Towards The Result Based Utility Sector In Armenia
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Transcript of Towards The Result Based Utility Sector In Armenia
TOWARDS PERFORMANCE BASED UTILTY SECTOR IN ARMENIA: CASE OF DRINKING
WATER SUPPLY SERVICES
By Lianna Mkhitaryan
THE GOAL OF THE RESEARCH
The research :• Investigates how performance management
increased efficiency, effectiveness and overall quality of the water supply services;
• how input, activity level, output and outcome targets are used;
• identifies existing gaps in the coverage and implementation ;
• has gathered and analyzed citizen perception, satisfaction with services and citizens’ expectations met by service provision.
CONTEXT INFORMATION
Problems with water supply in urban and ruralcommunities:• shortage of water;• intermittent supply;• low pressure due to leakages in the
transmission and distribution networks;• poor quality of drinking water.
CONTEXT INFORMATION
Supply side of services:• technological backwardness of the mechanical and
electrical equipment;• old and worn infrastructure;• outdated system designs and standards.
Demand side of services:• low wages and pensions of the population.
WATER SECTOR REFORMS
• Reforms started in 2001 with the adoption of theDecree “On Reforms of Water System Management”and establishment of SCWS;• adoption of the new “Water Code” in 2002;• transfer of the tariff setting functions to PSRC;• legislative changes enabling private sector
involvement and water sector commercialization;• decentralization and privatization, development of
the investments policies.
SYSTEMS OF WATER SUPPLY
1) Centralized supply provided by five WSCs (80% of the population ):
• Yerevan-Jur CJSC (YWSC);• Armenian Water and Sewerage CJSC (AWSC); • Shirak Water and Sewage CJSC (SWSC);• Lori Water and Sewage CJSC (LWSC);• Nor Akunk CJSC.2) Municipal supply/rural areas.
PERFORMANCE MANAGEMENT
Objectives: to improve efficiency, effectiveness andoverall quality of the services and make monitoring andevaluation more precise and objective. It focuses onresults valued by citizens, measured in terms of citizensatisfaction and involves citizens in decision making process.Includes:• definition of performance objectives and targets;• measurement and reporting actual performance.Results:• improved control, increased accountability and savings.
PERFORMANCE INDICATORS
• 6 categories: physical, service quality, financial, operational, personnel and environmental.
• Are developed by the WB and IWA and serve as a basis for providers;
• WSCs develop their own lists of PIs taking into consideration their objectives and priorities and local contexts for monitoring and benchmarking purposes.
YWSC
• serves 1,3 million inhabitants (Yerevan and 32 rural communities );
• 50 % of the total water supply;• is managed under 10-year lease contract
awarded to the French company “Generale des Eaux”, Veolia Water;
• the investment projects are financed by loans provided by the WB and French Government.
1. PIs in YWSCPerformance
IndicatorBefore Private
Sector Involvement
At the End of the Management
Contract with ACEA –
A. Utilities
After 2.5 Years of Lease Contract with “Generale
des Eaux”, Véolia Water
Average duration of water supply
4-6 hours 18.4 hours 20.35 hours
Energy consumption
240.3 mln kWh 124.2 mln kWh 115.3 mln kWh
Installed water meters
3 856 379 580 401 100
Average water consumption
By norm 250 lcdActual 797 lcd
110 lcd 87.3 lcd
User fee collection rate
20.9% 79% 90.3%
Source: SCWR
AWSC
• Serves 37 urban and 264 rural communities (around 700,000 inhabitants in all 10 marzes);
• accounts for nearly 22 % of the total water supply;
• Is managed by the French company SAUR based on management contract;
• investment projects are financed by loans provided by the WB, EBRD, ADB, USAID, RA Government and company funds.
2. PIs in AWSCPerformance
Indicator
Before Private Sector Involvement, (2004)
After 5 years of Management
Contract with SAUR
Average duration of water supply
6.0 hours
12.20 hours
Energy consumption 0.43 kWh/m3 0.29 kWh/m3
Installed water meters 40.0% of subscribers 65.0% of subscribers
Average water consumption, lcd
Not used Not used
User fee collection rate 47.95% 78.2%
Number of customers paying
53,000 115,000
Average water bacteriological
safety compliance
61.0% 92.0%
Source: SCWR
SWSC, LWSC, Nor Akunk
• SWSC serves the population of Shirak marz (more than 280,000);• LWSC serves the population of Lori marz (more than
280,000);• Nor Akunk serves urban and rural communities in
Armavir marz (near 100,000);• companies are managed in the framework of
partnership agreement between the state and German KfW development bank;
• 51 % of state shareholding and 49% of community.
3. ENVISAGED PIs IN SWSCPerformance Indicators Project Area
Average duration of water supply Reconstructed areas -24h; other areas increase from 1h to 3h daily per year
Compliance to water quality standards
Maximum 6 tests p.a. do not comply with standards
Water losses 1st year - max. 80% 2nd year - new network: <35%; old network: max.75%3rd year - new network: <30%; old network: max.70%
Improvement of user fee collection rate
-in 2008 comprised 67%
1st year ≥ 70%2nd year ≥ 80%3rd year ≥ 90%
Source: SCWS
CITIZEN EXPECTATIONS MET BY SERVICE PROVISION?: MONITORING PROGRESS
Performance management focuses:• on results valued by citizens; • involve citizens in decision making process;• measures success in terms of citizens’ satisfaction.Evaluation criteria: access to information,transparency and accountability, accessibility,timeliness, availability, affordability of services , valuefor money, redress, responsiveness, conformation tostandards.
CITIZEN EXPECTATIONS MET BY SERVICEPROVISION?: MONITORING PROGRESS
Source: survey of 296 households in 37 communities in Shirak, Gegharkunik and Kotayk marzes (June – September 2009).
CITIZEN EXPECTATIONS MET BY SERVICEPROVISION?: SUMMARY OF FINDINGS
The research revealed:• still insufficient citizens’ access to information;• absence of redress mechanisms;• lack of citizens’ initiative, fear of possible adverse
consequences and underdeveloped participation mechanisms brings to inability to demand better services from the relevant agencies within the limit of available recourses.
SUMMARY OF FINDINGS
Established PPPs are managed in accordance with performance-based contracts that enabled :• to attract external financing and diminish dependence on state subsidies;• to increase efficiency and payment discipline.The PPPs:• have different level of service delivery efficiency and use combinations of different output and outcome targets identified on the basis of importance and practicality in implementation;• define and link expenditures to each output or outcome targets and sectoral strategic goals.
1.RESULTS OF PERFORMANCE MANAGEMENTObjectives Characteristics Results on Project
LevelResults on
Organizational Level
1. Efficiency and effectiveness and internal control and/or accountability
Focus on outputs and outcomes (results and effects);availability of performance information
Recovery of operation and maintenance for all projected urban and rural communities;improved access to safe, reliable and sustainable water supply;improved duration of supply
Improved technical, financial, and managerial capacity and operating efficiency of WSCs; rehabilitated, replaced, and/or extended WSS;optimized operation of the existing infrastructure;constructed new infrastructure; improved personnel working conditions; some increase in salaries; limited public satisfaction with the quality of services
2.RESULTS OF PERFORMANCE MANAGEMENT
Objectives Characteristics Results on Project Level
Results on Organizational
Level2.
Improved decision making in the budget process, and/or allocation of resources and external accountability
Focus on performance budgeting
Improved decision making in the budget process and internal allocation of resources
Commercially-oriented operations; increased financial autonomy;meters installed to bulk and domestic consumers;increased tariff collection efficiency;reduced non-revenue water
3-4. RESULTS OF PERFORMANCE MANAGEMENTObjectives Characteristics Results on Project
LevelResults on
Organizational Level
3. Improved external transparency and accountability to higher administrative levels and public
Focus on the public availability of information
Still insufficient public access to information
Citizens’ discontent with public access to information
4. Savings Focus on input side of operations
Technical and financial management training provided to personnel of WSCs and communities covered and not covered by WSCs
Enhanced workforce skills;decreased number of employees
Source: prepared by author
SUMMARY OF FINDINGS
PPPs. Used policy level PIs (average consumption, etc), financial Pis(collection efficiency, working ratio, etc), operational (UfW,average duration, coverage, etc) are:• well defined, measurable and achievable;• monitored and updated;• have been reached or shown continuous improvement.Absence of PIs measuring service improvement /pipe brakes(km/yr), reaction to major breakdowns (h/yr)/ and enhancingemployee motivation and performance gives mixed quality ofevaluation.LG providers. Demonstrate insufficient technical and managerialcapacity to implement performance management.
RECOMMENDATIONS
To better meet consumers’ expectations the WSC need toundertake more initiatives to treat service users as customersthrough:• increasing number of indicators related to water quality;• increasing information accessibility in marzes;• holding persons/organizations responsible at every level of
service provision;• ascertaining awareness about the real cost of services to
public;• national standards must be defined and published, so that
users can know what to expect from providers.