ASSOCIATION OF PRIVATE WATER OPERATORS

Private sector perspective on harmonization and coordination

International Symposium on Rural Water ServicesMunyonyo Country Resort, Kampala

13 – 15 April 2010

Jane NimpamyaCoordinator, Association of Private Water Operators

Tel: +256-772-435349 Email: apwouganda@apwouganda.org

Presentation over view

• Background• Harmonization through legal frameworks• Harmonization through contracts

– The Framework for contract management systems – Contractual Framework & Institutional Roles– Managing relationships between contracting parties

• Coordination through the associations - APWO• Achievements• Challenges• Way forward

BACKGROUND• Concept of PSP in the water sector was derived from the

government programme of decentralisation of essential services from the centre to the local governments.

• There was lack of capacity at the local government levels to ensure efficiency and effectiveness of water supply service delivery to the communities in small towns.

• Private sector brought in professionalism in form of private water operators.

• Since 2001, the water sector has had private water operators managing water supply systems/schemes in small towns under management contracts with local authorities (the town councils).

Background• Background

3. Services shall stay in the decentralization framework but reduce governmental burden

3. Services shall stay in the decentralization framework but reduce governmental burden

2. Service provision is not economically viable for international operators

2. Service provision is not economically viable for international operators

1. Poor track record of Local Authorities in managing water systems

1. Poor track record of Local Authorities in managing water systems

Reform of Urban Water

and Sanitation Sector

(RUWASS)

Reform of Urban Water

and Sanitation Sector

(RUWASS)

19991999

increased performance and cost effectiveness achieving the national development targets achieving the MDG goals

Aims:

Private SectorParticipation recognized

Three management aspects were observed in the water reform process

Classification of towns

• Larger towns = 23 & are under NWSC• Small towns = 84 & are under PWOs• Small towns are the gazetted town councils, Town

boards and district HQrs with populations above 5,000 and those outside NWSC

• Rural Growth centers are those with populations below 5,000 and above 2,000.

• Currently, there are over 200 Sts, RGC and large garvity flow schemes.

• Time by time, RGCs are gazetted as WAs and hence turned into STs

• NB: Almost all towns are still rural at a global scale

• Private Water Operators in Uganda – a short overview

Background

Almost all PWOs are organized in the Association of Private Water Operators (APWO). APWO was formed as a platform in 2002 with eight member companies and has now 21 PWO under her umbrella.

At present, Private Water Operators managewater in 84 small towns throughout Uganda

In Uganda, bigger towns are managed by the parastatal National Water & Sewage Company , NWSC, usually referred to under the name “National Water”.

- including the former war zone areas in the north and in the troubled eastern part

Smaller towns, though, are generally managedby Private Water Operators on the base ofManagement contracts with the Local Water Authority.

Harmonization through legal frameworks

Uganda’s decentralization policy, 1994

• Transfer real power to local govts, reducing workload on central gov’ts

• Achieve good governance for better performance by promoting accountability and transparency of public servants

• Bring political & administrative control over services closer to the point where they are actually delivered

• Free local managers from central constraints and allow them to develop organizational structures tailored to local circumstances

• Improve capacities of councils, local authorities and boards to plan, finance, manage and deliver services to their constituents.

Enabling Legal frameworks …..Ct’d

• The Uganda constitution (1995) ensures that all Ugandans enjoy access to safe water potable water

• The water act (1995), cap 152, gives the minister powers to declare and appoint Water Authorities (WAs)

• The Local Gov’t act, cap 243: allows transfer of water and sanitation services from the central gov’t to the local gov’ts

Legal frameworks …..Ct’d

• The national Environment mgt statue (1995) safeguards against envirn’t pollution

• Sewerage regulations (1995) • The local gov’t financial & accounting regulations (1998)• Water supply regulations (1999)• National Water policy (1999) • Local govt PPDA regulations 2006 guides on

procurement of private operators• The water tariff policy for small towns and rural growth

centers (2008) with the Business Planning Tool (BPT) as a guide for tariff setting

Water Act, cap 152 of Nov. 1995

Section 45 to 48 of the water act allow the minister responsible for water to

• Declare areas as Water Supply & Sewerage Authorities • Appoint Town Councils to be the Water Supply &

Sewerage authority• Transfer responsibility for custody of water supply and

sewerage assets and mgt of systems to the new authority

• Establishment of the Water Supply and Sewerage Authority by the town Council to act as the custodian

Key requirements of the water act

• Execution of the performance contract between the Minister of water and the town council/water supply & Sanitation board

• Procurement of a private operator and execution of the operations and maintenance contract

• Monitoring evaluation and enforcement of operations and maintenance by town council / WSSB

Public Procurement & Disposal of Public Assets (PPDA) Act & Guidelines• Procurement of private operators must comply with the

PPDA Act • PPDA regulations and guidelines set out the threshold

limits applicable to different methods• PPDA act details pre-qualification, contract award and

other procurement requirements• PWOs are procured by district based contract

committees in accordance with the Local Govts PPDA guidelines

• Water supply projects funded by the World Bank’s Global Partnership on Output Based Aid (GPOBA) done under the World Bank procurement guidelines

The Water Tariff Policy for ST & RGCs, 2008

• The water tariff policy for small towns and rural growth centers (2008)

• Has the Business Planning Tool (BPT) as a guide for tariff setting and Business Plan development

• The tariff is set by the PWO and approved by the WSSB/WA but has to be endorsed by the Minister of water in order for it to be effected

• The tool is pro-poor

Institutional Frameworks

List of institutions• Ministry of water & Environment (MWE)• Directorate of water Development (DWD)• Local Water Authorities (WA) – Water Supply &

Sanitation Boards (WSSB)• Private Water Operators (PWOs) – Association

of Private Water operators (APWO – Uganda)• Others: PPDA, NEMA, UNBS, MOH,• Directorate of water Resources mgt (DWRM)

Contractual Framework & Institutional Roles

Performance contract

Management contract

Customer contract

NB: The PC and MC are all for coordination & harmonization

MW&E

WATER AUTHORITY

PRIVATE OPERATOR

USER/CONSUMER

Five member WSS Board1. Town Clerk2. Social services comm Chair3. Domestic consumers Rep4. Institutional consumers rep5. Other Consumers Rep

Roles of the MWE - DWD

• Appoints custodians: Local water Authority (WA)• Engage the WA into a performance contract

(PC)• Prepare a model mgt contract (MC)• Monitor performance of the Local WA• Provide agreed capital grants or operating

subsidies to water authority in accordance with PC conditions & agreed business Plans

• Technical Regulation – Regulaltion Unit within DWD

Role of Local Water Authority

• Act as Custodian of the water system assets in accordance with the PC

• Appoints a 5-member WSS Board to supervise the PO• Contract the PO to mgt the water supply and sewerage

systems• Develop the business plan for the operation and

maintenance of the systems (financial projections, new investments, tariff setting, etc)

• Open Investment & Operational Escrow Accounts• Annual reporting to MWE according to PC’s key

Performance indicators

Roles of the Private Operator

• To safeguard, use & manage assets to ensure provision of acceptable service standards

• Provide O&M services & system expansion• Billing and revenue collection from end-users• Maintain and keep records• Prepare 7 submit business plans to WA• Report (monthly & quarterly) on the performance

to the WA• To receive management fees from the WA

Managing relationships between contracting parties

• Managing contract information for better risk management

• Monitoring actual performance against set performance indicators

• Enforcement of contractual obligations• Investigation and resolution of disputes &

complaints• Communication on performance with key

stakeholders

Coordination through the associations - APWO

APWO is the Association of Private Water Operators in Uganda

• Started in 2002 with 6 members operating in 30 towns

• Registered in 2004 with 8 members operating in 40 small towns

• To date has 21 members operating in 74 small towns and rural growth centers country wide

APWO - objectives

Objectives include: • Platform to speak as one voice, • Information sharing and dissemination within

and outside of PWOs,• Generate economies of scale in costs eg

procurement of materials, • Capacity building activities eg training of staff,• Easier to access support either form govt or DPs• General coordination of PWOs and or

stakeholders can easily access Pos through APWO

APWO’s achievements-

• The executive Committee is elected by members and holder a 2-year term of office renewable once

• Has a secretariat headed by the Coordinator• Has build capacity of its member’s staff in terms

of training in customer care, None Revenue water, Financial management, Water quality testing and monitoring, operation and maintenance, HIV/AIDS and will soon procure a billing software for all its members

Achievements in WSS service delivery

due to PSP • Improved access to safe water through increased

connections to piped water systems. This directly contributes to attainment of MDGs and national sector targets.

• Reduced interruptions in service delivery as a result of improved maintenance systems

• Increased performance in billing and revenue collections• Increased proportion of operational costs covered by

revenue collections• Improvements in record keeping & reporting• Reduced water losses

CHALLENGES

• Low levels of education of the WSSB members• Lack of technical personnel of the WSSB• The 3 year contract period is very little for meaningful

investment by the Operator• Some clauses in the MC 7 Pc are not favouring the PO• High levels of political influence / intervention /

Interference at local levelHigh Operational costs due• 1. Low customer base• 2. high poverty levels in the communities we serve• 3. availability of unsafe water in streams, lakes & rivers• 4. High energy costs

Challenges Ct’d

• Failure by some WA to honour mang’t contracts in full particularly in regard to payment of management fee arrears due to lack of funds.

• PWOs submit network expansion plans to WA but have no influence on decisions pertaining to network or systems expansion. All decisions, in spite of plans submitted to WA by PWO remain the prerogative of the WA/ WB. This has kept most of the towns’ small in terms of business thus not viable.

Conclusion

• Political enabling environment for PSP in the water sector exists in the established institutions and policies

• Harmonization and coordination is a continuous process

• Achievements have been registered as success stories for introduction of PSp in the water sector and more benefits are yet to come

Thank You