Impact from Management and LeaseAffermage Contracts in Water Supply

1
Impact from Management and Lease/Affermage
Contracts in Water Supply

• 1818 Society Water Chapter
• September 8, 2006
• Klas Ringskog, World Bank consultant
• Mary-Ellen Hammond, Jr. Professional Associate
• Alain Locussol, Lead Water and Sanitation
  Specialist

2
Outline of Presentation

• What triggered the study the Delhi WSS project
  saga
• The political economy of PSP in water supply
• Case studies in the PPIAF study
• Service coverage/quality before and after PSP
• Efficiency of service before and after PSP
• Sustainability of service before and after PSP
• Lessons learnt

3
What triggered the study

• Delhi Water Supply and Sanitation
• 15 million people 1.5 million customers 240
  lpcd
• Water supplied few hours per day
• No metering NRW 50 NRW collection 80
• Cash collection covers less 70 of OM costs
• 90 of OM costs spent on energy and staff (17
  staff/1,000 connections)

4
What triggered the study

• DJB financial situation
• DJB Opex US120 million/year
• Customers US80 million/year
• Government US40 million/year
• DJB Capex US170 million/year
• Government US170 million/year
• DJB Debt US1,500 million
• Household WSS budget
• DJB Opex US 80 million/year
• Coping costs US120 million/year

5
What triggered the study

• Project to improve WSS service in pilot areas
  through Management contracts
• Strongly attacked
• Despite extensive consultation process with
  affected stakeholders
• By vocal group claiming that it would lead to
• Privatization and asset sell-off to foreigners
• Massive tariff increase
• Massive staff lay-out
• Exclusion of the poor and that
• PSP in WSS has never worked elsewhere anyway

6
What triggered the study

• Government
• Did little to defend a project it had earlier
  claimed strong commitment to, but
• Asked the Bank to provide evidence that
  Management contracts in WSS do work
• No such report was available to document how
• Service has improved
• Tariff has involved
• Staff has been affected
• The poor have been affected

7
Political economy of water supply PSP

• Stakeholders
• Politicians
• Public utility staff and government officials
• Non Government Organizations (NGOs)
• Private operators
• Consumers

8
Case studies of PPIAF study

• Amman Management contract 2000-2005
• Gaza Management contract 1995-2005
• Zambia Management contract 2000-2004
• Antalya Affermage 1996-2001
• Gdansk Affermage 1992-2005
• Senegal Affermage 1996-2005
• Barranquilla Lease/affermage 1990-2005
• Cartagena Lease/affermage 1995-2005

9
Case studies of PPIAF study

• Data collected (year before PSP and latest year)
• Coverage (water supply and sewerage)
• Quality (service hours /bacteriological quality)
• Efficiency (non-revenue water/metering/staff
  productivity)
• Sustainability (financial working ratio)

10
Service coverage quality, before and after
private operator contract

• Case Water coverage before/after Hours of
  supply before/after
• Amman 90 100 4 9
• Antalya 93 95 19 23
• Barranquilla 60 89 19 23
• Cartagena 74 95 17 24
• Gaza 58 56 ... 8
• Gdansk 100 100 24 24
• Senegal 59 73 16 22
• Zambia 100 100 13 18

11
Efficiency of service before and after private
operator contractNon Revenue Water
12
Sustainability before and after private operator
contract Financial working ratio

• Financial working ratio

13
Sustainability -Productivity and tariff changes
in Cartagena
14
Lessons learnt

• Access, quality, efficiency and sustainability
  have all improved
• Another PPIAF study is planned to widen and
  deepen scope of study
• Managing PSP expectations crucial
• Adequate investment funding is critical for
  success of MCs and leases