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Urban water supply

Urban water supply. The privatization process in Mozambique Christophe Nothomb Barcelona, 21.11.08. Mozambique. Population : about 20 million Urban population : 36% GNI per capita : ~310 USD Aid per capita : ~77 USD Population below poverty line : 54%

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Urban water supply

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  1. Urban water supply The privatization process in Mozambique Christophe Nothomb Barcelona, 21.11.08

  2. Mozambique • Population : about 20 million • Urban population : 36% • GNI per capita : ~310 USD • Aid per capita : ~77 USD • Population below poverty line : 54% • Life expectancy at birth : ~42 years • Mobile phone users : 15 per 100 hab. • Inflation : ~8 to 10% • Improved sanitation access : ~31%

  3. RATIONALE OF DELEGATED MANAGEMENT FRAMEWORK INVESTMENTS + OPERATIONS + TARIFFS SUSTAINABLE WATER SERVICES

  4. Private Sector Participation (PSP): Increase efficiency Technical (reduction of water losses, of chemical consumption, energy, etc.) Commercial (improve customer relations, billing and collection, etc.) Training and development of HR Training Responsibilities Perspectives Principles of the Delegated Management Framework

  5. Principles of the Delegated Management Framework Benefits for the consumers Service levels Cost of water Increase coverage GoM objectives and MDGs, via increase in n° of connections Sustainability of the sector reforms Debt service Capacity of attracting funding for investments

  6. Institutional Framework Ministry of Public Works and Housing Council of Ministers • ARA-Sul • Issue water permits • Monitor water resources • DNA • (National Water Directorate) • Sets water and sanitation policy • Supervises sector and draft investment plans • Support to semi-urban and rural schemes • Ministry of Health • Set drinking water standards • Monitor quality Performance contract • FIPAG (Assets holding and investment company) • Full investment responsibilities • Local Authorities (Municipalities) • Review investment plans Lease, Management or Technical Assistance contracts CRA • Economic regulation • Approval of tariffs • Protection of customers Águas de Moçambique Vitens (NL) ??? Subscription contracts Customers (14 urban centres)

  7. Urban Water Supply Reform Process • Civil war up to 92 : very limited investment • 1991 : Water law • 1995 (revised 2007) : National water policy • Principle of PSP • 1998 : Tariff policy • Water as a social but also economic good • 1998 : Delegated Management Framework • 1999 : Lease contract award to Águas de Moçambique (AdeM) for Maputo • 2000 : Major floods • 2001 : SAUR quits AdeM • 2004 : Revised Lease Contract • 2008 : Periodic Review Process

  8. MDG 70% Urban Water Service Coverage MWSP TARGET 73% DELEGATED MANAGEMENT FRAMEWORK GOVERNMENT TARGET STATE OWNED UTILITIES 60% 40% 48% 32% 35% 1980 1990 2000 20072009 2015

  9. Maputo case • Total population: 1.8 Million • Peri-urban area • Expansion started in the year 2000 • Population: 300.000 • Growth rate: 6% to 10% • Cement city • Population: 800.000 • Growth rate: 1% • Peri-urban area • Expansion started in the 80´s • Population: 700.000 • Growth rate: 2%

  10. Official Maputo Water Supply System • Maputo/Matola : • 1 700 000 inhabitants, • (1 250 000 in peri-urban areas) • Conventional system in a delegated management framework : • 15 years lease to private operator (Águas de Moçambique - AdeM, since 1999) • from public asset holding company (FIPAG) • with an independent regulator : CRA • Main characteristics (2008): • ~1000 km network, • ~100 000 connections, • 350 functioning standpipes, • average distribution time : 12 hrs/day, • 38% population coverage • High level of UFW (55% losses) and low collection rate (~80%)

  11. Water quality and quantity • Quality improved • Quantity

  12. Key performance standards • Non-revenue water • 2000 : 44% • 2002 : 53% • 2004 : 58% • 2008 : 55%

  13. Collection rates • 2000 : ~62% • 2002 : ~68% • 2004 : ~60% • 2008 : ~85%

  14. Nr of Customers • 2000 : ~78 500 • 2002 : ~80 000 • 2004 : ~85 000 • 2008 : ~105 000

  15. Tariffs

  16. 180.00 160.00 140.00 USD (Millions) 120.00 100.00 80.00 60.00 40.00 20.00 0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Cumulative Investment (Maputo)

  17. Results – Evolution of key performance standards • Quality of water • Quantity of water • Nr of connections • Tariffs • Investment • Level of Service • Customer Satisfaction

  18. Maputo Water Supply

  19. Maputo case- Water Supply • SERVICE PROVIDERS • Formal: AdeM -15 years lease contract • Informal- 427 SSIP • ADEM • Manage the conventional network : • All the historical centre • Most part of the first expansion area • FIPAG´s Investment • SMALL SCALE INDEPENDENT PROVIDERS- SSIP • Serves the two expansion areas with own networks (purely private investment)

  20. Maputo case- SSIP • Water service: metered private connection, standpipes • Water tariffs: 1$/m3, 100$ connection fee (all included) • Water available for the consumers 20h/day (average)

  21. Maputo case- SSIP Biggest SSIP´s Mr. Luís Faquene: 7 systems with 2100 PC Mr. Calmo Nualane: 2 systems with 2000PC, one with 1500 PC Mr. Arlindo Xavana: 2 systems with 1900 PC

  22. Maputo case- Integration of SSIP • PRINCIPLES • Recognition of SSIP role • Making profit of SSIP know how • SSIP as potential partners in urban water sector • CONSTRAINTS • SSIP´s Low technical capacities • Weak organization: 2 associations covering 50% of the SSIP • Higher Number of different types of SSIP: Network overlaps • VISION • Build on the existing capacities to develop reliable Mozambican water distribution companies

  23. Maputo case- Integration of SSIP • CHALLENGES • Enabling environment • Security through licensing • Opportunities for partnerships with water sector institutions and financial entities • Capacity building through partnership • On the job training to create national water companies • FIPAG/SSIP contractual arrangement conducive to building capacity • Maputo water market structuring • Concentration of market : fewer and bigger SSIP • Integration of SSIP´s infrastructure

  24. Conclusions • Privatization process • Mixed evaluation – private operator • Positive for consumers on water quality, quantity and reliability • Negative for efficiency and customer services • Negative for time spent in contract negotiations • Neutral for tariffs • Positive evaluation – government attitude • Stability and strenghtening of institutions, open attitude • Financiers confidence • Negative for speed of investment implementation • Specific context of small providers services • Move towards « hybrid system » • Challenges • Regulation

  25. Thank you

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