1. Processes of Reform Capacity Building Module

2. Overview

• Introduction

• • 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

3. 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

4. Key steps for successful reforms

• Planning the process of introducing reform

• Involving stakeholders

• Setting upstream policy

• Setting service standards, tariffs, subsidies, and financial arrangement

• Developing institutional model

• • Utility: public or PSP

• • Non-utility services: small scale providers

• • Environment: policy maker; asset holder; regulator

• • Legal instruments for the arrangement

5. Involving stakeholders

• Politicians: local and national levels

• Management and staff of public utility

• Consumer associations

• NGO: national and intl (service to the poor, environment, governance)

• Financiers: multi and bi-lateral

• Alternative suppliers (tankers, drilling companies)

• Media: national and intl

• Private sector: local and intl

6. Sustainable utility reform and reform of the environment have to go hand-in-hand Our goal utility poor good poor good Typical reform path environment Possible combinations environment status/utility provider status

7. How Uganda combisequenced the reforms of NWSC, its national utility Utility reform Reform of the environment 70s political turmoil mid 80s new government end 80s & 90s Major rehab 95 new statute 97 new Board 98 new MD 98-00 service & revenue enhancement programs 00 ext & int performance contracts 02 automatic tariff indexation 03 staff performance contracts 97 corporate plan

8. Overview

• Introduction

• • 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

9. South Africa Mike Muller Former Director General, South African Department of Water Affairs &Forestry

10. South Africa

• Total pop - 45.2 Million (2005)

• Urban pop (% of total) 59%

• Surface area - 1,221,037 sq miles

• Life expectancy 45 years

• GDP (US$ billions) 240.2

• Access to water supply 88%

• Access to sanitation 65%

• Trigger: the end of apartheid

• Vertical unbundling: bulk utilities and end providers

• Most utilities are corporatized

• Subisidies: Free basic water 25 l/p/d

• Basic 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

11. Uganda Dr. William Muhairwe Managing Director, National Water and Sewerage Corporation, Uganda

12. Uganda

• Total pop - 28.8 Million (2005)

• Urban pop (% of total) 13%

• Surface area - 241,038 sq miles

• Life expectancy 49 years

• GDP (US$ billions) 8.7

• Access to water 60%

• Access to sanitation 43%

Utility reform Reform of the environment

13. Russia Alexander Bazhenov Vice-Chairman, Eurasian Water Partnership

14. Russia

• Total pop - 143.2 Million (2005)

• Urban pop (% of total) 73%

• Surface area - 17,075,200 sq miles

• Life expectancy 65 years

• GDP (US$ billions) 763.7

• Access to water 97%

• Access to sanitation 87%

• Trigger: the end of communism

• Subsidies: lgoti and maximum % expenditure

• WSS part of broader Housing and Communal Services sector centralized billing and collection

• Mostly municipal departments with little autonomy

• History of focus on infra: low efficiency

• Regulation is regional oblast responsibility

• Boom & bust of PSP in 03/04; now 2 nd generation PSP

15. Overview

• Introduction

• • 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

16. The first challenge: how to trigger reform Droughts, floods & epidemics Unacceptable levels of service Political shifts & pressures financial crises

17. The constant challenge to maintain progress. time performance Pressure to improve Broad sector reform Utility reform 3 2 1 Maintain progress 4

18. Triggers and Obstacles to Reform Click the button to play a 5 minute video clip. (Windows Media;9,421k)

19. Maintaining progress: Balancing external accountabilities Owners Customers Regulators Policy makers Financiers The unserved?

20. Overview

• Introduction

• • 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

21. Key Success Factors in Reform Click the button to play a 5 minute video clip. (Windows Media; 9,208k)

22. Overview

• Introduction

• • 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

23. Taking Care of the Poor in Reforms Click the button to play a 10 minute video clip. (Windows Media; 15,619k)

24. Existing quantity-targeted subsidies are regressive Source: Water, Electricity, and the Poor: Who Benefits from Utility Subsidies? Komives et al.

25. 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 users

• May purchase from a neighbor poor households are often heterogeneous; differentiate demand as slums may have mixed densities, income levels

• May 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

26. How to improve services for the poor?

• The long term utility solution: a private - house/yard -connection for all

• Standpipes from free to paid service

• Augmenting small-scale service providers

• How to deal with self provisioning?

27. Overview

• Introduction

• • 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

28. The Role of the Central Government Click the button to play a 4 minute video clip. (Windows Media; 7,526k)

29. Overview

• Introduction

• • 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

30. 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 success

• Best 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

31. The Importance of Leadership Click the button to play a 3 minute video clip. (Windows Media; 3,477k)