Impact from Management and Lease/Affermage 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 O&M costs • 90% of O&M costs spent on energy and staff (17 staff/1,000 connections)

4. What triggered the study • DJB financial situation • DJB Opex: US$120 million/year • Customers US$80 million/year • Government US$40 million/year • DJB Capex: US$170 million/year • Government US$170 million/year • DJB Debt US$1,500 million • Household WSS budget • DJB Opex US$ 80 million/year • Coping costs US$120 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