1. The Senegalese pro-poor approach to tackle the urban water sector affordability/viability issue 5th World Water Forum World Water – Istanbul – Thursday, March 19 2009 Session 5.2.2. : convened by OCDE - Suez Environnement - IWA By Mouhamed Fadel NDAW Technical Adviser to the urban water Minister and coordinator of PEPAM projeau@orange.snprojeau@orange.sn - www.pepam.gouv.sn www.pepam.gouv.sn projeau@orange.sn www.pepam.gouv.sn Affordable and sustainable water and sanitation services : The role of tariffs and other instruments

2. URBAN WATER : THE INSTITUTIONAL FRAMEWORK SONES Asset company Concession contract SDE Private partner « Affermage » contract Clients State Performance contract THE PPP CONTRACTUAL SCHEME

3. Financial issues to adress  Developing and maintaining the infrastructure  Providing access to water services to the poorest (PRSP, MDGs) through private connections  Ensuring sustainable financial viability of the sector  Covering environmental costs (Treatment plants, sludge disposal, protecting surface water) SENEGAL: CHALLENGES OF THE URBAN WATER SECTOR

4. SENEGAL: MAIN URBAN WATER DATA  Urban population served 4.5 millions  % of population having access to potable water : 98% - Private connections : 74 % - Stand pipes : 24 %  60 major cities of the country including Dakar  Annual volume produced : 135.000.000 m3  Annual volume sold: 110.000.000 m3  UFW (Unaccounted For Water) : 20 %  Number of connections : 482.752  Sector annual revenue : 105 millions $  % of metering : 98,5 %  Private customers billing collection ratio : 98%  Government billing collection ratio : 100 %  1.220 staff members (SDE : 1140 – SONES : 80)

5. AFFORDABILITY/ACCESS ISSUES 1. CONCESSIONAL LOANS TO SONES : 250 MILLIONS $ (77 %) DIRECT LOANS TO SONES : AFD AND WADB : 100 millions $ REASSIGNMENT OF LOANS FROM GVT TO SONES (BEI, BOAD etc…) : 20 ans - 3,5 % : 60 millions $ EQUITY (50% IDA + 55% KFW) : 90 millions $ 2. PRIVATE OPERATOR (SDE) : 64 MILLIONS $ (20 %) 3. LOCAL COMMERCIAL BANKS : 11 MILLIONS $ (3 %) TOTAL : 325 MILLIONS $ FINANCING THE WATER SECTOR INVESTMENT PLAN (1996-2008)

6. AFFORDABILITY/ACCESS ISSUES  1.800.000 new persons benefiting of improved drinking water services (98 % coverage rate among with 74% of private connections).  861 kms network extensions to the periurban areas and secondary cities  145.531 subsidized social connections to poor households : 30 $  56.921 ordinary connections to wealthy households : 150 to 600 $  500 public standpipes in new urban settlements WATER COVERAGE EXTENSION (1996-2008)

7. AFFORDABILITY/ACCESS ISSUES Tariff for social block = 40 cents $/m 3 Second block : 1.3 $ Third block (dissuasive) : 1.8 § Tariff at standpipes = = 3 to 5 times the social block tariff TS TP TD AVERAGE TARIFF : 1.1 $/M3) SOUND COMBINATION OF 3 T + TIME (3% INCREEASE PER YEAR FROM 1996 TO 2003)

8. AFFORDABILITY/ACCESS ISSUES n Private operator revenues to cover operating cost and partial renewal of investment : 30contract 0 FCFA (55%) – SDE- Revenues linked to fulfillment of performance targets n Public asset holding company fees to cover new investment and debt service : 150 FCFA (28%) – SONES n Sanitation surcharges on water to cover partial O&M costs and rehabilitation of facilities which lifespan inferior to 15 years : 41 FCFA (8%) – ONAS n Taxes (mainly VAT of 18 %) : 46 FCFA (9%) - STATE ALLOCATION OF TARIFF REVENUES

9. REMAINING CHALLENGES n Major gains of efficiency already reaped n Financing of the third generation of investment for Dakar (desalination?) n Limited possibilities of future tariffs adjustments to maintain the financial sustainability of the sector (domestic tariffs frozen since 2003) – Demand and WTP study n Maintaining level of the subsidized rate for the first 20 m 3 block : 40% of the total water at a tariff covering 60 % of the O&M costs n Compelling issue of urban sanitation (O&M costs and partial rehabilitation of facilities)