, MREA and the

been engaged in Jordan for over 30

nent of the programme supports the

EU. Currently GTZ is heading the Donor

years. Through its Water Programme,

institutional reform in WSS, improved

Subgroup on Water. Within its Techni-

GTZ is supporting the implementation

operational efficiency and „Phasing-In

cal Committee on Commercialisation

of the Jordanian Water Strategy in all

Approaches“ for different PSP options.

and PSP, issues on regulation, PSP and

important institutions responsible for

In close cooperation with KfW, progress

user group participation, especially in

water supply and sanitation, irrigation

could be achieved with regard to cost

irrigated agriculture, have been elabo-

and water reuse as well as water re-

recovery in the sector. German Devel-

rated and presented to the Minister of

sources management. The Operations

opment Cooperation closely coordi-

Water and Irrigation.

This document belongs to a series of Case Sheets, which draw on GTZ’s advisory services in the area of “Regulation and Supervision of Water Supply and Sanitation”. The conclusions expressed in this paper are those of

the authors and should not necessarily be attributed to GTZ or German Development Cooperation as a whole. Nor do the conclusions represent official policy of the GTZ.

Imprint This note is available on www.gtz.de/psp For more information: [email protected] Authors: Marina Meuss, Uwe Stoll, Nina Barmeier Published by:  Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH PO Box 5180, 65726 Eschborn, Germany

Design by: www.creativerepublic.net, © 2006 Photos: © Marc Latzel Printed on 100% recycled paper

Status: January 2006

Division Environment and Infrastructure

Casesheet

Focus: Kenya

Regulation and Supervision in Water Supply and Sanitation (WSS) Key Facts Kenya Population

32 million

Urban population as a percentage of total population

36%

Population with access to water supply

50%

Population with access to sanitation

No reliable data available

Regulatory framework

Water Services Regulatory Board (WSRB)

Service providers

Water Services Providers (WSPs), Alternative providers

Situation in the Country with regard to WSS Kenya is classified as a chronically

to decentralised sanitation. Popula-

of policy, regulatory, asset holding and

water-scarce country and has cur-

tion growth in Kenya is projected to

operational functions.

rently the lowest access to safe wa-

increase dramatically, particularly in

ter in East Africa. Available access

the urban informal settlements, fur-

statistics are largely outdated but it

ther worsening the situation.

is estimated that more than 50% of

Prior to the reforms, a number of organisations had been involved in water service provision including the

the population is underserved. Urban

Service Provision in the Sector.

Ministry of Water and Irrigation (MWI),

informal settlement and the rural

There have been a great number of

the National Water Conservation and

poor are the most affected: while the

changes in Kenya’s WSS sector with

Pipeline Corporation (NWCPC), vari-

urban poor largely rely on informal

the completion of the Water Act of

ous local councils as well as an esti-

vendors, the rural consumers often

2002 (enacted in 2003). The Act pro-

mated 3000 Community Based Or-

draw their water from unprotected

vides for the decentralisation of pow-

ganisations.

sources. The sanitary situation is

ers from the national to the regional

likely to be worse with just about

and local level; the separation of wa-

Following the provisions of the Act,

10% of all households connected to

ter resources management from WSS

the transfer of asset ownership from

a sewerage system and around 50%

as well as the institutional separation

the Water Ministry and the National

commissioned by:

MWI (Ministry of Water and Irrigation) Framework for WSS service provision

WAB (Water Appeals Board)

WSRB (Water Services Regulatory Board)

WSTF (Water Services Trust Funds)

License Dispute prevention and resolution

WSBs (Water Services Boards)

no regulation

Service Provision Agreement

WSPs (Water Services Providers)

WSS regulatory ­framework in Kenya

Customers A

financing provision for poor areas

Alternative providers

Ä ÄÄ Ä Ä Ä

Customers B

Regulatory Framework Water Corporation to seven regional

Institutional Structure of the Sector.

defined by the Act as policy-making

Water Services Boards (WSBs) has

The national regulator, the Water

body in charge of providing an ena-

been gazetted in July 2005, and

Services Regulatory Board (WSRB),

bling framework for effective service

most local governments have hand-

has been created by virtue of the

provision. The Minister wields con-

ed over their assets to the WSBs.

2002 Water Act to supervise water

siderable powers, such as appointing

While the WSBs are in charge of asset

services provision in the country.

and removing Board members and

development and bear overall WSS

However, some regulatory tasks are

ensuring sector control.

service responsibility within their are-

delegated to the seven regional

as of jurisdiction, they appoint Water

WSBs. A Water Appeals Board (WAB)

Regulatory Tasks, Powers and Tools.

Services Providers (WSPs) to actually

is responsible for resolving and deter-

Institutional responsibilities, powers

provide the service.

mining certain disputes. The Water

and regulatory tools are still in the

Services Trust Fund (WSTF) assists in

process of being further defined. The regulator’s primary responsibilities are:

In urban settlements the WSPs are

financing the provision of water to

mostly local authority-owned utilities

areas without adequate supply (see

that have been established recently

chart above).

as commercialised, publicly owned companies. In other areas numerous

The regulator, which has only be-

community-managed projects are to

come operational in 2004, consists

be transformed into formally recog-

of an 11-member board structure in

nised WSPs. Community Based Or-

charge of major decisions and a

ganisations will retain the ownership

management team headed by a CEO.

over their assets and, where possi-

The recruitment process to fill the

ble, remain or become in charge of

key positions is still on going. The

operations.

sector’s “line” ministry is the MWI,

<

<

<

L  icensing the WSBs and formulating

vision agreement between the WSBs

providers operate a flat-rate lifeline tar-

sector guidelines and regulations.

and the WSPs. The WSBs also have

iff, the actual impact on low-income

M  onitoring

the

monitoring tasks in relation to the

communities is contentious. There are

WSBs’ compliance with conditions

service provision agreements within

indications that connection rates may

attached to their licences.

their area and are partly allowed by

be prohibitively high. Service provision

D  etermining standards and issuing

law to make their own subsidiary

in the large informal settlements re-

guidelines on service provision,

regulations within the framework of

mains outside the regulatory regime.

customer protection, cost-effective

the overall regulatory regime.

Presently, the sector institution with a

and

enforcing

and efficient operation and mainte-

clear pro-poor focus and mandate is

nance (O&M) procedures.

Incentives for Service Providers.

<

F  ulfilling certain dispute resolution

The current Model Service Provision

functions.

Agreements provide for some simple

<

Issuing overall guidelines on tariff

incentive mechanisms. According to

policies, structures and adjustment

these, the WSPs may be allowed to re-

mechanisms.

tain part of the additional revenues if

Regulatory reforms have only started

C  ompiling sector information for

they outperform with regard to collec-

recently and are part of a wider sec-

comparative competition of provid-

tion rates and Unaccounted-for-Water

tor reform. So far, key institutions

ers and informing the public about

(UFW). As part of a government civil

have been established and are in the

sector development.

service reform policy, on going since

process of becoming operational.

<

the Water Services Trust Fund.

Assessing Results

July 2005, the WSBs and the top man-

Some crucial regulatory tools have

The overall price regulation regime

agement of state corporations as well

been developed or are currently be-

is currently being further defined and

as the Ministry have signed Perform-

ing finalized. Direct impacts of the

clarified. The proposal endows indi-

ance Contracts, which will be assessed

regulatory reform are expected to be

vidual WSPs to request adjustments

annually.

seen once the institutions and tools become effective.

of remuneration as part of their periodic business planning process,

Dispute Prevention and Resolution.

which the WSB approves. Any adjust-

The functions of the Water Appeals

Regulatory Independence. Although

ment to the WSB remuneration will

Board are likely to be limited to disputes

the Water Act provides for a fairly inde-

need to be approved by the regulator.

between the regulator and WSB or, as a

pendent regulator, at this stage of the

In addition, the current draft concept

third instance, between WSBs and

reform process, the WSRB is not yet

proposes an indexation formula to be

WSPs. Alternative more localised and

fully independent. Funding is currently

included in the standard service pro-

accessible mechanisms are currently

provided through government grants

being discussed as part of the on-going

and a proposal for a regulatory levy of

development of dispute resolution and

1% is waiting for approval. In addition,

appeals mechanism guidelines and

staff is still being seconded from the

Model Service Provision Agreements.

Ministry to the regulator instead of being recruited from the market. A board

Pro-poor Provisions. Although strate-

appointed by the Minister takes key

gic plans indicate an awareness of

regulatory decisions and most of the

“pro-poor” issues in the regulatory

WSRB’s responsibilities are limited to

process, the definition of targets has

issuing guidelines and advice rather

remained vague and implementation is

than actual decision-making. However,

in the initial stages. While many formal

the ultimate degree of independence

Conclusions and Outlook will be determined with the definition

of public consultation and active

The success of regulatory reform will

of the respective roles and responsi-

stakeholder engagement is gradually

depend on the progress of the overall

bilities and the development of regula-

being build. By appointing representa-

reform process in the sector as well

tory tools.

tives into the boards of the respective

as on the future strength and credibil-

institutions some improvements have

ity of the regulator. It remains to be

Transparency in Decision-making.

been made with regard to involving

seen whether the regulator will be

There is an increasing awareness of

consumers and civil society. Some of

able to take a leading role, providing

the regulator as well as growing pres-

the larger WSPs are starting the proc-

guidance to the regulated industry as

sure from the general public and the

ess of improving customer service

well as to the Ministries throughout

regulated industry to move towards

(e.g. Nairobi Water Company).

the reform process.

more transparency and accountability in regulatory decision-making.

Promotion of Competition. While the Water Act encourages competition by

Stakeholder Involvement. The Water

appointing the WSP, government poli-

Act requests consultation on a number

cy gives preference to public local

of provisions and regulations. A culture

government companies.

Role of German Development Cooperation. German Development Cooperation

Programme. Objectives of this project

sents German cooperation externally

has been intensely involved in estab-

are inter alia the establishment of an

and as such also co-chairs the water

lishing local government-owned au-

effective regulatory regime for WSS;

donor forum. Close cooperation ex-

tonomous and commercialised com-

the operationalisation of the new in-

ists with the Swedish/Danish funded

panies in various secondary towns in

stitutions, established as part of the

Kenya Water and Sanitation Pro-

Kenya. These projects serve as a

water sector reforms; and the com-

gramme formalised in a joint financ-

model for the establishment of WSPs

mercialisation of WSPs. Water re-

ing agreement as well as an agree-

throughout Kenya under the on-going

source management components in-

ment on a common programme be-

reforms. Presently, GTZ is providing

tend to optimise available resources,

tween German Development Coop-

substantial support to the sector

their management and use. KfW as

eration (KfW, GTZ and DED) and the

through the Water Sector Reform

the sector focus coordinator repre-

World Bank.

This document belongs to a series of Case Sheets, which draw on GTZ’s advisory services in the area of “Regulation and Supervision of Water Supply and Sanitation”. The conclusions expressed in this paper are those of

the authors and should not necessarily be attributed to GTZ or German Development Cooperation as a whole. Nor do the conclusions represent official policy of the GTZ.

Imprint This note is available on www.gtz.de/psp. For further information: [email protected] Authors: Authors: Anja König, Roland Werchota and Nina Barmeier Published by: Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH PO Box 5180, 65726 Eschborn, Germany

Design by: www.creativerepublic.net, © 2006 Photos: © GTZ Printed on 100% recycled paper

Status: January 2006

Division Environment and Infrastructure

Casesheet

Focus: Peru

Regulation and Supervision in Water Supply and Sanitation (WSS) Key Facts Peru Population

27.5 million

Urban population as a percentage of total population

71%

Population with access to water supply

76%

Population with access to waste water collection and treatment systems

57%

Regulatory framework

Superintendencia Nacional de Servicios de Saneamiento (SUNASS )

Service providers

Empresas Prestadoras de Servicios de Saneamiento (EPS), Juntas Administradoras de Servicios de Saneamiento (JASS), Community-based organizations, NGOs

Situation in the country with regard to WSS The urban WSS sector in Peru has

ticularly in the rapidly growing peri-

(Juntas Administradoras de Servicios

relatively high WSS coverage ratios

urban areas, are a consequence of

de Saneamiento) as well as by other

but they are mostly confined to the

this situation.

types of community organizations and

utilities in densely populated areas.

NGOs. Private sector participation

Smaller utilities have not reached

Service provision in the Sector. ­ In

(PSP) had until very recently been lim-

sufficient levels of WSS coverage. A

Peru 45 WSS utilities or EPS (Empre-

ited to outsourcing, with the exception

high level of Unaccounted-for-Water

sas Prestadoras de Servicios de

of a concession contract for the con-

(UFW) with a national average of

Saneamiento) – public companies in

struction and operation of a water plant

45%, low metering rates, poor water

property of the corresponding munici-

in Chillón issued by Lima’s utility

quality and intermitted water availa-

palities - are in charge of providing

SEDAPAL (Servicio de Agua Potable

bility are persisting problems in the

service to about 65% of the popula-

y Alcantarillado de Lima). Lately, there

sector. Wastewater treatment facili-

tion. The remaining 35% of the - most-

are number of PSP processes in effect

ties are almost absent. Frequent wa-

ly rural - population, is serviced by

at the provincial level. If these pilots

ter borne in­fectious diseases, par-

smaller service associations or JASS

prove to be successful ten more EPSs

commissioned by:

Regulation of public providers are to be privatised in the next years. Amongst the pilot projects is a 30-year

MVCS (Ministry of Housing, Construction and Sanitation)

concession for the city of Tumbes awarded end of July 2005 by the Pri-

Promotes contract and provides technical assistance for its preparation Elaborate and approve contract

Municipalities

Authorize implementation of PMO

vate Investment Promotion Agency (PROINVERSION) to the Argentinean/ Peruvian consortium Latinaguas-Concyssa. The company EPS GRAU, operator of the WSS system in the city of Piura, is in the stage of pre-qualification

Contrato de explotation

Supervises execution

SUNASS (Regulator)

Approves PMO and supervises execution

for a 30-year concession. A number of small and medium-size municipalities PMO (Optimized Master Plan)

Promotes and assists with elaboration of PMO

EPSs (Utilities)

Sign contract

Elaborate and sustain PMO

are in the process of tendering the operation of their WSS services (e.g. Sechura and Laredo).

Regulatory Framework Institutional Structure of the Sector. The water regulatory agency SUNASS (Superintendencia Nacional de Servi-

Regulation of private providers

cios de Saneamiento) was created by decree in 1993 as a decentralized and

MVCS (Ministry of Housing, Construction and Sanitation)

PROINVERSION (Private Investment Promotion Agency)

tion of the Presidency of the Council of Ministers. Presently, SUNASS oversees quality, coverage and rates in 45

Pr sis ovid tio tanc es te n of e fo chn co r p ica nc r ep l a s es sio ara- n

n tio nta act ple ntr im co n es ot ssio om ce Pr con of

Elaborate and approve concession

autonomous agency under the jurisdic-

Municipalities

Authorize implementation of PMO

EPSs. Service provision in small cities and rural areas, administered by local governments or other institutions, as well as small legal commercial activities (water deliverers) are not registered with SUNASS. SUNASS is a comparatively large

Concession Contract

Supervises execution

SUNASS (Regulator)

Approves PMO and supervises execution

regulator with around 100 employees headed by a Superintendent appointed PMO (Optimized Master Plan)

Promotes and assists with elaboration of PMO

Sign concession

EPSs (Utilities)

by the minister. The financial autonomy of SUNASS with an annual budget of US$ 4million is provided by means of a 2% levy on the turnover of the industry. The Ministry of Housing, Construction

Elaborate and sustain PMO

and Sanitation (MVCS), created in

2002, is the “line” ministry of the sector,

Incentives for Service Providers.

Pro-poor Provisions. In its capacity

responsible for the management, su-

The link between regulatory incen-

as consumer protection agency, SU-

pervision and policy planning.

tives and performance measures in

NASS encourages the service provid-

Peru is weak. To stimulate improve-

ers to apply “social rates” and cross-

and

ments of the municipal utilities’ man-

subsidies in their rate structures in ur-

Tools. SUNASS has the functions to

agement, SUNASS established a

ban areas. For example, in Cusco the

supervise, regulate, oversee and en-

benchmarking scheme in 1999 which

“social” rate for WSS services is ap-

force water service provision; to set

is based on nine indicators measur-

proximately 36% lower, than the “reg-

norms and standards for water quality;

ing four areas of efficiency: quality of

ular” domestic rate and almost 80%

and to resolve controversies and user

service, coverage rates, management

lower than the rate applicable to com-

claims. The agency is empowered to

and financial efficiency. Each utility

mercial and industrial users.

take punitive action against any viola-

annually reports to SUNASS on its

tions committed by providers. With re-

efficiency indicators. The ranking

gard to price regulation SUNASS’ pow-

based on the data is calculated and

er is limited to designing tariff rules and

published by the regulator. However,

Regulatory Independence. Although

proposing tariff levels. The ultimate ap-

SUNASS cannot (at present) apply

SUNASS is financially self-sufficient it

proval of tariff adjustments is carried

formal rewards or penalties based on

is still vulnerable to political interven-

out by the municipalities, with the ex-

these rankings. Because of the lack

tion, so that unpopular decisions, such

ception of the city of Lima.

of connection between the utilities

as tariff increases, are extremely diffi-

performance and benefits, no real in-

cult to implement. Because there is no

centives for service improvement are

board representing different stakehold-

presently given to the utilities.

ers and the powers are concentrated

Regulatory

Tasks,

Powers

In the past, two plans were used for the regulation of tariffs of public providers and a single plan, the Optimized

Assessing Results

on the Superintendent, SUNASS is not

Master Plan (PMO), for the determina-

Dispute Prevention and Resolution.

immune to direct intervention by the

tion of rates of private providers. Re-

At the moment there are no viable

ministry. The presence of multiple enti-

cently, SUNASS modified the directive

conflict resolution mechanisms in

ties in charge of supervising EPSs, in-

of formulation and approval of tariffs

place with regard to disputes be-

cluding the Ministry of Housing, the

for public providers. Now the PMO is

tween the regulator and a service

Ministry of Economy and Finances and

being used for the regulation of tariffs

provider. If a service provider does

SUNASS doesn’t provide for a clear

of both: public and private providers.

not adhere to regulation, SUNASS

definition of roles.

The PMO includes proposals for the

may assess a penalty but there are no

economic offers, management objec-

further implications if the provider

Transparency in Decision-making.

tives, tariff structure, and tariff formula

fails to comply.

Regulatory decision-making is getting

and coverage rates. SUNASS’ respon-

increasingly transparent. SUNASS`

sibility is to examine the proposal in a

The law provides for a water utility

regulations and decisions as well as

consultative process with the popula-

to appeal the regulator’s decision to

the results of the benchmarking scheme

tion and to submit the outcome – in

the courts, but judiciary weaknesses

are available on the regulator’s web

case of private providers - to PROIN-

reduce the credibility of the regulatory

page. Users can get guidance upon

VERSION for approval and to the mu-

framework. Disputes raised by con-

consultation using the service hotline.

nicipalities in case of public providers.

sumers and presented to service pro-

Once the PMO is approved for private

viders are addressed by the regula-

Stakeholder Involvement. There is

providers, it is viewed as involving

tor’s consumer appeals office in the

little stakeholder involvement in regu-

mandatory targets.

second instance.

latory decision-making. As an attempt

Conclusions and Outlook to establish a forum for regulatory con-

would need to be linked to it. Also, the

A number of regulatory improvements

sultations a consultative committee,

weight given to the benchmarking sys-

have taken place in recent times and

comprising representatives of different

tem’s indicators might need to be re-

their impact remains to be seen. Par-

stakeholder groups, including the Su-

vised to serve this purpose.

ticularly the ongoing PSP-initiatives

perintendence, the water utilities, the

involving regional and national firms

municipalities, as well as associations

Impact of Regulatory Reform on

could offer an effective means to im-

of engineers and consumers was cre-

Sector Performance. SUNASS and

prove sector performance and to

ated. SUNASS is also obli­ged to con-

its line ministry advocate a policy of

stimulate municipal service providers

sult consumers on the PMO and to

total recovery of operating and main-

efficiency.

include their views into the plan.

tenance costs through user fees. Nevertheless the rate policies have not yet

An accountable regulator will play a

Promotion of Competition. SUNASS

been accepted by elected officials

key role in realizing the gains. However,

is only marginally involved in facilitat-

and tariffs are still too low in many

some regulatory reforms still remain to

ing competition by private sector par-

urban areas. This provides little incen-

be carried out: the legal framework for

ticipation. Currently, this role lies more

tives for service providers to improve

SUNASS’ tasks needs to be complet-

with PROINVERSION. The SUNASS

UFW and makes it difficult to cover

ed and its strategic orientation and

benchmarking system’s role is to stim-

costs for service provision, to carry

goals need further clarification. The

ulate comparative competition but to

out operation and maintenance and

autonomy from government and ac-

achieve this, incentives or penalties

even more to expand coverage.

countability in decision-making has to be guaranteed.

Role of German Development Cooperation.

To make operations more efficient,

German Development Cooperation has

capacity building and training sys-

several organizational obstacles need

been engaged in Peru for over 30 years.

tems for the EPS. As a member and

to be solved and the staff’s conduct

GTZ’s water supply and sanitation pro-

co-coordinator of the “Grupo Agua”,

would need to adjust to the new struc-

gramme “PROAGUA” focuses (i.) on fi-

GTZ closely coordinates its activities

tures. The accuracy of the current

nancial, institutional and commercial

with bi- and multilateral development

SUNASS ranking schemes would need

strengthening of the water utilities (EPS),

cooperation partners active in Peru`s

to be revised to make it an effective

(ii.) supporting public participation and

WSS-sector.

tool for providing incentives to the public utilities.

stakeholder dialogue and (iii.) setting up

This document belongs to a series of Case Sheets, which draw on GTZ’s advisory services in the area of “Regulation and Supervision of Water Supply and Sanitation”. The conclusions expressed in this paper are those of

the authors and should not necessarily be attributed to GTZ or German Development Cooperation as a whole. Nor do the conclusions represent official policy of the GTZ.

Imprint This note is available on www.gtz.de/psp For more information: [email protected] Authors: Michael Rosenauer, Nina Barmeier and Sandra Neuhaus Published by:  Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH PO Box 5180, 65726 Eschborn, Germany

Design by: www.creativerepublic.net, © 2006 Photos: © GTZ/PROAGUA Printed on 100% recycled paper

Status: January 2006

Division Environment and Infrastructure

Casesheet

Focus: Uganda

Regulation and Supervision in Water Supply and Sanitation (WSS) Key Facts Uganda Population

24.7 million

Urban population as a percentage of total population

15%

Population with access to water supply

About 57%

Population with access to sanitation

Between 60 – 80% depending on source

Regulatory framework

Regulation done largely by contract

Service providers

National Water and Sewerage Corporation (NWSC), Local private and public operators, Small-scale providers

Situation in the Country with regard to WSS Uganda is a largely rural country with

sanitation. The WSS sector is a main

of the remaining urban towns are

ample water resources. However,

area of focus in Uganda’s Poverty Re-

owned and managed by the respec-

slightly less than half of the population

duction Strategy and key in meeting

tive municipal town councils, a result

still lives without access to safe water

the Millennium Development Goals.

of the government’s decentralization

supply: overall urban water supply

programme. Over half of these towns

coverage stands at about 60% of the

Service Provision in the Sector.

have established a Water Authority,

population, whereas rural water cover-

Water supply services in 19 large ur-

which contracts out operations to lo-

age is about 55%. It is estimated that

ban towns are the mandate of the

cal private firms. The local private

86% of the urban population use

National Water and Sewerage Cor-

sector currently serves 61 towns and

shared or unshared on-site sanitation

poration (NWSC), a commercialised,

has achieved water supply coverage

and around 4% have no access to any

publicly owned utility established in

rates of 67%.

sanitation facility. Less than 10% are

1972. NWSC currently also owns

connected to the water-borne sewer-

and manages the assets of 18 of the

There have been two international

age systems, which are mostly in a

44 largest towns in Uganda. The

private sector contracts in recent

very poor state. In rural areas around

present water supply coverage in

years in the form of management

60% of the households use on-site

these towns stands at 68%. Assets

contracts in the Kampala water

commissioned by:

MWLE (Ministry of Water) & MoFPED (Ministry of Planning)

MWLE (Ministry of Water) DWD (Directorate of Water Development)

PCRC (Performance Contract Review Committe)

Performance contracts

Contract monitoring

Contract monitoring

NWSC (National Water and Sewerage Corporation)

Muncipal Town Councils / Water Authorities Management contracts

Contract monitoring

Contract monitoring

Private Operator

IDAMC (Internally Delegated Management Contract)

NWSC Area Offices Key: Contract Regulation

WSS regulatory ­framework in Uganda Consumer A

Ä Ä Ä

Part of MWLE

Consumer B

Ä Ä Ä

supply area (1997-2001 undertaken

(DWD), the Performance Contract Re-

Regulatory Tasks, Powers and

by JBG Gauff, a German consulting

view Committee (PCRC), as well as

Tools. The PCRC is tasked to monitor

firm and 2002-2004 carried out by

the service providers themselves

the contract performance between

ONDEO Services Uganda Limited, a

(NWSC, water authorities). The Water

MWLE/MoFPED and NWSC using

French water firm). In 2002/2003 it

Act of 1995 puts DWD in charge of

performance indicators. These include

was still envisaged to turn these in-

technical regulation in the sector.

among others the coverage, Unac-

ternational private sector contracts

DWD is carrying out this role with re-

counted for Water (UFW), collection

into a lease or concession contract

gard to monitoring of the perform-

efficiency, financial and operating ef-

for the urban water sector, along with

ance contracts that exist between the

ficiency, customer service and opera-

the creation of a regulatory authority.

water authorities and the MWLE.

tional indicators. The MWLE is re-

These plans were not carried out and

Since 2000 part of the technical regu-

sponsible for price regulation. Pres-

instead the reforms are now focusing

lation is carried out via performance

ently, the operating entities propose

on improving the financial and com-

contracts between the MWLE / the

tariffs and the MWLE endorses these.

mercial viability of NWSC and estab-

Ministry of Finance, Planning and

There are currently no explicit mecha-

lishing an asset holding authority.

Economic Development (MoFPED) on

nisms for the periodic evaluation of

the one hand and NWSC on the other

tariffs to ascertain cost-recovery.

hand. The PCRC is in charge of over-

Since 2004, tariffs for the NWSC-

Regulatory Framework

seeing these contracts on behalf of

served towns are indexed annually to

the MWLE. The NWSC in return mon-

adjust for inflation and increases in

Institutional Structure of the Sector.

itors its area offices under the Inter-

operating costs. During the last Joint

The main institutions in charge of

nally Delegated Area Management

Sector Review in September 2005 it

regulation of the WSS sector are the

Contracts (IDAMCs) and the water

was agreed that the existing regula-

Ministry of Water, Lands and Environ-

authorities monitor the private sector

tory framework needs to be strength-

ment (MWLE), its technical arm, the

operators through management con-

ened by more clearly defining institu-

Directorate of Water Development

tracts (see chart above).

tional roles and responsibilities and by

providing targeted capacity building,

standards and levels of service at

resources to act as a permanent sec-

where necessary. Regulation by con-

present. Currently, the NWSC provides

retariat and is in fact largely not opera-

tract will be the key regulatory mecha-

a subsidised yard tap and domestic

tional. In general, there is a lack of ef-

nism in the short and medium term.

tariff as well as a new connection policy

fective monitoring and enforcement of

that provides more affordable access to

standards. The need for capacity in

Incentives for Service Providers.

water supply services to the urban and

the DWD paired with overlapping roles

The IDAMCs, established within each

peri-urban poor. In recent years, the

and responsibilities lead to institution-

of the NWSC service areas, have a

NWSC has also improved customer

al conflicts.

well-defined incentive mechanism

services, reduced the average time to

that is based on “Minimum Per­

deal with complaints and introduced

Transparency in Decision-making.

formance Standards” and “Perform-

GIS based customer records and a

The ongoing review and analysis of

ance Targets”. Under this system sev-

Customer Charter.

the existing regulatory framework in-

eral key areas of performance are

creased the awareness with respect

used to calculate incentive fees for

to transparency, accountability and

the staff in each operating area. In ad-

Assessing Results

need for enforcement. A recent tariff

and a 25% per­fo­rmance-related com-

The process of strengthening the ex-

the need for a clear price regulation

ponent, there is an incentive fee,

isting regulatory framework, as agreed

mechanism based on sound analysis

which allows the operators to earn a

at the Joint Sector Review in 2005, is

of the respective service area before

bonus when minimum performance

ongoing and improvements are cur-

tariff adjustments are applied.

standards are exceeded.

rently being defined. All stakeholders

dition to the normal management fee

directive by the Minister highlighted

contribute actively to the process of

The Association of Private Water Op-

Dispute Prevention and Resolution.

developing a transparent and well-de-

erators (APWO) is raising pressure on

There are no explicit mechanisms for

fined framework.

the government to increase transpar-

dispute resolution. However, the Wa-

ency and accountability. Information

ter Statute of 1995 provides for the

Regulatory Independence. Within

campaigns are under way to enhance

establishment of a Water Policy Com-

the current process of strengthening

awareness and understanding of the

mittee (WPC) to assist the Minister in

the regulatory framework, it is difficult

reform process in the affected insti-

sector co-ordination and to advise on

to assess the degree of autonomy in

tutions as well as by the general

disputes between agencies. The dis-

decision-making. It is questionable

public.

pute appeals and dispute resolution

whether the PCRC, which is financed

between NWSC head office and area

by the government, provides suffi-

Stakeholder Involvement. The deci-

offices are handled by the managing

ciently robust means to oversee the

sion to strengthen the existing regu-

director/board of NWSC. This arrange­

performance contracts. It lacks the

latory framework was made through

ment may lead to conflict of interest and is envisaged to be changed in the ongoing reforms when more contracts with local private sector entities have been entered into. Pro-poor Provisions. Although the poor have benefited from the increased connections and greater continuity in water supply, most of the reforms that have taken place had no explicit propoor focus and there are no defined

Conclusions and Outlook a participatory process involving all

the currently weak regulatory system

The effectiveness of the strength-

key stakeholders. However,

make Uganda a less preferred option

ened regulatory framework will large-

for international involvement.

ly depend on the acceptance of the

at

present the sole mechanism to involve the consumers in WSS regula-

regulatory reform process by all

tion is a NWSC community develop-

Impact of Regulatory Reform on

stakeholders. So far the process has

ment officer. There are currently no

Sector Performance. Service deliv-

received relatively high support be-

other staff or committees for captur-

ery in NWSC-served towns has

cause of its participatory and trans-

ing the voice of the poor.

clearly improved between 1998 and

parent nature.

2005. This was partly due to private Promotion of Competition. The

sector

IDAMCs already provide a very good

through management contracts. Pri-

platform for internal competition. The

vate sector participation had a sig-

aim is to continue to engage the local

nificant influence on sector reforms

private sector to stimulate wider com-

and performance. Even more signifi-

petition. The involvement of foreign

cantly were the internal reforms as

private sector firms is also being con-

well as the introduction of the

sidered as a potential option, al-

IDAMCs in 2004.

participation

initiatives

though market size, country risks and

Role of German Development Cooperation. German Development Cooperation

tor Wide Approach to Planning (SWAP)

ter and Sanitation Sector Development

has supported the reforms in the ur-

that was adopted in 2002. It is an ac-

Partner Group (WSDPG) that is cur-

ban WSS sub-sector since 2002 un-

tive member in the Water and Sanita-

rently chaired by Germany as lead

der its Reform of the Urban Water

tion Sector Working Group (WSWG), a

donor. Sector progress is monitored

Sector (RUWAS) programme. RUWAS

high-level decision-making and steer-

biannually during the Joint Technical

advises on the legal, institutional and

ing committee that coordinates the

and Joint Sector Reviews in March

regulatory changes necessary to im-

work of all stakeholders in the sector.

and September of each year.

plement the agreed sector reforms.

The development partner contribu-

The programme forms part of the Sec-

tions are coordinated through the Wa-

This document belongs to a series of Case Sheets, which draw on GTZ’s advisory services in the area of “Regulation and Supervision of Water Supply and Sanitation”. The conclusions expressed in this paper are those of

the authors and should not necessarily be attributed to GTZ or German Development Cooperation as a whole. Nor do the conclusions represent official policy of the GTZ.

Imprint This note is available on www.gtz.de/psp. For further information: [email protected] Authors: Fridtjof Behnsen, Barbara Gerhager and Nina Barmeier Published by:  Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH PO Box 5180, 65726 Eschborn, Germany

Design by: www.creativerepublic.net, © 2006 Photos: © GTZ Printed on 100% recycled paper

Status: January 2006

Division Environment and Infrastructure

Casesheet

Focus: Zambia

Regulation and Supervision in Water Supply and Sanitation (WSS) Key Facts Zambia Population

10.7 million

Urban population as a percentage of total population

43%

Population with access to water supply

47%

Population with access to sanitation

44%

Regulatory framework

National Water Supply and Sanitation Council (NWASCO)

Service providers

Commercial Utilities (CUs), Local Authorities (LAs), Water Trusts (in some areas of Lusaka)

Situation in the country with regard to WSS Zambia is one of the most urbanised

water pipe system or pollute resourc-

water to their employees (1%). Within

countries in sub-Saharan Africa with

es. The unhygienic conditions as well

the official coverage area of the Lu-

around 43% of the population living in

as the lack of access to safe water

saka Water and Sewerage Company

urban areas. Although the country

mainly affect the poor, particularly

(LWSC), a very large proportion of the

has abundant water resources, clean

women and children.

peri-urban areas receive their supply

drinking water only reaches around

through community-managed Water

47% of the urban population and

Service provision in the Sector.

more than half of the urban popula-

­Urban WSS services in Zambia are

tion has no access to adequate sani-

mainly provided by Commercial Utili-

tary facilities. The largely desolate

ties (CUs), which are owned by Local

water infrastructure in low-income ar-

Authorities as shareholders. 84% of

Institutional Structure of the WSS

eas offers insufficient and often unac-

the urban population resides in the

Sector. The National Water Supply

ceptable service levels with frequent

service area of one of the ten CUs.

and Sanitation Council (NWASCO),

interruptions. Since decades cholera

The remaining 16% are still serviced

established in October 2000, regulates

arises regularly in these areas, due to

by Local Authorities directly (15%) or

urban WSS service provision. All the

the fact that wastewater can enter the

by private companies that supply

WSS service providers who provide

commissioned by:

Trusts.

Regulatory Framework

MLGH (Ministry of Local Government and Housing) Responsible for WSS provision

WSS Regulatory ­framework in Zambia

MEWD (Ministry of Energy and Water Development) Appoints board members

Advice

Reports

DTF (Devolution Trust Fund)

NWASCO (National Water Supply and Sanitation Council) Regulation

LAs (Local Authorities)

Customers A

no regulation

Alternative service provision (Water Trusts)

CUs (Commercial Utilities)

Ä Ä Ä

Customers B

Ä Ä Ä

Customers C

financing provision for poor areas

Ä Ä Ä

services other than for their own use

The responsibility for WSS, however,

mitting a tariff adjustment proposal a

are required by the Water Supply and

is under the Ministry of Local Govern-

provider has to hold a consultative

Sanitation Act of 1997 to obtain an

ment and Housing (MLGH), ensuring

meeting with customer representa-

operator’s licence. Other service pro-

a clear separation between policy/ex-

tives. A new tariff model is applied

viders operating in the service area of

ecutive and regulatory functions (see

since 2005.

a CU, i.e. small-scale providers are

chart above). Incentives for Service Providers.

required to enter into formal agreements with the licensee. The commu-

Regulatory Tasks, Powers and

There are a number of incentive

nity-managed Water Trust, up to now,

Tools.

of

mechanisms that are presently being

operate outside of the regulatory re-

NWASCO, as established under the

applied in the urban water sector in

gime. NWASCO presently has a staff

WSS Act, are advising government

Zambia:

contingent of 13 people. Its board is

institutions, licensing of utilities, de-

<

composed of 16 stakeholders, repre-

veloping guidelines for WSS, estab-

senting government institutions, pri-

lishing and enforcing standards for the

vate sector and other agencies. In

design and management of utilities,

2004, its annual expenditure amount-

advising utilities and other service

is designed to stimulate CUs to

ed to about € 300,000, 84% of which

providers, disseminating information

become more efficient in their op-

is covered through the license fees of

to consumers, as well as other activi-

erations, and improve services while

1% of the service providers’ turnover.

ties. NWASCO has powers to enforce

moving towards cost-recovery

The remaining comes from govern-

its functions through the licensing and

ment and technical assistance (e.g.

tariff setting process and through en-

Scheme (POIS), which is a system

from GTZ).The water sector’s “line”

forcement notices and penalties.

aimed at improving human resourc-

The

main

functions

the Service Level Agreement and Ser­ vice Level Guarantee based on the respective guideline by NWASCO

<

<

ministry is the Ministry of Energy and

t he tariff setting mechanism which

t he Performance Oriented Incentive

es management and development

Water Development (MEWD). NWAS-

NWASCO’s power with regard to

CO reports to parliament through the

price regulation is based on the WSS

Minister of MEWD who also appoints

Act. Applications for tariff-adjust-

the members of the regulator’s board

ments by providers go through a

after the institutions represented on

number of stages before final ap-

the board have submitted proposals.

proval by the regulator. Before sub-

linking financial and non-financial rewards to performance, and <

a  process to deal with poorly performing utilities.

cessfully implemented for over ten

under the new tariff model incorpo-

years. The regulator also put in place

rated in the guidelines in May 2005. It

the Devolution Trust Fund (DTF), a bas-

gives less discretionary power to the

ket-financing instrument that provides

regulator and makes tariff adjustments

funding to the CUs to extend their serv-

more predictable.

ices to the urban poor. Pilot projects already serve about 85,000 consumers

Stakeholder Involvement. The com-

with safe drinking water. The DTF also

position of NWASCO‘s Board en-

supports the CUs in setting up sustain-

sures a high degree of stakeholder

able kiosk management systems.

involvement. In order to establish a direct link with the consumers, NWASCO set up voluntary consumer

Dispute Prevention and Resolution. If a provider in Zambia is not satisfied with a regulatory decision, arbitration procedure starts with the first instance at the Minister of Energy and Water Development. If the provider or the regulator does not accept the decision, it is referred to the High Court and then the Supreme Court. Both courts can establish arbitration commissions in order to ensure consultation of professional competence. Pro-poor Provisions. NWASCO has tried to give special consideration to the poor in all its regulatory tools, e.g. through the promotion of a lifeline consumption and cross subsidisation allowing for social tariffs. Through the definition of service coverage areas in the licence agreement, the regulator obliges the CUs to provide services also to the low-income urban areas. Recognising the challenges for the CUs to fully meet coverage targets, NWASCO issues guidelines on service provision to the urban poor through water kiosks, which have been suc-

Assessing Results

groups (Water Watch Groups -

Regulatory Independence. NWASCO

tive WWGs, acting as mediators be-

is relatively independent from political

tween the CUs and the customers;

interference. Its full financial autonomy

educating consumers on their rights

will be guaranteed with an increase in

and obligations; and assisting in re-

license fees from 1% to 2% of the

solving complaints and providing

turnover, effective in January 2006.

feedback to NWASCO. Consumer

WWGs). Currently, there are four ac-

involvement in the tariff setting procTransparency in Decision-making.

ess is guaranteed through consulta-

Every year NWASCO publishes the

tive meetings, which the CUs are

“Urban and Peri-urban Water Supply

obliged to hold with consumer repre-

and Sanitation Sector Report” in

sentatives before applying for tariff

which the performance of the service

adjustments. The minutes of meeting

providers is assessed and compared

of these consultations are part of the

on the basis of a number of key indi-

tariff adjustment proposal submitted

cators. The quality of the underlying

to NWASCO.

data was improved significantly with the establishment of the NWASCO

Promotion of Competition. NWASCO

Information System (NIS). Transpar-

facilitates competition by benchmark-

ency in price regulation was enhanced

ing, thus creating comparative com-

Conclusions and Outlook petition in the absence of market

In the relatively short period of opera-

proaches and technologies. One of

competition. The main tool used is

tion, NWASCO has achieved very

the steps, which NWASCO plans to

NAWASCO‘s

good results with regard to independ-

undertake, is to integrate the Water

ence, transparency, accountability

Trusts in Lusaka into the regulatory

and stakeholder involvement. Also,

regime.

annual

comparative

sector report. Impact of Regulatory Reform on

technical performance has shown

Sector Performance. A number of

some improvement. One of the major

The Water Watch Groups (WWGs)

CUs have improved their technical

challenges remaining is the low serv-

concept has proven to be very suc-

performance with regard to collection

ice coverage of most CUs, which re-

cessful in establishing the regulator’s

efficiency, cost coverage, hours of

sults in inadequate service provision

presence on the ground. NWASCO

supply, water quality and customer

in the continuously growing peri-ur-

aims to establish a WWG in each of

services, in particular when compared

ban areas. The regulator will have to

the service areas and explore how the

to areas still served by LAs. Neverthe-

continue to promote the extension of

WWGs can adopt a more explicit pro-

less, significant further progress needs

service provision with appropriate ap-

poor focus.

to be made with regard to financial performance since most CUs have started only a few years ago from a very low level when taking over opera-

Role of German Development Cooperation.

tions from the councils. Although tariffs have been raised considerably and

Germany provides financial and

as well as through institutional

continuously over the last few years,

technical support to the sector.

support. At the service provider

the tariff levels are still relatively low,

GTZ contributed to the establish-

level, GTZ has assisted in the es-

resulting in insufficient operational

ment of an effective regulatory

tablishment of two CUs. In all pro-

cost recovery. It is expected that all

system through its support to

gramme components, GTZ has as-

CUs will be able to meet their opera-

NWASCO, including the setting-up

sisted in developing a pro-poor

tional costs within the next two years

of NWASCO’s sector-wide infor-

focus. The German support to the

given a satisfactory level of collection

mation system and the new tariff

Zambian Water Sector is well har-

efficiency. The objective is to reach full

model. In addition, GTZ supported

monised with the concerted efforts

cost recovery four years after covering

the operationalization of the DTF

of other cooperating partners.

100% of operational costs.

through funding of pilot projects

This document belongs to a series of Case Sheets, which draw on GTZ’s advisory services in the area of “Regulation and Supervision of Water Supply and Sanitation”. The conclusions expressed in this paper are those of

the authors and should not necessarily be attributed to GTZ or German Development Cooperation as a whole. Nor do the conclusions represent official policy of the GTZ.

Imprint This note is available on www.gtz.de/psp. For further information: [email protected] Authors: Amelie D’Souza and Nina Barmeier Published by:  Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH PO Box 5180, 65726 Eschborn, Germany

Design by: www.creativerepublic.net, © 2006 Photos: © GTZ Printed on 100% recycled paper

Status: January 2006