The Water and Sanitation Program is an international partnership for improving water and sanitation sector policies, practices, and capacities City District Local Government Ministry of to serve poor people Government Karachi of Sindh Environment 34443 August 2005 shehr ki duniya Proceedings Managing Karachi's Water Supply and Sanitation Services Lessons from a Workshop Background Water services in Pakistan's major cities and urban centers remain fragmented and intermittent--no city currently has 24 hours of water supply for seven days a week.This impairs the ability of cities to support economic growth and meet basic needs. Faced by this challenge, the Nazim of the City District Government of Karachi (CDGK) suggested in mid-2004 that the Water and Sanitation Program ­ South Asia (WSP-SA) help to arrange a discussion about lessons for Karachi from Water & Sanitation (W&S) services reform in large cities and urban areas elsewhere in the world. In follow up discussions, it was agreed that although Karachi would be the entry point, the workshop should also include discussion of similar challenges elsewhere in Pakistan. Key W&S stakeholders from major cities in Pakistan, the central government and the provincial government of Sindh (where Karachi is located) attended a two-day workshop in Karachi on February 23-24, 2005. WSP-SA facilitated participation by several resource persons, including practitioners from Manila, Johannesburg, Phnom Penh and from the national water utility in Uganda. The formal presentations and delegates' inputs all emphasized the institutional--rather than technical-- nature of the challenges around water and sanitation in Pakistani cities. This message also came through in a number of keynote addresses: THE GOVERNOR OF SINDH, DR. ISHRAT-UL-IBAD, highlighted the impact of W&S on quality of life and combating deaths and diseases across the world. It is crucial to find ways to use scarce resources properly, which requires innovation, efficiency, partnership with the private sector and international institutions and accountable arrangements. The challenge, he said, is one of enduring institutions. IN A PRESENTATION READ BY MR. TARIQ HASSAN, NAIB WAZIM, CDGK, ON BEHALF OF THE NAZIM OF KARACHI, MR. NIAMTULLAH KHAN, it was explained that as the city continues to grow, service demands will grow.The vast service expansion needed requires major financial skills, finance and new management experiences. Devolution provides a favorable context, but there are still many issues at stake. KW&SB is a key delivery mechanism that can provide lessons for other utilities as well create efficient, accountable and self-reliant service providers and authorities. THE HEAD OF THE WORLD BANK IN PAKISTAN, MR. JOHN WALL, said that W&S is crucial to poverty reduction and intractably linked to education, health and other services. He pointed out that Pakistan is booming, GDP is growing, and economic indicators are improving. But basic services need to improve, and the challenges are primarily about `getting organized' for this. In his view, people are willing to pay for these services, but they want value for money.The key thing right now is to change the way the city is governed and to ensure better cooperation between key public institutions on land and services management.There is `fiscal space' as revenue has become more available. But it is necessary to work `smarter', and this workshop is about that primarily. MS. CATHERINE J. REVELS,THE REGIONAL TEAM LEADER OF THE WSP SOUTH ASIA, said that the key issues are institutional arrangements and incentive frameworks. While every context is different, all issues are not unique.The workshop provides an opportunity to learn from different experiences and different approaches to assist Karachi and others define and take forward reform agendas. 2 Managing Karachi's Water Supply and Sanitation Services: Lessons from a Workshop (Karachi, February 23-24, 2005) Pakistani Cities in the 50 percent, and only 20 to 30 percent Box 2 (on page 4) shows that in of operations and maintenance cost in Pakistan, Lahore is best off--its Urban Millennium the water sector is being recovered. consumers can expect access to water for 16 to 18 hours a day in summer and The Urban Challenge No city or town in South Asia has water for 12 to 14 hours in winter. Consumers supply for 24 hours a day, seven days a in Karachi, Peshawar, Faisalabad and Improving water and sanitation service week. In Hyderabad (India), water is Multan have access for only around delivery in South Asia's growing cities provided for only two hours every eight hours per day, with some variation is not about fixing the pipe--it is second day; even in Delhi, supply is a between access for industrial and about fixing the institutions that fix mere five hours a day. domestic users. those pipes1. Box 1: Waterborne Diseases Harm Many Pakistanis Per Year As cities grow and compete in the region and globally, different urban More than three million Pakistanis (UNICEF), in Pakistan 40 percent of services can no longer be dealt with in become victims of waterborne hospital beds are occupied by isolation. Services must come infections annually, of which 1.2 patients suffering from water-related together to enhance the economic million die. Among them 250,000 are diseases. productivity and credit worthiness of children under five years of age, who urban centers. This requires better succumb to diarrhoea and vomiting. Doctors and chemists warn that management, driven by sensible chemical compounds can cause policy, effective structures, and According to recent research by the severe health hazards, including quality skills. Pakistan Council for Research in cancer, diabetes, kidney and heart Water Resources (PCRWR), more diseases, high blood pressure, The current devolution process in than half of the population of Pakistan irritation, headache, as well as Pakistan provides an opportunity to did not have access to clean drinking congenital and dental and bone empower the country's rapidly growing water.The World Health Organization diseases. Bacterial contamination in cities to become internationally and (WHO) has warned Pakistan of water is very common through mixing regionally competitive and meet the increasing demand for basic services. possible dangers from infectious and of sewage, as the required distance However, at present Pakistani and other waterborne diseases. According to between the water supply-line and South Asian cities find this challenge WHO, one hundred million cases of sewerage-line is not kept. daunting.Their population growth has diarrhoea are being registered for been phenomenal--by 1998, 40 treatment in Pakistani hospitals every On average, only 2-4 percent percent of the country's population was year. A survey conducted by PCRWR Pakistanis use bottled water (mineral already urbanized, and predictions are showed that 81,996 cases of water- water), 7-10 percent have a water- that this will move to over 50 percent by related diseases were registered in filter facility available in their houses 2015. But they have not managed to Rawalpindi division alone. According and the remaining 86-91 percent secure the levels of service this to the United Nations Children's Fund use regular tap water. requires. On average, unaccounted-for water in the region is over 40 to Source: Weekly Independent, March 17-23, 2005, Lahore. 1This point was the focus of a presentation by Junaid Ahmad and David Savage on Making Water Services Work: An Institutional Agenda, and affirmed in most discussions throughout the proceedings. 3 Box 2: Defining the Delivery Gap and Benchmarking: Perspectives from Group Discussions Officials from all the cities present at their medium- and long-term visions. the workshop--Karachi, Lahore, While these indicators are not official, Peshawar, Faisalabad and Multan-- they offer a useful starting point and were able to reflect on current service perspective on the state of WSS in indicators and how these differ from Pakistan's major cities. The patchy services impose a heavy cost burden on cities and their people, Indicators: Hours of supply Indicators: Non-revenue water financially and in health and 4 45 environmental terms. Poor people pay Karachi 9 Karachi 30 the highest price. According to the 24 20 World Health Organization 17 40 approximately 25-30 percent of the Lahore 24 Lahore 30 24 20 diseases in Pakistan are gastro- 8 intestinal in nature; 45 percent of the 40 akistanP Faisalabad 10 akistanP Faisalabad 30 country's infant deaths are due to of 24 of 25 diarrhoea and 60 percent to overall cities 8 cities 45 Rawalpindi Rawalpindi infectious waterborne diseases such 24 20 Major Major as typhoid, polio and hepatitis A and 8 40 Multan Multan B. Moreover, lack of regular access to 16 35 water costs households income as 9 50 they need to assign more time to Peshawar 14 Peshawar 25 24 10 obtain water for daily usage2. 0 4 8 12 16 20 24 0 10 20 30 40 50 No. of hours of supply Percentage of non-revenue water Yet, it is possible to perform better, as the experiences of Johannesburg in Present After 5 years After 10 years Present After 5 years After 10 years South Africa, Phnom Penh in Cambodia, Manila in the Philippines, and the corporate water utility at Indicator: % Metered connections Indicator: Revenue collection rate central state level in Uganda have 60 shown. In all these cases, service Karachi 30 Karachi 90 100 100 problems were systematically reduced 40 and 24/7 water supply has become 75 Lahore 65 Lahore 85 the norm. The approaches in these 95 95 locations have varied, from local-level 50 corporatization in Johannesburg and akistanP Faisalabad 20 akistanP Faisalabad 95 of 100 of 100 Phnom Penh to a centralized cities cities corporate structure in Uganda, and to 15 70 Rawalpindi Rawalpindi 100 85 a private-public partnership in Manila. Major Major But they have in common the fact that 30 Multan Multan 90 improvements were not primarily 90 about more bricks, mortars or pipes, Peshawar 10 Peshawar 90 or about getting more resources. 50 100 Instead, they all have managed to 0 25 50 75 100 0 20 40 60 80 100 120 improve water services by getting No. of metered connection in percentage Revenue collection percentage organized through creating institutions Present After 5 years After 10 years Present After 5 years After 10 years 2World Health Organization (www.who.int/countries/pak/en) 4 Managing Karachi's Water Supply and Sanitation Services: Lessons from a Workshop (Karachi, February 23-24, 2005) and incentives that rewarded providers decentralized to Tehsil Municipal local governments and ensure and offered consumers reason to pay Administration (TMAs). Union distribution among local governments. for services. administrations have not been assigned any major service delivery But devolution has also introduced a Devolution Offers Opportunities responsibilities. Fiscally, local new set of challenges, among others governments have been given the in the management of water and In Pakistan, devolution offers new powers to raise some additional sanitation services. First, the scale opportunities to improve services (see revenues and Provincial Finance and costs of delivery challenges has Figure 1). The creation of three tiers of Commissions (PFCs) have been increased in urban areas where local government (District, Tehsil and established to direct the distribution of populations have grown and economic Union Councils) since 2002 opens the resources between the province and demands increased, and in rural areas door to improve service delivery through appropriate local-level policies Figure 1: Devolution in Pakistan and institutional arrangements. In total, 6,473 indirectly elected local Devolution of political power governments were created, with more than 120,000 councillors. Four provincial capitals were designated as City Districts, each further sub-divided into Towns. New governance arrangements make Nazims (or Mayors) accountable, and established · Three tiers Citizen Community elected · Local priority Boards (CCBs) are Decentralization of Distribution of resources setting administrative power to the districts supposed to facilitate citizens' participation in · More operational · Power to raise tax local-level decision- autonomy to the 5Ds of · Fiscal transfer from district level higher tiers of making. Administrative departments New Local Government government to reforms include the creation of district System lower tiers governments with their own departments, given functional · Focused approach · Monitoring by citizens responsibility for delivering services in · Meritocracy and elected sectors like elementary and secondary · Performance-based representatives appraisal system · Civil society's education and health and agriculture. · Specialization vs involvement in Towns and tehsils have been assigned generalization development work · Recognition and · Effective checks `municipal service' responsibilities, rewards and balances although in practice their responsibilities have been De-concentration Diffusion of relatively unchanged, except of management the power for two provinces where functions authority nexus water supply has been Source: http://www.nrb.gov.pk/local_government/figure_1 5 Political and operational accountability lie at the heart of dealing with the institutional challenge. and overcoming deep-rooted fiscal weaknesses in most local institutions. In the urban areas, some municipal authorities have been quite innovative in their approaches to service delivery, experimenting with new options like contracting out and finding ways to improve their revenue. But in many tehsils, technical skills are in short supply. Many posts remain unfilled, or filled by staff without the skills to carry out their designated duties. Even in relatively attractive areas such as Faisalabad, one tehsil is operating with 50 percent of posts unfilled. Anomalies are widespread with relatively junior, unskilled staff now responsible for other staff of a higher professional status and seniority. And even in urban areas, no one has yet come near 24/7 supply. Clearly, Indicators : Staff/1000 connections 6 Karachi 5 4 12 Lahore 10 8 10 akistanP Faisalabad 8 of 7 cities where tehsils are poor, with scattered 11 Rawalpindi 8 populations. Second, the management Major and institutional complexities of 27 Multan 16 devolving responsibilities from 14 provinces to districts and tehsils and Peshawar 12 clarifying their new roles have been 10 daunting. Issues include blending staff 0 5 10 15 20 25 30 Staff/1000 connection from diverse departments; defining the role of WASAs; equalizing delivery; Present After 5 years After 10 years 6 Managing Karachi's Water Supply and Sanitation Services: Lessons from a Workshop (Karachi, February 23-24, 2005) institutional systems are not up to such as in South Africa, the Operational Accountability the challenge. Philippines and Uganda, where the principles of decentralization were Operational accountability demands Making use of the opportunities that actively ensconced in the constitution that owners, operators, and regulators devolution offers requires a different and local government legislation. all clearly know their responsibilities mindset from the past emphasis on and are empowered to execute them, technical issues. It simply cannot be For service providers the test lies in independently or in partnership. business as usual--institutions must who owns their assets. There are Resources should be commensurate be made politically and operationally different options, but it is crucial that with responsibilities. This requires accountable. the choices made are very clear. In clear separation of policy, regulation Uganda, for example, the water utility and provider roles and clear Accountability: still is a national entity, although local ownership and regulatory structures government has become stronger. In (see Figure 1). The Heart of the Chile, accountability was kept at Matter Such separation and clarity of roles national and regional levels and in can be achieved in the following ways: India at state and national levels. In principle there is nothing intrinsically Although local context is always ! The operating agency should have wrong with making different tiers of important and necessitates local an independent board, able to hire institutions politically accountable, responses, there has been great its own Chief Executive Officer provided it is clear who is accountable consistency in the institutional rules (CEO), to whom it can delegate for what. and principles that have guided management functions; reforming cities across the world. In Pakistan, devolution since 2001 has Political and operational accountability ! Operational decision-making set a supportive context for local-level lie at the heart of dealing with the should be within the power of the accountability. However, there still are institutional challenge. responsible institution. The CEO several uncertainties. In some of the should be empowered to take city-focused group discussions at the Political Accountability flexible and operationally relevant workshop, for example, some decisions about human resources delegates were distinctly unclear Political accountability requires that (HR) and to mobilize resources for the responsibilities between different about their roles in relation to capital investment, for example, tiers of government are clearly provinces, and continued to assume a through borrowing; defined, and that the right tier of great deal of provincial control over government is chosen to ensure the key decisions. In most cases, they ! The full costs of service provision service is duly delivered. This is about seemed to assume that higher tier should be borne by the responsible who owns the assets and shares in authorities would need to retain institutions. Those that failed the utility and how they hold the shareholding in water utilities, if not should not be bailed out through providers accountable. fully control them. But the ownership end-of-year transfers or other issues have not really been thought means. Information and planning For example, political accountability through yet, and need to be must ensure upfront knowledge of can be devolved to local institutions, considered in future reforms. costs of collapse; 7 Separation and clarity of roles is the point of departure to ensure accountability. Figure 2: Separating Roles to Ensure Accountability First, the demand for services continues to grow. The population is now estimated at over 12 million, which means basic domestic services Policy have to be expanded consistently. This is difficult, as 60 percent of the · Define the population is estimated to live in objectives informal settlements. Knowledge ­ 24-hour supply about these consumers is fragmented ­ Clean water and it is difficult to reach them through ­ Extended access water connections. On average, · Define the rules household consumers receive water Regulation Delivery from KW&SB for only three to four hours per day. · Enforce the rules · Deliver the service ­ Monitor compliance · Play by the rules Moreover, Karachi is the largest ­ Regulate pricing metropolitan city and major business center in Pakistan, contributing almost 50 percent of national revenues. It has to compete with other cities in The Challenges in ! Measures to ensure universal Pakistan and South Asia for access to services should be investment, which adds to the demand transparent and predictable--for Pakistan for reliable water supply. It is nowhere example, through multi-year grants near its goals in this respect, as to municipalities. The key issue is As Pakistani cities began to business and industrial clients can to price water properly and to be disentangle their own experiences at currently expect at most eight to clear about subsidies. Concerns the Karachi workshop, the pivotal 10 hours of water supply per day. that this will exclude the poor are importance of institutional change ill-founded: as paying customers became confirmed. This is a new way The city does not only need new the poor are already paying for of thinking that will take time to infrastructure to cope with this inefficiency. They will benefit from become established, but there can be demand--its existing systems have pricing that reflects true costs, no doubt that it paves the way for deteriorated for long, due to especially if they can also accelerated reform. inadequate maintenance. For many participate in making key local- years, the KW&SB was simply an level service choices; and Karachi at the Crossroads executing agency for the regional authorities, closely controlled without ! Monitoring of service delivery The Managing Director (MD) of the any significant powers to make its own outcomes should include Karachi Water and Sanitation Board investment and operational decisions. independent assessment, (KW&SB) said his organization is at There was no independent and robust for which sound information the crossroads and that `not reforming monitoring of its performance--it was is essential. is not an option'. neither politically nor operationally 8 Managing Karachi's Water Supply and Sanitation Services: Lessons from a Workshop (Karachi, February 23-24, 2005) held accountable. It therefore lacked incentives to keep its infrastructure up to date, keep in tune with its customer base, keep water losses under control or respond rapidly to customer requests. It still takes at least three to four days to respond to major customer requests, although the current management has at least ensured that minor issues are dealt with generally on the same day. Water losses also are still high--at an estimated 35 percent in transmission points where it has not been able to effectively detect and plug leakage, theft and illegal connections. The MD's reform plan focuses first systems and management levels; No systematic information was built up on improved customer relations. He redeploying staff and managers; over the years. As a result, the hopes to become more proactive in improving technical skills; and, KW&SB does not have a complete dealing with customers, gain their improving the use of private providers, network map that shows connections support and willingness to pay by such as water tankers. and that makes it possible to monitor offering better services, and water supply and total billing. It is well ensuring them better access to While there are many technical known, for example, that water is filled senior management. Second, he challenges, the senior management in private tankers tapped into broken wants improved revenue by dealing sees institutional reform as the water mains and/or by installing illegal with illegal connections, improving fundamental challenge--and have pumps on the water supply lines. recovery systems and offering better received encouragement from their incentives for people to pay. A political leadership (such as the Devolution has meant greater number of project-related reforms Governor of Sindh province and the City are also necessary: speeding up the Nazim of Karachi) to make the most of autonomy, and the current implementation of mega projects devolution to achieve such reform. management sees this as a golden that cut across local government KW&SB is viewed as a key delivery opportunity and incentive to deal with boundaries; institutionalizing the mechanism that can have lessons for these problems. But it has also meant capacity to undertake development other utilities wanting to improve a much enlarged and more diversified works and speed up their execution; efficiency and becoming accountable jurisdiction. Spread over 2,600 square start new projects; undertake a and self-reliant. kilometers, the KW&SB jurisdiction sector master plan study to improve now covers 18 towns and union the strategic approach to project Institutional Challenges for Delivery councils. It is in the process of selection and management; and in Pakistani Cities decentralizing its structure to these improve the use of seawater for daily levels to enable it to adapt to the purposes. Several management The group discussions and role-playing range and variety of demand. reforms are required: streamlining at the Karachi workshop focused on 9 KW&SB is viewed as a key delivery mechanism that can have lessons for other utilities wanting to improve efficiency and becoming accountable and self-reliant. technical and institutional assessments of the current state of water supply in the major Pakistani cities, setting longer term benchmarks and goals and exploring institutional Box 2 on page 4) were not official, they and reform initiatives. Officials from options to get each city to achieve provided a basis for self-reflection on every Pakistani city present said those goals and benchmarks. Options reality and ideal. All the groups swiftly that they lacked such information, considered included that of a line moved from a technical emphasis to a and many believed it was perhaps department, a public water board and focus on institutional challenges in the most critical area to address. a corporate utility (either with or Pakistani cities.This provides a starting without private sector participation). In point from which to take the debate ! Performance benchmarks and choosing options, groups focused on: about options in Pakistan forward. monitoring: In the absence of sound Table 1 (on pages 14-15) provides an information, Pakistani cities have ! Political accountability of the insight into international experiences not been able to monitor the national, provincial, city district, discussed in Karachi that could help performance of service providers. In town and union level, clarifying inform these discussions. the international cases discussed, which tier of government is owner baseline data comparisons made it or policymaker, regulator and Key Lessons: possible for the institutions involved operator, what their contribution is to monitor their own operations, and to development and O&M Making Things Work for independent evaluators, political expenditure, how they can avoid supervisors and the public to judge overlap and achieve consistency There is no single solution or model their performance and hold them between technical, economic and for water management that can be accountable. Defining such political jurisdictions; and applied everywhere: One size does benchmarks provides incentives to not fit all. However, international and improve information, which in its ! Operational accountability, Pakistani city experiences all highlight own right becomes an important focusing on separation of policy, a number of factors crucial for effective driver of change. regulator and provider roles, reform in most contexts: integration and independence of Strategy provider functions, composition of Information the board (if applicable), ! Knowing the choices: There have transparent pricing and subsidies, ! Reliable information: been very different experiences in access to services and monitoring Internationally and in Pakistani the specific application of and regulation. cities, the importance of institutional models. Uganda has a information as a management central government owned The assessments enabled all groups to resource is very evident. Without corporate utility and Manila a develop a sense of the gap between information, utility managers are centrally driven public-private their current situation and what they not able to keep track of their partnership; Johannesburg and would like to achieve. Although the customers or of problems in Phnom Penh have opted for indicators developed in the course of delivery, or to plan roll-out of corporatized entities owned by the discussions (presented in the figures in connections and other technical city, but managed in terms of own 10 Managing Karachi's Water Supply and Sanitation Services: Lessons from a Workshop (Karachi, February 23-24, 2005) benchmarks and with clear accountability. Phnom Penh has also used the private sector in some areas, but pragmatically where management needs required that, rather than as a matter of principle. The point is that these different institutional models can be used either on their own or in combination. For example, although private sector involvement is still quite controversial in Pakistan, the international experience shows that the involvement of the private sector was mostly not an ideological choice, but a strategic one.The private sector does not always offer a solution, but private operators may add useful innovation. The more critical issue is keeping policymaking, regulation and provision separate, and therefore ensuring a robust accountability framework. !Strong political leadership: In successful cases, like Johannesburg, the initial drive for reform and the degree to which it has been sustained came from all formed part of a broader vision have the overall framework within political support at the highest of urban service delivery and which the specific steps can then level. Currently, for example, initial reform, and water planning was be driven. Incrementalism without plans to move towards a water carefully crafted into a broader a plan does not work. concession in Johannesburg are plan. In Manila the need for very wavering, largely because the top practical step-by-step ! Stick to the principles, while being political leadership is not quite sure arrangements was emphasized, pragmatic in strategy: Managers that is the direction they wish and there is reason to take care come under many pressures--for to follow. that the whole reform process is example, to make `politically not merely a broad vision friendly' appointments or renege !A comprehensive plan: Where statement, difficult to achieve in on key initiatives because they are local utilities were established, they practice. But it is still necessary to perceived as too risky. Those who 11 Box 3: What Delegates Wanted to Know: Some Prominent Questions at the Karachi Workshop Question Perspectives from the Discussions How does one decide the direction and ! Ensure you remain functional and not overtaken by big ideas rate of change, and how do you prioritize at the cost of practical delivery. to avoid being swept away by change? ! Plan ahead: analyze the situation technically, institutionally and politically and develop a sequence of actions. ! Remain flexible: have a plan, but do not allow it to prevent innovation. ! Structure political accountability carefully to balance the interest of owners, providers and consumers. Is reform enough: is what is needed not ! There can be no doubt that it cannot be business as usual and radical change? that far-reaching change is needed. It is crucial to understand the issues and trends and to pace reform or change accordingly. ! Devolution has set a platform on which sensible reform could be built ­ but this is not to deny the need for far-reaching change. What about the poor: does cost recovery ! The poor already carry the burden of inefficiency more than not mean they will lose out even more? people with resources, because they cannot buy their way out of the bad services. ! Involve the poor. Do we have adequate data to base ! All Pakistani cities lack good data and this is a major problem; reform upon? that is exactly why one of the key reforms has to be improvement of data. ! In international case studies, efficiency and accountability improved as data improved, and the converse is also true.You cannot wait for data before you reform; but you should ensure it remains integral to the process. Are we not being hooked into a ! Privatization is not the solution to all problems, or the only preconceived privatization agenda? solution. It is crucial to analyze the options, choose between them or combine them on the basis of good information and rational thinking. What next? ! Reform requires local ownership. The ideas generated here could now be taken forward in each locality, and where appropriate and agreed, the WSP-SA may be able to render advice or help mobilize expertise. ! It is not just a local process: the restructuring of WSS is a matter that cuts across the levels of government, and from formal government structures to dedicated structures and utilities. 12 Managing Karachi's Water Supply and Sanitation Services: Lessons from a Workshop (Karachi, February 23-24, 2005) have succeeded have been able to arrangements around ownership, At the core of this is political and recount cases of resisting these debt management or relief and operational accountability. This pressures. Simultaneously, being other management issues could demands effective links between principled does not mean not provide powerful incentives as well. services and institutions, clear being pragmatic: it is crucial to Making the roleplayers clearly designation of roles and the right adapt to the demands as they responsible for specific aspects of incentives. arise, and to be able to change governance, management and course if the situations demand it. service delivery is a way of The Karachi workshop facilitated building incentives into the system important dialogue between key ! Change processes have to be for better performance. stakeholders in the WSS in Pakistani managed: In every successful cities. With important perspectives international case, care was taken ! Sustainable revenue: Reform plans gained from international to involve stakeholders-- and initiatives fall flat if the presentations, it is now possible for management and staff in utilities resources are not there to sustain Karachi and other cities in Pakistan to and municipal departments, trade them. Ideally, local revenue look at their own situations and the unions, consumer groups and generation--based on economic considerable institutional challenges individual consumers, private pricing of water--is the approach they face. The workshop was a step in sector clients and possible to follow, but in the interests of a process though, and the challenge providers, other tiers of universal access, higher tiers of would now be to take forward this government, and all other relevant government sometimes have to dialogue on reform within each parties. The message from the provide support to local institutions. province and city. Therefore: cities of Johannesburg, Phnom This needs to be calculated when Penh, Manila, and from the central reforms are planned, and the ! Important political, technical and state model in Uganda was: support must be clearly identified civil society stakeholders need to be "Consult but be decisive; and targeted. consulted and informed of options; communicate at all times; prepare to meet resistance, especially from The Way Forward ! Involvement of city and utility unions and incumbent leaderships will move the agenda management." forward on the basis of a more The current devolution process in systematic understanding of Pakistan provides an opportunity to Rewards and Incentives issues and options; and empower the rapidly growing cities to become competitive and meet the ! Incentives: It is important to ! The WSP-SA is well placed to remember that change becomes increasing demand for basic services. continue to provide access to possible only if key stakeholders But this needs a focus on institutional global experience and expertise-- see it as in their interests to issues first, not on technical matters from different agencies--to assist support it. The most evident primarily. Important as technical Pakistani cities and water utilities incentives are challenge funds, capacity and fiscal resources are, they design a way forward. Karachi such as in South Africa where will only work in the interests of provides a difficult but possible cities like Johannesburg have been consumers and cities if they are starting point that could well be assisted to restructure. But the managed well. extended to other cities. 13 It is crucial to adapt to demands as they arise, and to be able to change course if the situations demand it. Table 1: International Experiences Johannesburg, South Africa Phnom Penh, Cambodia The Challenge ! WSS reform part of broader reform drive; ! In 1993, daily water supply less than ! Started 1999, sparked by financial and 10 hours; institutional crisis; ! Only 25 percent coverage; ! Institutions fragmented, performance not ! Collection rate of water charges measured and policy not implemented; and 48 percent; ! Infrastructure and service coverage in ! 300 cases of illegal connections every decline, backlogs growing, staff morale year and annual water loss 73 percent; and and productivity low. ! 12 percent metering. Key Reforms ! Reform covered all services; ! Considered privatization but lack of ! Privatizing gas; corporatizing recreational political acceptance; and facilities; public health management; ! Focus on greater autonomy in the ! Utilities formed for water and sanitation; management, within a public sector model. ! Electricity and waste management PSP; and ! Water utility with a performance-based contract. New Arrangements Policy, regulation and operational roles Separation of roles: separated: ! Policy role with Board of Directors; ! Elected council sets policy; holds ! Operations with Managing Director and provider accountable; five departments, able to use private ! Contract management unit is operators; independent regulator outside policy ! Credible billing, information are incentives and operations; and for payment; and ! The provider charges a base fee ! Accurate and transparent, and takes profit share. financial systems. Service Outcomes ! 24/7 water service now the norm; ! 24/7 water supply; ! By 2004 the company showed first profits; ! High levels of billing and low non-revenue ! Service more flexible; water; ! First six liters of water free of charge, ! 100 percent metered connections with advancing universal access; and high accuracy metering and leak ! Customer care center largely functional, detection; but turnaround time can improve. ! 24 hours leak repairs and almost full elimination of illegal connections; and ! Customer satisfaction helped by education, incentives, enforcement, and responsive services. 14 Managing Karachi's Water Supply and Sanitation Services: Lessons from a Workshop (Karachi, February 23-24, 2005) Manila, Philippines Uganda ! BOTs resolve national power crisis in the 1990s; ! Despite large investments only three of 12 targeted towns viable; ! Top level national political support for reform; ! Arrears and deficit high, collection low, 36 staff members ! WSS utility in Metro Manila (11 million people) for every 1,000 customers, staff and bad office practice; under severe financial pressure with weak profits, ! Water leakage and sewage spillages; cash flow and revenue recovery; ! 15 to 21 hours supply; and ! Only 61 percent water and 8 percent sewerage ! Slow response to complaints: one week. connections; and ! Many Illegal connections. ! Brought private sector into water supply; ! National utility model; and ! Policy, operations and regulation separated; ! Improving performance through internal reforms (PIPs), ! Operations concessioned; and commercialization and some private sector participation. ! Comparative benchmarking. Concession since 1997: ! New Board and Management appointed; ! Quasi-independent regulator; ! Corporate Plan with long and short term goals; ! Implementation in two zones benchmarked; ! Some private sector participation and outsourcing; ! Local and international operators owner split ! Staff consulted on restructuring, incentives; and of 60:40; and ! Head Office focus on asset holding and regulation. ! Debt servicing through `concession fees'. ! More than 1.5 million poor people have direct ! Most areas have 24-hour supply; connections; in 2003 alone, 300,000 poor people ! Response time to complaints improved to 36 hours; received direct connections; ! Total connections up from 50,826 in 1998 to 100,475 in ! Average monthly consumption per poor household 2004 and billed ones from 31,284 to 83,020; 25 cubic meters, same as system-wide ! New connections per year have risen from 3,317 to residential average; about 14,000; ! Average cost to poor is US$5.40 per month, ! Staff per 1,000 connections has been reduced from less than four percent of their income; and 36 to 10 in 2004; and ! Two-zone approach made comparative ! Operating profit increased from 1.9 bn Ugandan Shilling to benchmarking possible. 12.3 bn in 2004. 15 ABOUT THE SERIES: Pakistan, like all countries of South Asia, urgently needs to address the growing challenge of service provision to the urban poor. For long, the country has needed viable forums to bring together key stakeholders such as policymakers, municipal staff, and nongovernmental sector all of whom are struggling to find new ways to solve old problems.Water and Sanitation Program-South Asia is one of the leading agencies trying to fill this vacuum by Water and Sanitation Program- establishing a consultative sector debate at the federal, provincial and local South Asia 20 A, Shahrah-e-Jamhuriat, Ramna 5 levels in the country. Urban Roundtables organized by WSP-SA bring G-5/1, Islamabad, Pakistan stakeholders together to discuss operational problems and priority policy interventions.The Roundtables have generated a lively and influential debate Tel: +92 (51) 909 0161 with clearly articulated calls for provincial and national policy interventions. Fax: +92 (51) 282 6362 There is growing interest in widening the participation and scope of the debate. E-mail: wspsa@worldbank.org The proceedings, key issues, and recommendations of these Roundtables are Website: www.wsp.org disseminated through the publication of Shehr ki Duniya with the purpose of sharing lessons learnt, highlight emerging issues, documenting best practice, and fostering a better operating environment in the sector of water supply and sanitation services. Box 4: Karachi's Major Challenges in Water and Sanitation Provision ! A growing demand for Revenue: Target and achievement services: The population is now estimated at over 12 million--60 1994-95 percent in informal settlements. As the country's major 1995-96 commercial center, the city has many businesses and industries. August 2005 1996-97 Under devolution, KW&SB has a WSP MISSION much larger and more diverse To help the poor gain sustained access to improved 1997-98 water and sanitation services. jurisdiction over 2,600 square kilometers, comprising 18 towns. WSP FUNDING PARTNERS 1998-99 The Governments of Australia, Belgium, Canada, ! Intermittent water supply: Denmark, Germany, Italy, Japan, Luxembourg, the Netherlands, Norway, Sweden, Switzerland, and the The average household receives 1999-00 United Kingdom, the United Nations Development water supply for only three to Programme, and The World Bank. 2000-01 four hours a day. ! High levels of water losses: 2001-02 An estimated 35 percent! 2002-03 Budget ! A weak knowledge base: Collection This workshop was supported by Patchy/inaccurate information Swiss Development Cooperation and AusAID. about consumers, networks and 2003-04 connections. 0 500 1000 1500 2000 2500 3000 ! Low revenue collection: ! Poor customer relations: Collection is only about two- Response times to customer thirds of the KW&SB budget (see requests range from three to Swiss Agency for graph at right). four days. Development and Cooperation ! Distorted institutional ! Devolution: The devolution incentives: KW&SB is an process in Pakistan creates a executing agency under regional framework for greater local control; it cannot make its own autonomy and the challenge is to investment and operational use this to make KW&SB more decisions and lacks performance directly accountable to the City incentives. and customers. Created by: Roots Advertising Services Pvt Ltd Source: KW&SB Printed at: PS Press Services Pvt. Ltd., India