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

31 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)

41 What triggered the study DJB financial situation DJB Opex: US$120 million/year CustomersUS$80 million/year GovernmentUS$40 million/year DJB Capex: US$170 million/year GovernmentUS$170 million/year DJB DebtUS$1,500 million Household WSS budget DJB OpexUS$ 80 million/year Coping costs US$120 million/year

51 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

61 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 AmmanManagement contract GazaManagement contract Zambia Management contract Antalya Affermage Gdansk Affermage Senegal Affermage BarranquillaLease/affermage CartagenaLease/affermage

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 Amman90%100%49 Antalya93%95%1923 Barranquilla60%89%1923 Cartagena74%95%1724 Gaza58%56%...8 Gdansk100%100%2424 Senegal 59%73%1622 Zambia 100%100%1318

11 Efficiency of service before and after private operator contract Non 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