shehr ki duniya Proceedings Managing Karachi’s Water...

The Water and Sanitation Programis an international partnership forimproving water and sanitation sectorpolicies, practices, and capacitiesto serve poor people

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Managing Karachi’s Water Supplyand Sanitation ServicesLessons from a Workshop

shehr ki duniya

August 2005

Proceedings

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BackgroundWater services in Pakistan’s major cities and urban centers remain fragmented and intermittent—no citycurrently has 24 hours of water supply for seven days a week. This impairs the ability of cities to supporteconomic growth and meet basic needs.

Faced by this challenge, the Nazim of the City District Government of Karachi (CDGK) suggested in mid-2004that the Water and Sanitation Program – South Asia (WSP-SA) help to arrange a discussion about lessons forKarachi from Water & Sanitation (W&S) services reform in large cities and urban areas elsewhere in the world.In follow up discussions, it was agreed that although Karachi would be the entry point, the workshop shouldalso include discussion of similar challenges elsewhere in Pakistan. Key W&S stakeholders from major citiesin Pakistan, the central government and the provincial government of Sindh (where Karachi is located)attended a two-day workshop in Karachi on February 23-24, 2005. WSP-SA facilitated participation by severalresource persons, including practitioners from Manila, Johannesburg, Phnom Penh and from the nationalwater utility in Uganda.

The formal presentations and delegates’ inputs all emphasized the institutional—rather than technical—nature of the challenges around water and sanitation in Pakistani cities. This message also came through in anumber of keynote addresses:

THE GOVERNOR OF SINDH, DR. ISHRAT-UL-IBAD, highlighted the impact of W&S on quality of life andcombating deaths and diseases across the world. It is crucial to find ways to use scarce resources properly,which requires innovation, efficiency, partnership with the private sector and international institutions andaccountable arrangements. The challenge, he said, is one of enduring institutions.

IN A PRESENTATION READ BY MR. TARIQ HASSAN, NAIB WAZIM, CDGK, ON BEHALF OF THE NAZIM OFKARACHI, MR. NIAMTULLAH KHAN, it was explained that as the city continues to grow, service demands willgrow. The vast service expansion needed requires major financial skills, finance and new managementexperiences. Devolution provides a favorable context, but there are still many issues at stake. KW&SB is akey delivery mechanism that can provide lessons for other utilities as well create efficient, accountable andself-reliant service providers and authorities.

THE HEAD OF THE WORLD BANK IN PAKISTAN, MR. JOHN WALL, said that W&S is crucial to povertyreduction and intractably linked to education, health and other services. He pointed out that Pakistan isbooming, GDP is growing, and economic indicators are improving. But basic services need to improve, andthe challenges are primarily about ‘getting organized’ for this. In his view, people are willing to pay for theseservices, but they want value for money. The key thing right now is to change the way the city is governedand to ensure better cooperation between key public institutions on land and services management. There is‘fiscal space’ as revenue has become more available. But it is necessary to work ‘smarter’, and this workshopis about that primarily.

MS. CATHERINE J. REVELS, THE REGIONAL TEAM LEADER OF THE WSP SOUTH ASIA, said that the keyissues are institutional arrangements and incentive frameworks. While every context is different, all issuesare not unique. The workshop provides an opportunity to learn from different experiences and differentapproaches to assist Karachi and others define and take forward reform agendas.

Managing Karachi’s Water Supply andSanitation Services: Lessons from a Workshop(Karachi, February 23-24, 2005)

3

Pakistani Cities in theUrban Millennium

The Urban Challenge

Improving water and sanitation servicedelivery in South Asia’s growing citiesis not about fixing the pipe—it isabout fixing the institutions that fixthose pipes1.

As cities grow and compete in theregion and globally, different urbanservices can no longer be dealt with inisolation. Services must cometogether to enhance the economicproductivity and credit worthiness ofurban centers. This requires bettermanagement, driven by sensiblepolicy, effective structures, andquality skills.

The current devolution process inPakistan provides an opportunity toempower the country’s rapidly growingcities to become internationally andregionally competitive and meet theincreasing demand for basic services.However, at present Pakistani and otherSouth Asian cities find this challengedaunting. Their population growth hasbeen phenomenal—by 1998, 40percent of the country’s population wasalready urbanized, and predictions arethat this will move to over 50 percent by2015. But they have not managed tosecure the levels of service thisrequires. On average, unaccounted-forwater in the region is over 40 to

50 percent, and only 20 to 30 percentof operations and maintenance cost inthe water sector is being recovered.

No city or town in South Asia has watersupply for 24 hours a day, seven days aweek. In Hyderabad (India), water isprovided for only two hours everysecond day; even in Delhi, supply is amere five hours a day.

Box 2 (on page 4) shows that inPakistan, Lahore is best off—itsconsumers can expect access to waterfor 16 to 18 hours a day in summer andfor 12 to 14 hours in winter. Consumersin Karachi, Peshawar, Faisalabad andMultan have access for only aroundeight hours per day, with some variationbetween access for industrial anddomestic users.

1 This point was the focus of a presentation by Junaid Ahmad and David Savage on Making Water Services Work: An Institutional Agenda, and affirmed in most discussions throughout the proceedings.

Source: Weekly Independent, March 17-23, 2005, Lahore.

More than three million Pakistanis

become victims of waterborneinfections annually, of which 1.2million die. Among them 250,000 are

children under five years of age, whosuccumb to diarrhoea and vomiting.

According to recent research by thePakistan Council for Research inWater Resources (PCRWR), more

than half of the population of Pakistandid not have access to clean drinkingwater. The World Health Organization

(WHO) has warned Pakistan ofpossible dangers from infectious andwaterborne diseases. According to

WHO, one hundred million cases ofdiarrhoea are being registered fortreatment in Pakistani hospitals every

year. A survey conducted by PCRWRshowed that 81,996 cases of water-related diseases were registered in

Rawalpindi division alone. Accordingto the United Nations Children’s Fund

(UNICEF), in Pakistan 40 percent of

hospital beds are occupied bypatients suffering from water-relateddiseases.

Doctors and chemists warn thatchemical compounds can cause

severe health hazards, includingcancer, diabetes, kidney and heartdiseases, high blood pressure,

irritation, headache, as well ascongenital and dental and bonediseases. Bacterial contamination in

water is very common through mixingof sewage, as the required distancebetween the water supply-line and

sewerage-line is not kept.

On average, only 2-4 percent

Pakistanis use bottled water (mineralwater), 7-10 percent have a water-filter facility available in their houses

and the remaining 86-91 percentuse regular tap water.

Box 1: Waterborne Diseases Harm Many Pakistanis Per Year

4

Officials from all the cities present atthe workshop—Karachi, Lahore,

Peshawar, Faisalabad and Multan—were able to reflect on current serviceindicators and how these differ from

their medium- and long-term visions.While these indicators are not official,

they offer a useful starting point andperspective on the state of WSS inPakistan’s major cities.

24

2424

24

24

16

24

Percentage of non-revenue water

Karachi

Lahore

Faisalabad

Rawalpindi

Multan

Peshawar

Indicators: Non-revenue water

Maj

or c

ities

of P

akis

tan

Present After 5 years After 10 years

0 10 20 30 40 50

1025

50

3540

2045

2530

40

2030

40

45

3020

The patchy services impose a heavycost burden on cities and their people,financially and in health andenvironmental terms. Poor people paythe highest price. According to theWorld Health Organizationapproximately 25-30 percent of thediseases in Pakistan are gastro-intestinal in nature; 45 percent of thecountry’s infant deaths are due todiarrhoea and 60 percent to overallinfectious waterborne diseases suchas typhoid, polio and hepatitis A andB. Moreover, lack of regular access towater costs households income asthey need to assign more time toobtain water for daily usage2.

Yet, it is possible to perform better, asthe experiences of Johannesburg inSouth Africa, Phnom Penh inCambodia, Manila in the Philippines,and the corporate water utility atcentral state level in Uganda haveshown. In all these cases, serviceproblems were systematically reducedand 24/7 water supply has becomethe norm. The approaches in theselocations have varied, from local-levelcorporatization in Johannesburg andPhnom Penh to a centralizedcorporate structure in Uganda, and toa private-public partnership in Manila.But they have in common the fact thatimprovements were not primarilyabout more bricks, mortars or pipes,or about getting more resources.Instead, they all have managed toimprove water services by gettingorganized through creating institutions

2 World Health Organization (www.who.int/countries/pak/en)

Box 2: Defining the Delivery Gap and Benchmarking: Perspectives fromGroup Discussions

Revenue collection percentage

Karachi

Lahore

Faisalabad

Rawalpindi

Multan

Peshawar

Indicator: Revenue collection rate

Maj

or c

ities

of P

akis

tan


0 20 40 60 80 100 120

1009090

9030

8570

9550

9585

75

10090

60

100

No. of metered connection in percentage

Karachi 30100

Lahore

Faisalabad

Rawalpindi

Multan

Peshawar

Indicator: % Metered connections

Maj

or c

ities

of P

akis

tan


0 25 50 75 100

40

6595

10020

15

10

100

50

No. of hours of supply

Karachi4

9

17

810

8

8

914

Lahore

Faisalabad

Rawalpindi

Multan

Peshawar

Indicators: Hours of supply

Maj

or c

ities

of P

akis

tan


0 4 8 12 16 20 24

5

local governments and ensuredistribution among local governments.

But devolution has also introduced anew set of challenges, among othersin the management of water andsanitation services. First, the scaleand costs of delivery challenges hasincreased in urban areas wherepopulations have grown and economicdemands increased, and in rural areas

and incentives that rewarded providersand offered consumers reason to payfor services.

Devolution Offers Opportunities

In Pakistan, devolution offers newopportunities to improve services (seeFigure 1). The creation of three tiers oflocal government (District, Tehsil andUnion Councils) since 2002 opens thedoor to improve service deliverythrough appropriate local-level policiesand institutional arrangements. Intotal, 6,473 indirectly elected localgovernments were created, with morethan 120,000 councillors. Fourprovincial capitals were designated asCity Districts, each further sub-dividedinto Towns. New governancearrangements make Nazims (orMayors) accountable, and established

decentralized to Tehsil MunicipalAdministration (TMAs). Unionadministrations have not beenassigned any major service deliveryresponsibilities. Fiscally, localgovernments have been given thepowers to raise some additionalrevenues and Provincial FinanceCommissions (PFCs) have beenestablished to direct the distribution ofresources between the province and

Figure 1: Devolution in Pakistan

Source: http://www.nrb.gov.pk/local_government/figure_1

Decentralization ofadministrative power

Distribution of resourcesto the districts

De-concentrationof managementfunctions

Diffusion ofthe power

authority nexus

Devolution of political power

5Ds ofNew Local Government

System

• Three tierselected

• Local prioritysetting

Citizen CommunityBoards (CCBs) aresupposed to facilitatecitizens’ participation inlocal-level decision-making. Administrativereforms include the creation of districtgovernments with their owndepartments, given functionalresponsibility for delivering services insectors like elementary and secondaryeducation and health and agriculture.Towns and tehsils have been assigned‘municipal service’ responsibilities,although in practice theirresponsibilities have beenrelatively unchanged, exceptfor two provinces wherewater supply has been

• Power to raise tax• Fiscal transfer from

higher tiers ofgovernment tolower tiers

• More operationalautonomy to thedistrict leveldepartments

• Focused approach• Meritocracy• Performance-based

appraisal system• Specialization vs

generalization• Recognition and

rewards

• Monitoring by citizensand electedrepresentatives

• Civil society’sinvolvement indevelopment work

• Effective checksand balances


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Political and operational accountability lie at the heart ofdealing with the institutional challenge.

Staff/1000 connection

Karachi

Lahore

Faisalabad

Rawalpindi

Multan

Peshawar

Indicators : Staff/1000 connections

Maj

or c

ities

of P

akis

tan


0 5 10 15 20 25 30

1012

14

1627

811

78

10

810

12

456

and overcoming deep-rooted fiscalweaknesses in most local institutions.

In the urban areas, some municipalauthorities have been quite innovativein their approaches to service delivery,experimenting with new options likecontracting out and finding ways toimprove their revenue. But in manytehsils, technical skills are in shortsupply. Many posts remain unfilled, orfilled by staff without the skills to carryout their designated duties. Even inrelatively attractive areas such asFaisalabad, one tehsil is operatingwith 50 percent of posts unfilled.Anomalies are widespread withrelatively junior, unskilled staff nowresponsible for other staff of a higherprofessional status and seniority. Andeven in urban areas, no one has yetcome near 24/7 supply. Clearly,

where tehsils are poor, with scatteredpopulations. Second, the managementand institutional complexities ofdevolving responsibilities fromprovinces to districts and tehsils andclarifying their new roles have beendaunting. Issues include blending stafffrom diverse departments; defining therole of WASAs; equalizing delivery;

institutional systems are not up tothe challenge.

Making use of the opportunities thatdevolution offers requires a differentmindset from the past emphasis ontechnical issues. It simply cannot bebusiness as usual—institutions mustbe made politically and operationallyaccountable.

Accountability:The Heart of theMatter

Although local context is alwaysimportant and necessitates localresponses, there has been great

consistency in the institutional rulesand principles that have guidedreforming cities across the world.

Political and operational accountabilitylie at the heart of dealing with theinstitutional challenge.

Political Accountability

Political accountability requires thatthe responsibilities between differenttiers of government are clearlydefined, and that the right tier ofgovernment is chosen to ensure theservice is duly delivered. This is aboutwho owns the assets and shares inthe utility and how they hold theproviders accountable.

For example, political accountabilitycan be devolved to local institutions,

such as in South Africa, thePhilippines and Uganda, where theprinciples of decentralization wereactively ensconced in the constitutionand local government legislation.

For service providers the test lies in

who owns their assets. There aredifferent options, but it is crucial thatthe choices made are very clear. In

Uganda, for example, the water utilitystill is a national entity, although localgovernment has become stronger. In

Chile, accountability was kept atnational and regional levels and inIndia at state and national levels. In

principle there is nothing intrinsicallywrong with making different tiers ofinstitutions politically accountable,provided it is clear who is accountable

for what.

In Pakistan, devolution since 2001 has

set a supportive context for local-levelaccountability. However, there still areseveral uncertainties. In some of the

city-focused group discussions at theworkshop, for example, somedelegates were distinctly unclear

about their roles in relation toprovinces, and continued to assume agreat deal of provincial control over

key decisions. In most cases, theyseemed to assume that higher tierauthorities would need to retain

shareholding in water utilities, if notfully control them. But the ownershipissues have not really been thought

through yet, and need to beconsidered in future reforms.

Operational Accountability

Operational accountability demandsthat owners, operators, and regulatorsall clearly know their responsibilitiesand are empowered to execute them,independently or in partnership.Resources should be commensuratewith responsibilities. This requiresclear separation of policy, regulationand provider roles and clearownership and regulatory structures(see Figure 1).

Such separation and clarity of rolescan be achieved in the following ways:

! The operating agency should havean independent board, able to hireits own Chief Executive Officer(CEO), to whom it can delegatemanagement functions;

! Operational decision-makingshould be within the power of theresponsible institution. The CEOshould be empowered to takeflexible and operationally relevantdecisions about human resources(HR) and to mobilize resources forcapital investment, for example,through borrowing;

! The full costs of service provisionshould be borne by the responsibleinstitutions. Those that failedshould not be bailed out throughend-of-year transfers or othermeans. Information and planningmust ensure upfront knowledge ofcosts of collapse;

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! Measures to ensure universalaccess to services should betransparent and predictable—forexample, through multi-year grantsto municipalities. The key issue isto price water properly and to beclear about subsidies. Concernsthat this will exclude the poor areill-founded: as paying customersthe poor are already paying forinefficiency. They will benefit frompricing that reflects true costs,especially if they can alsoparticipate in making key local-level service choices; and

! Monitoring of service deliveryoutcomes should includeindependent assessment,for which sound informationis essential.

The Challenges inPakistan

As Pakistani cities began todisentangle their own experiences atthe Karachi workshop, the pivotalimportance of institutional changebecame confirmed. This is a new wayof thinking that will take time tobecome established, but there can beno doubt that it paves the way foraccelerated reform.

Karachi at the Crossroads

The Managing Director (MD) of theKarachi Water and Sanitation Board(KW&SB) said his organization is atthe crossroads and that ‘not reformingis not an option’.

Separation and clarity of roles is the point of departure toensure accountability.

First, the demand for servicescontinues to grow. The population isnow estimated at over 12 million,which means basic domestic serviceshave to be expanded consistently.This is difficult, as 60 percent of thepopulation is estimated to live ininformal settlements. Knowledgeabout these consumers is fragmentedand it is difficult to reach them throughwater connections. On average,household consumers receive waterfrom KW&SB for only three to fourhours per day.

Moreover, Karachi is the largestmetropolitan city and major businesscenter in Pakistan, contributing almost

50 percent of national revenues. It hasto compete with other cities inPakistan and South Asia forinvestment, which adds to the demandfor reliable water supply. It is nowherenear its goals in this respect, asbusiness and industrial clients cancurrently expect at most eight to10 hours of water supply per day.

The city does not only need newinfrastructure to cope with thisdemand—its existing systems havedeteriorated for long, due toinadequate maintenance. For manyyears, the KW&SB was simply anexecuting agency for the regionalauthorities, closely controlled withoutany significant powers to make its owninvestment and operational decisions.There was no independent and robustmonitoring of its performance—it wasneither politically nor operationally

Figure 2: Separating Roles to Ensure Accountability

Policy

• Define theobjectives– 24-hour supply– Clean water– Extended access

• Define the rules

• Enforce the rules– Monitor compliance– Regulate pricing

• Deliver the service• Play by the rules

Regulation Delivery

9

systems and management levels;redeploying staff and managers;improving technical skills; and,improving the use of private providers,such as water tankers.

While there are many technicalchallenges, the senior managementsees institutional reform as thefundamental challenge—and havereceived encouragement from theirpolitical leadership (such as theGovernor of Sindh province and the CityNazim of Karachi) to make the most ofdevolution to achieve such reform.KW&SB is viewed as a key deliverymechanism that can have lessons forother utilities wanting to improveefficiency and becoming accountableand self-reliant.

Institutional Challenges for Deliveryin Pakistani Cities

The group discussions and role-playingat the Karachi workshop focused on

held accountable. It therefore lackedincentives to keep its infrastructure upto date, keep in tune with its customerbase, keep water losses under controlor respond rapidly to customerrequests. It still takes at least three tofour days to respond to majorcustomer requests, although thecurrent management has at leastensured that minor issues are dealtwith generally on the same day. Waterlosses also are still high—at anestimated 35 percent in transmissionpoints where it has not been able toeffectively detect and plug leakage,theft and illegal connections.

No systematic information was built upover the years. As a result, theKW&SB does not have a completenetwork map that shows connectionsand that makes it possible to monitorwater supply and total billing. It is wellknown, for example, that water is filledin private tankers tapped into brokenwater mains and/or by installing illegalpumps on the water supply lines.

Devolution has meant greaterautonomy, and the currentmanagement sees this as a goldenopportunity and incentive to deal withthese problems. But it has also meanta much enlarged and more diversifiedjurisdiction. Spread over 2,600 squarekilometers, the KW&SB jurisdictionnow covers 18 towns and unioncouncils. It is in the process ofdecentralizing its structure to theselevels to enable it to adapt to therange and variety of demand.

The MD’s reform plan focuses firston improved customer relations. Hehopes to become more proactive indealing with customers, gain theirsupport and willingness to pay byoffering better services, andensuring them better access tosenior management. Second, hewants improved revenue by dealingwith illegal connections, improvingrecovery systems and offering betterincentives for people to pay. Anumber of project-related reformsare also necessary: speeding up theimplementation of mega projectsthat cut across local governmentboundaries; institutionalizing thecapacity to undertake developmentworks and speed up their execution;start new projects; undertake asector master plan study to improvethe strategic approach to projectselection and management; andimprove the use of seawater for dailypurposes. Several managementreforms are required: streamlining


10

technical and institutionalassessments of the current state ofwater supply in the major Pakistanicities, setting longer term benchmarksand goals and exploring institutionaloptions to get each city to achievethose goals and benchmarks. Optionsconsidered included that of a linedepartment, a public water board anda corporate utility (either with orwithout private sector participation). Inchoosing options, groups focused on:

! Political accountability of thenational, provincial, city district,town and union level, clarifyingwhich tier of government is owneror policymaker, regulator andoperator, what their contribution isto development and O&Mexpenditure, how they can avoidoverlap and achieve consistencybetween technical, economic andpolitical jurisdictions; and

! Operational accountability,

focusing on separation of policy,regulator and provider roles,integration and independence of

provider functions, composition ofthe board (if applicable),transparent pricing and subsidies,

access to services and monitoringand regulation.

The assessments enabled all groups todevelop a sense of the gap betweentheir current situation and what theywould like to achieve. Although theindicators developed in the course ofdiscussions (presented in the figures in

Box 2 on page 4) were not official, theyprovided a basis for self-reflection onreality and ideal. All the groups swiftlymoved from a technical emphasis to afocus on institutional challenges inPakistani cities. This provides a startingpoint from which to take the debateabout options in Pakistan forward.Table 1 (on pages 14-15) provides aninsight into international experiencesdiscussed in Karachi that could helpinform these discussions.

Key Lessons:Making Things Work

There is no single solution or modelfor water management that can beapplied everywhere: One size doesnot fit all. However, international andPakistani city experiences all highlighta number of factors crucial for effectivereform in most contexts:

Information

! Reliable information:Internationally and in Pakistanicities, the importance ofinformation as a managementresource is very evident. Withoutinformation, utility managers arenot able to keep track of theircustomers or of problems indelivery, or to plan roll-out ofconnections and other technical

KW&SB is viewed as a key delivery mechanism that can have lessons forother utilities wanting to improve efficiency and becoming accountableand self-reliant.

and reform initiatives. Officials fromevery Pakistani city present saidthat they lacked such information,and many believed it was perhapsthe most critical area to address.

! Performance benchmarks andmonitoring: In the absence of soundinformation, Pakistani cities havenot been able to monitor theperformance of service providers. Inthe international cases discussed,baseline data comparisons made itpossible for the institutions involvedto monitor their own operations, andfor independent evaluators, politicalsupervisors and the public to judgetheir performance and hold themaccountable. Defining suchbenchmarks provides incentives toimprove information, which in itsown right becomes an importantdriver of change.

Strategy

! Knowing the choices: There havebeen very different experiences inthe specific application ofinstitutional models. Uganda has acentral government ownedcorporate utility and Manila acentrally driven public-privatepartnership; Johannesburg andPhnom Penh have opted forcorporatized entities owned by thecity, but managed in terms of own

11

benchmarks and with clearaccountability. Phnom Penh hasalso used the private sector insome areas, but pragmaticallywhere management needsrequired that, rather than as amatter of principle. The point is thatthese different institutional modelscan be used either on their own orin combination. For example,although private sectorinvolvement is still quitecontroversial in Pakistan, theinternational experience showsthat the involvement of the privatesector was mostly not anideological choice, but a strategicone. The private sector does notalways offer a solution, but privateoperators may add usefulinnovation. The more critical issueis keeping policymaking, regulationand provision separate, andtherefore ensuring a robustaccountability framework.

! Strong political leadership: Insuccessful cases, likeJohannesburg, the initial drive forreform and the degree to which ithas been sustained came frompolitical support at the highestlevel. Currently, for example, initialplans to move towards a waterconcession in Johannesburg arewavering, largely because the toppolitical leadership is not quite surethat is the direction they wishto follow.

! A comprehensive plan: Wherelocal utilities were established, they

all formed part of a broader visionof urban service delivery andreform, and water planning wascarefully crafted into a broaderplan. In Manila the need for verypractical step-by-steparrangements was emphasized,and there is reason to take carethat the whole reform process isnot merely a broad visionstatement, difficult to achieve inpractice. But it is still necessary to

have the overall framework withinwhich the specific steps can thenbe driven. Incrementalism withouta plan does not work.

! Stick to the principles, while beingpragmatic in strategy: Managerscome under many pressures—forexample, to make ‘politicallyfriendly’ appointments or renegeon key initiatives because they areperceived as too risky. Those who


12

Box 3: What Delegates Wanted to Know: Some Prominent Questions at the Karachi Workshop

Question Perspectives from the Discussions

How does one decide the direction and ! Ensure you remain functional and not overtaken by big ideasrate of change, and how do you prioritize at the cost of practical delivery.to avoid being swept away by change? ! Plan ahead: analyze the situation technically, institutionally and

politically and develop a sequence of actions.! Remain flexible: have a plan, but do not allow it to prevent

innovation.! Structure political accountability carefully to balance the

interest of owners, providers and consumers.

Is reform enough: is what is needed not ! There can be no doubt that it cannot be business as usual andradical change? that far-reaching change is needed. It is crucial to understand

the issues and trends and to pace reform or change accordingly.! Devolution has set a platform on which sensible reform

could be built – but this is not to deny the need for far-reachingchange.

What about the poor: does cost recovery ! The poor already carry the burden of inefficiency more thannot mean they will lose out even more? people with resources, because they cannot buy their way out

of the bad services.! Involve the poor.

Do we have adequate data to base ! All Pakistani cities lack good data and this is a major problem;reform upon? that is exactly why one of the key reforms has to be

improvement of data.! In international case studies, efficiency and accountability

improved as data improved, and the converse is also true. Youcannot wait for data before you reform; but you should ensure itremains integral to the process.

Are we not being hooked into a ! Privatization is not the solution to all problems, or the onlypreconceived privatization agenda? solution. It is crucial to analyze the options, choose between

them or combine them on the basis of good informationand rational thinking.

What next? ! Reform requires local ownership. The ideas generated here couldnow be taken forward in each locality, and where appropriate andagreed, the WSP-SA may be able to render advice or helpmobilize expertise.

! It is not just a local process: the restructuring of WSS is a matterthat cuts across the levels of government, and from formalgovernment structures to dedicated structures and utilities.

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have succeeded have been able torecount cases of resisting thesepressures. Simultaneously, beingprincipled does not mean notbeing pragmatic: it is crucial toadapt to the demands as theyarise, and to be able to changecourse if the situations demand it.

! Change processes have to bemanaged: In every successfulinternational case, care was takento involve stakeholders—management and staff in utilitiesand municipal departments, tradeunions, consumer groups andindividual consumers, privatesector clients and possibleproviders, other tiers ofgovernment, and all other relevantparties. The message from thecities of Johannesburg, PhnomPenh, Manila, and from the centralstate model in Uganda was:“Consult but be decisive;communicate at all times; prepareto meet resistance, especially fromunions and incumbentmanagement.”

Rewards and Incentives

! Incentives: It is important toremember that change becomespossible only if key stakeholderssee it as in their interests tosupport it. The most evidentincentives are challenge funds,such as in South Africa wherecities like Johannesburg have beenassisted to restructure. But the

arrangements around ownership,debt management or relief andother management issues couldprovide powerful incentives as well.Making the roleplayers clearlyresponsible for specific aspects ofgovernance, management andservice delivery is a way ofbuilding incentives into the systemfor better performance.

! Sustainable revenue: Reform plansand initiatives fall flat if theresources are not there to sustainthem. Ideally, local revenuegeneration—based on economicpricing of water—is the approachto follow, but in the interests ofuniversal access, higher tiers ofgovernment sometimes have toprovide support to local institutions.This needs to be calculated whenreforms are planned, and thesupport must be clearly identifiedand targeted.

The Way Forward

The current devolution process inPakistan provides an opportunity toempower the rapidly growing cities tobecome competitive and meet theincreasing demand for basic services.But this needs a focus on institutionalissues first, not on technical mattersprimarily. Important as technicalcapacity and fiscal resources are, theywill only work in the interests ofconsumers and cities if they aremanaged well.

At the core of this is political andoperational accountability. Thisdemands effective links betweenservices and institutions, cleardesignation of roles and the rightincentives.

The Karachi workshop facilitatedimportant dialogue between keystakeholders in the WSS in Pakistanicities. With important perspectivesgained from internationalpresentations, it is now possible forKarachi and other cities in Pakistan tolook at their own situations and theconsiderable institutional challengesthey face. The workshop was a step ina process though, and the challengewould now be to take forward thisdialogue on reform within eachprovince and city. Therefore:

! Important political, technical andcivil society stakeholders need to beconsulted and informed of options;

! Involvement of city and utilityleaderships will move the agenda

forward on the basis of a moresystematic understanding ofissues and options; and

! The WSP-SA is well placed tocontinue to provide access toglobal experience and expertise—from different agencies—to assistPakistani cities and water utilitiesdesign a way forward. Karachiprovides a difficult but possiblestarting point that could well beextended to other cities.


14

Table 1: International Experiences

Johannesburg, South Africa Phnom Penh, Cambodia

The Challenge ! WSS reform part of broader reform drive; ! In 1993, daily water supply less than! Started 1999, sparked by financial and 10 hours;

institutional crisis; ! Only 25 percent coverage;! Institutions fragmented, performance not ! Collection rate of water charges

measured and policy not implemented; and 48 percent;! Infrastructure and service coverage in ! 300 cases of illegal connections every

decline, backlogs growing, staff morale year and annual water loss 73 percent; andand productivity low. ! 12 percent metering.

Key Reforms ! Reform covered all services; ! Considered privatization but lack of! Privatizing gas; corporatizing recreational political acceptance; and

facilities; public health management; ! Focus on greater autonomy in the! Utilities formed for water and sanitation; management, within a public sector model.! Electricity and waste management PSP; and! Water utility with a performance-based

contract.

New Arrangements Policy, regulation and operational roles Separation of roles:separated: ! Policy role with Board of Directors;! Elected council sets policy; holds ! Operations with Managing Director and

provider accountable; five departments, able to use private! Contract management unit is operators;

independent regulator outside policy ! Credible billing, information are incentivesand operations; and for payment; and

! The provider charges a base fee ! Accurate and transparent,and takes profit share. financial systems.

Service Outcomes ! 24/7 water service now the norm; ! 24/7 water supply;! By 2004 the company showed first profits; ! High levels of billing and low non-revenue! Service more flexible; water;! First six liters of water free of charge, ! 100 percent metered connections with

advancing universal access; and high accuracy metering and leak! Customer care center largely functional, detection;

but turnaround time can improve. ! 24 hours leak repairs and almost fullelimination of illegal connections; and

! Customer satisfaction helped byeducation, incentives, enforcement,and responsive services.

It is crucial to adapt to demands as they arise, and to be able to changecourse if the situations demand it.

15

Manila, Philippines Uganda

! BOTs resolve national power crisis in the 1990s; ! Despite large investments only three of 12 targeted towns viable;! Top level national political support for reform; ! Arrears and deficit high, collection low, 36 staff members! WSS utility in Metro Manila (11 million people) for every 1,000 customers, staff and bad office practice;

under severe financial pressure with weak profits, ! Water leakage and sewage spillages;cash flow and revenue recovery; ! 15 to 21 hours supply; and

! Only 61 percent water and 8 percent sewerage ! Slow response to complaints: one week.connections; and

! Many Illegal connections.

! Brought private sector into water supply; ! National utility model; and! Policy, operations and regulation separated; ! Improving performance through internal reforms (PIPs),! Operations concessioned; and commercialization and some private sector participation.! Comparative benchmarking.

Concession since 1997: ! New Board and Management appointed;! Quasi-independent regulator; ! Corporate Plan with long and short term goals;! Implementation in two zones benchmarked; ! Some private sector participation and outsourcing;! Local and international operators owner split ! Staff consulted on restructuring, incentives; and

of 60:40; and ! Head Office focus on asset holding and regulation.! Debt servicing through ‘concession fees’.

! More than 1.5 million poor people have direct ! Most areas have 24-hour supply;connections; in 2003 alone, 300,000 poor people ! Response time to complaints improved to 36 hours;received direct connections; ! Total connections up from 50,826 in 1998 to 100,475 in

! Average monthly consumption per poor household 2004 and billed ones from 31,284 to 83,020;25 cubic meters, same as system-wide ! New connections per year have risen from 3,317 toresidential average; about 14,000;

! Average cost to poor is US$5.40 per month, ! Staff per 1,000 connections has been reduced fromless than four percent of their income; and 36 to 10 in 2004; and

! Two-zone approach made comparative ! Operating profit increased from 1.9 bn Ugandan Shilling tobenchmarking possible. 12.3 bn in 2004.


! A growing demand forservices: The population is nowestimated at over 12 million—60percent in informal settlements.As the country’s majorcommercial center, the city hasmany businesses and industries.Under devolution, KW&SB has amuch larger and more diversejurisdiction over 2,600 squarekilometers, comprising 18 towns.

! Intermittent water supply:The average household receiveswater supply for only three tofour hours a day.

! High levels of water losses:An estimated 35 percent!

! A weak knowledge base:Patchy/inaccurate informationabout consumers, networks andconnections.

! Low revenue collection:Collection is only about two-thirds of the KW&SB budget (seegraph at right).

! Distorted institutionalincentives: KW&SB is anexecuting agency under regionalcontrol; it cannot make its owninvestment and operationaldecisions and lacks performanceincentives.

! Poor customer relations:Response times to customerrequests range from three tofour days.

! Devolution: The devolutionprocess in Pakistan creates aframework for greater localautonomy and the challenge is touse this to make KW&SB moredirectly accountable to the Cityand customers.

Box 4: Karachi’s Major Challenges in Water and Sanitation Provision

Revenue: Target andachievement

1994-95

1995-96

1996-97

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

0 500 1000 1500 2000 2500 3000

Budget

Collection

ABOUT THE SERIES:Pakistan, like all countries of South Asia, urgently needs to address thegrowing challenge of service provision to the urban poor. For long, the countryhas needed viable forums to bring together key stakeholders such aspolicymakers, municipal staff, and nongovernmental sector all of whom arestruggling to find new ways to solve old problems. Water and SanitationProgram-South Asia is one of the leading agencies trying to fill this vacuum byestablishing a consultative sector debate at the federal, provincial and locallevels in the country. Urban Roundtables organized by WSP-SA bringstakeholders together to discuss operational problems and priority policyinterventions. The Roundtables have generated a lively and influential debatewith clearly articulated calls for provincial and national policy interventions.There is growing interest in widening the participation and scope of the debate.The proceedings, key issues, and recommendations of these Roundtables aredisseminated through the publication of Shehr ki Duniya with the purpose ofsharing lessons learnt, highlight emerging issues, documenting best practice,and fostering a better operating environment in the sector of water supply andsanitation services.

Water and Sanitation Program-South Asia20 A, Shahrah-e-Jamhuriat, Ramna 5G-5/1, Islamabad, Pakistan

Tel: +92 (51) 909 0161Fax: +92 (51) 282 6362E-mail: [email protected]: www.wsp.org

August 2005

WSP MISSIONTo help the poor gain sustained access to improvedwater and sanitation services.

WSP FUNDING PARTNERSThe Governments of Australia, Belgium, Canada,Denmark, Germany, Italy, Japan, Luxembourg, theNetherlands, Norway, Sweden, Switzerland, and theUnited Kingdom, the United Nations DevelopmentProgramme, and The World Bank.

This workshop was supported bySwiss Development Cooperation and AusAID.

Created by: Roots Advertising Services Pvt Ltd

Printed at: PS Press Services Pvt. Ltd., India

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Source: KW&SB

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