1 Processes of Reform Capacity Building Module. 2 Overview Introduction Key steps in reforms ...

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Processes of Reform

Capacity Building Module

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Overview

IntroductionKey steps in reformsBalancing progress in utility and environment

Video interviews with three speakersTriggers and obstacles to reform Key success factors in reformTaking care of the poor in reformsRole of central government in reformsLeadership

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Planning reforms

Identify what the problems are…Inefficient planning and project implementationWater availability, water quality, energy supply Staff motivation, capacity, efficiencyTariff level and structureCorruptionCommercial operation

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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 PSPNon-utility services: small scale providers ‘Environment’: policy maker; asset holder; regulatorLegal instruments for the arrangement

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Involving stakeholders

Politicians: local and national levels Management and staff of public utility Consumer associations NGO: national and int’l (service to the poor,

environment, governance…) Financiers: multi and bi-lateral Alternative suppliers (tankers, drilling companies…) Media: national and int’l Private sector: local and int’l

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Sustainable utility reform and reform of the environment have to go hand-in-hand

Our goal

utilitypoor good

poor

good

Typical reform path

envi

ronm

ent

Possible combinations environment status/utility

provider status

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How Uganda combisequenced the reforms of NWSC, its national utility

Utility reform

Ref

orm

of

the

envi

ronm

ent

70s political turmoilmid 80s new government

end 80s & 90s Major rehab95 new statute

97 new Board98 new MD

98-00 service & revenue enhancement programs

00 ext & int performance contracts

02 automatic tariff indexation

03 staff performance contracts

97 corporate plan

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Overview



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South Africa

Mike Muller

Former Director General, South African Department of Water Affairs &Forestry

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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

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Uganda

Dr. William Muhairwe

Managing Director, National Water and Sewerage Corporation, Uganda

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Uganda



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

Ref

orm

of

the

envi

ronm

ent

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Russia

Alexander Bazhenov

Vice-Chairman, Eurasian Water Partnership

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Russia



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: l’goti 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 2nd generation PSP

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Overview

Introduction Key steps in reformsBalancing progress in utility and environment


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The first challenge: how to trigger reform

Droughts, floods & epidemics

Unacceptable levels of service

Political shifts & pressures

financial crises

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The constant challenge to maintain progress….

time

performance

Pressure to improve

Broad sector reform

Utility reform

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Maintain progress

4

3

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Triggers and Obstacles to Reform

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

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Owners

Customers

Regulators

Policy makers

Financiers

Maintaining progress: Balancing external accountabilities

The unserved?

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Overview



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Key Success Factors in Reform

Click the button to play a 5 minute video clip.(Windows Media; 9,208k)

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Overview



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Taking Care of the Poor in Reforms

Click the button to play a 10 minute video clip.

(Windows Media; 15,619k)

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Existing quantity-targeted subsidies are regressive

% of poor hhs receiving subsidy vs. benefit targeting performance

India, State IBTs, 0.56

Cape Verde, 0.48Sao Tome, 0.41

P eru, 0.82Honduras, 0.49

Guatemala, 0.20

Hungary (S), 0.98

Rwanda (S), 0.35

Kathmandu, 0.56

Bangalore, 0.66Sri Lanka, 0.83

Cape Verde, 0.240.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

0.00 0.20 0.40 0.60 0.80 1.00 1.20

Benefit targeting performance indicator

Sh

are

of

po

or

hh

s re

ceiv

ing

su

bsi

dy

Electricity

Water

Source: Water, Electricity, and the Poor: Who Benefits from Utility Subsidies? – Komives et al.

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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

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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?

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Overview



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The Role of the Central Government

Click the button to play a 4 minute video clip.

(Windows Media; 7,526k)

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Overview



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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 timelineDevelop a sequenced, prioritized list of reforms…Match available human, financial and knowledge resourcesTake one step at a time, but lock in progress

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The Importance of Leadership

Click the button to play a 3 minute video clip.(Windows Media; 3,477k)

1 Processes of Reform Capacity Building Module. 2 Overview Introduction Key steps in reforms ...

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