60137 Public-private Services For 200 Improving Water Utilitypartnerships October The Poor Through Delegated for small piped water Management schemes Field Note Serving the Rural and Small Town Poor A review of progress in seven African countries Public-Private Partnerships For Small Piped Water Schemes This field note reviews the first generation of Public-Private Partnerships (PPPs) for small piped water schemes in seven countries: Benin, Burkina Faso, Mali, Mauritania, Niger, Rwanda and Senegal. The field note proposes a framework for moving towards more sustainable piped water PPPs. The framework comprises four building blocks to consider: improving contracting practices, the enabling environment, the capacity of the PPP stakeholders, and information tools and services. About one quarter of the population living in rural areas and in small towns are served through piped water schemes Summary Introduction Public-private partnerships (PPPs) are common in the urban utility sector, but were This field note reviews the experience with Public-Private Partnerships (PPPs) first introduced into the rural water supply for small piped water schemes in seven countries: Benin, Burkina Faso, Mali, sector in the early 2000s as an alternative to Mauritania, Niger, Rwanda and Senegal. the community-based management model, which, after 20 years as the prevailing The purpose of the field note is to identify key lessons and success factors arrangement for water service delivery, had from the first generation of PPPs in the rural and small town water sector in fallen short in terms of meeting performance Africa to guide countries in their development of national PPP action plans expectations especially for piped water systems. and to inform the implementation of WSP's Sustainable Services through Domestic Private Sector Participation (SS-DPSP) initiative. The introduction of public-private partnerships brought with it a framework Small piped water schemes are of strategic importance as one quarter of the to address key issues, such as asset population living in rural areas and in small towns today are already served ownership, performance monitoring, and through piped water schemes. regulation of water operators, which until then had remained unresolved in the rural All the countries have adapted PPP arrangements as an alternative to the and small-town water sub-sector. community-based management model to ensure sustainable service delivery. A significant number of rural and small-town PPPs were introduced in the early 2000s to complement decentralization water service delivery contracts have been reform. put in place over the past few years, but little analytical work has been done to review By the end of 2008, a quarter of the piped schemes were under PPPs. The this experience. This paper consolidates landscape of private operators is diverse and they vary in size. Private lessons from the first generation of public- sector participation improves water services and ensures efficiency gains, private partnerships and identifies factors but challenges remain: ownership of the PPP process by key stakeholders, that are likely to contribute to the successful scaling up of delivery. sustainable service delivery, implementation of effective regulation and sustainable financing of investments. The observations made are based on a desk review of recent rural and small-town This field note proposes a framework for setting up sustainable small piped studies of public-private partnerships water PPPs. The framework comprises four building blocks: improving and on an overview of lessons from the contracting practices to ensure win-win PPPs for all parties involved implementation of the WSP Domestic (consumers, asset holders and operators); putting in place an enabling Private Sector Participation activities in Africa since 2005. The study includes case environment for the operators to ensure regulation, access to maintenance studies from the following Western and and financial services and products; building the capacity of the PPP Central Africa countries: Benin, Burkina stakeholders to ensure that adequate asset holding authority and regulation Faso, Mali, Mauritania, Niger, Rwanda and Senegal. is exercised and to build a professional private sector; and, developing sound information tools and services to improve sharing of lessons, monitoring and The core concept of the original French reporting in the sector and scheme management. version of this paper is `delegation de 2 Public-private Services For Improving Water Utilitypartnerships The Poor Through Delegated for small piped water Management schemes The basic concept incorporates all forms Among the countries surveyed, Senegal of contractual relationship between an has the highest penetration levels in terms `operator' and an `asset owner', whether of piped water for rural communities: fifty it is a management, a lease (affermage), or six per cent of the county's rural population a concession contract. The operator role had access to piped water. It is anticipated can be fulfilled by a private company, an that by 2015 this will exceed 80 per cent. association, or a community group, as long as the operator is a legally recognized entity The share of piped water is likely to increase that operates under a service agreement. in the other countries too, due to the priority given to piped water in respective national Millennium Development Goal plans. Background In the sample countries there were 4,800 Access through piped supply is piped water schemes in operation in increasing 2008. The range of production levels of these schemes varied widely, from 5m About one quarter of the populations to 2,000m per day, and the populations living in Africa's rural areas and small The Refane water tower in Senegal served ranged from 500 to 200,000. The towns are served through piped water types of piped water scheme were fairly schemes. Taken together, the number of homogenous across the sample countries gestion de service public', which means people in rural and small towns served and fell into four basic categories according essentially delegation of the management by piped water schemes in the seven to their size and level of complexity: of a public service. However the most countries reviewed is nearly 13 million, 1) schemes with a single communal meaningful term in English was found to be which in 2008 was approximately 25 per distribution point; 2) schemes with multiple `public-private partnership', hence its use cent of the rural and small town population communal distribution points; 3) schemes in this publication. (see Figure 1). with multiple distribution points and household connections; and 4) multi-village schemes (see Table 1). Besides piped water schemes, water Figure 1: No. of schemes and % of rural population served by piped schemes can be made available to rural areas and small towns directly from the water 1400 1400 source by means of hand pump boreholes 1200 1200 and modern wells. These types of `point source' water points are good solutions 1000 1000 in places where settlements are scattered 800 800 and groundwater is limited but shallow. On 600 600 the other hand piped water schemes are 400 400 well suited for dense settlements requiring higher levels of water production and where 200 200 deeper boreholes are needed. 0 0 SEN RWA MAL NIG BEN BUR MAU 1 The paper has been freely translated to ensure the flow in English and French. As a result not all sentences and paragraphs No. of piped % of rural population served by piped schemes correspond to the French version, but the findings and conclusions schemes are the same. Consumers generally pay from US$ 0.5 to US$1 per m of water Table 1: Scheme characteristics Type Characteristics Population Network Storage Production served length capacity capacity Scheme with a single No distribution network, communal 500 - 1,000 < 0,1 km 2 - 10 m3 5 - 10 m3/day communal distribution distribution point at the borehole, limited point storage underground or at low elevation Scheme with multiple Limited reach of the network, stand posts 500 - 2,000 < 2 km 10 - 50 m3 5 - 40 m3/ communal distribution only, limited storage capacity at low day points elevation Scheme with multiple Extended network, stand posts and 2,000 - 10,000 2 - 10 km 10 - 50 m3 20 - 300 distribution points and household connections, higher capacity m3/day household connections storage at higher elevation Multi-village schemes Larger piped schemes with transportation 5,000 - 200,000 10 - 250 km 10 - 50 m3 100 - 2000 of water to up to dozens of villages m3/day In practice it is often the case that more than one technology type is used within a Figure 2: Average water production per scheme (m3/ day) particular area or settlement: for example the review noted that point sources in 700 villages that were also served by a piped 600 scheme. This overlapping of water source 500 types can pose difficulties in the day-to- day management of water, as discussed 400 below. For piped water schemes, each of 300 the countries in the study has set minimum 200 thresholds for the viability of proposed 100 schemes. In general a piped water scheme is considered to be viable if it is serves a 0 RWA SEN MAL NIG RWA MAU BUR minimum of 2,000 people. In countries (gravity fed) (pump fed) with very small populations however, the minimum can be much lower, as in Mauritania, where it is 500. Piped water schemes that have either a where the types of water sources available, schemes covered in the survey varies single or multiple communal distribution namely high-level borehole flow in Senegal significantly from country to country, points represent 50 per cent of the piped and gravitation systems in Rwanda, suit ranging from 20m per day in Burkina Faso water supply-system networks and are these schemes. to 6m per day in Rwanda. found mainly in Burkina Faso, Benin, Mali and Niger. Multi-village water schemes As shown in Figure 2, the average amount The water volumes produced in the are found mainly in Senegal and Rwanda of water produced by the piped water Rwanda schemes are exceptional, as many Public-private Services For Improving Water Utilitypartnerships The Poor Through Delegated for small piped water Management schemes also tend to have higher levels of water consumption per capita per day, and more affordable prices for the consumer. The presence of competing water points, such as wells, hand pumps and surface water, which are less expensive or free, has a negative impact on the level of piped water production. These correlations were found within as well as across all the countries surveyed. The production of water remains highly dependent on hydrocarbons, although the use of solar power is increasing. There are two key problems (apart from the environmental considerations) with relying on energy generated from hydrocarbons: the price of water is highly sensitive to Solar panels for a small piped water scheme in the region of Kayes in Mali fluctuations in the price of oil and the operation and maintenance costs of diesel powered systems are high. Table 2: Scheme energy sources across the countries In the seven countries surveyed, more than 60 per cent of the piped water schemes Energy source Proportion of the schemes are equipped with diesel-powered 10% 20% 30% 40% 50% 60% 70% 80% 90% engines or generators. Depending on the Diesel BF ML,NG MR,SN pumping needs and the cost of oil, the energy costs tend to represent between Solar RW,SN MR BF,NG ML 30 per cent and 50 per cent of recurrent operating expenditure. The price of one El. Grid OC SN BF liter of diesel can go up to US$ 2 in the most remote areas. Despite this high cost, Gravity RW the populations of these countries often BF: Burkina BN: Benin MR: Mauritania ML: Mali : Average prefer hydro-carbon energy to alternative technologies, as can be seen by the fact NG: Niger RW: Rwanda SN: Senegal OC: Other countries that oil-based power is more common in rural areas. schemes are gravity fed. Where pumping provided gives an indication of the average As an alternative source, solar energy is required, the average production level level of water production, i.e. where there has reached a significant penetration varies between 20m per day in Burkina is high water production the tendency level, although it is still far from achieving Faso and 0m per day in Senegal. is to find water systems with a good its potential. Nearly 20 per cent of the number of connections and more often piped water schemes are equipped with In general the size of the water systems productive use of water for livestock and photovoltaic pumping systems. This is along with the level of the water service irrigation. High water production schemes largely a result of the Comité permanent 5 Public-private partnerships are a response to the prevailing community-based management model which has dominated the sector over the past 20 years. Inter-Etats de Lutte contre la Sécheresse connection), 2) the production costs charges for equipment and facilities with a dans le Sahel (CILSS) regional solar (energy, maintenance, personnel, taxes and lifespan of less than 20 years are included. program which has been supported for miscellaneous levies etc), 3) the volume over 15 years by the European Union. of water sold, and 4) the depreciation In some instances national guidelines for charges. In some cases the tariffs levied are cost recovery do not correlate accurately When it comes to solar power, Mali is at higher or lower than the range given above: with the realities of how the water services the forefront since the 1970s with 50 per for example, the tariffs applied for small are provided and sustained over time. In cent of the country's piped water schemes gravity schemes in Rwanda and for very Rwanda a recent tariff study concluded equipped with solar pumping systems. large schemes in Senegal are lower. On the that following the tariff guidelines for full Following Mali in terms of solar use are other hand higher tariffs tend to be applied cost recovery was only practical in the case Niger, Burkina Faso and Mauritania. While to schemes that are sensitive to diesel fuel of gravity systems where no pumping or solar power is reliable and easy to use, costs during a fuel crisis. treatment of water was needed. The review there are technological constraints that noted however that in most countries meter need to be overcome to mainstream solar Depreciation charges included in the use was widespread and fixed fee billing power. Water solar pumping capacity water tariff are non-cash expenses that was becoming less common. today is only 70m per day for a pumping reflect the replacement value of assets level of 60 meters for instance. In addition, that have lost value as a result of wear and In all the countries surveyed it is usually better management of the demand and tear or obsolescence. The proportion of the case that the tariff varies according to better management of ownership by the depreciation costs reflected in the water the type of distribution point. The review local population and governments are tariff is determined by each country's observed that in some cases tariffs for needed. national policy framework. In Rwanda, private connections were lower than those Burkina Faso and Mali all depreciation for stand posts, which at first glance would Less than 10 per cent of the scheme charges are required to be included in the seem illogical, as the level of service for a is connected to a low-voltage grid water tariff, whereas in Senegal, Mauritania, private connection is higher. However the because of the poor rural electrification Benin, and Niger only the depreciation apparent anomaly lies in the fact that in penetration in the countries surveyed. Senegal and Burkina Faso show the most favorable statistics. The ongoing rural electrification programs in Senegal, Mali Figure 3: The growth of water schemes in Niger and Burkina Faso should improve this and 900 as schemes are connected to the grid, it TOTAL: 850 should significantly reduce operation and 800 maintenance costs. It is worth noting that 700 Rwanda differs from the other countries, 600 as the piped water schemes there are 500 gravity fed. This is made possible by 400 the mountainous landscape and the strongly flowing water sources that can be 300 harnessed. 200 100 Users generally pay US$ 0.5 to US$ 1 0 per m3 of water (in West African francs 1970 1975 1980 1985 1990 1995 2000 2005 2010 this is 250 to 500 FCFA per m). Water tariffs depend mainly on four parameters: Source: Situation analysis for the development of a WSS guide in the rural water and sanitation sector, 1) the service level (stand post, private June, 2009 6 Public-private Services For Improving Water Utilitypartnerships The Poor Through Delegated for small piped water Management schemes Organization's recommended standard and communities in the management. of 35 liters per day for each person. As a result of the establishment of the Very often households with piped water community-based model, good practices also draw water from free water points were introduced into the sector, the most such as wells and hand pumps. Hence, important being the sale of water by design assumptions of 35 liters per day volume, and replacement funds (savings for systematically result in oversized schemes future infrastructure expenditure). that are unlikely to be financially viable. Despite the relative success of the Reasons for setting up public-private community-based management model partnerships in Senegal and in certain parts of the other countries, the model did not meet In Africa's water sector, public-private expectations in terms of performance partnerships came about as a response and sustainable service delivery. There to the prevailing community-based were problems with transparency, organization management model. Piped citizen accountability, cost recovery and water schemes were relatively uncommon implementation capacity (in terms of both in most of the countries surveyed until management and investment projects). the early 1980s, only gaining prominence These shortcomings resulted in unreliable A private operator installing a water pump during the international decade for drinking services. For instance, the 2010 sector water and sanitation (1981-1990). review in Burkina Faso concluded that 34 per cent of piped schemes were not most cases rural households with private Originally, the schemes were managed at functioning. connections cover the full cost of installing community level by `village management the water connection, and relative to committees'. This collective approach Between 2003 and 2005, in response household income this can be high: for drew on the experience of the `water point to these difficulties, governments in example the average cost of a private committees' that had been put in place these countries began to engage private connection in Senegal is US$ 200. Often, to manage hand pumps in conventional sector organizations to operate small households are charged the same tariff rural water supply programs. However, water schemes as an alternative to the as kiosk vendors, who in turn need to since the village management committees community-based management model. For sell water at a higher price to cover their were not legally recognized, lacked the governments, promoting this new approach expenses and salaries. necessary skills, and did not apply formal has not been easy, especially given the management practices, the schemes often fact that communities do not always trust While the cost of producing piped water failed or were simply abandoned. the private sector. Fortunately there were and water distributed depends to some pioneering initiatives which could be drawn extent on economic circumstances, In response to these difficulties, the on, such as the introduction of fee-based the scheme design and the policy user association or community based management by private water scheme dimensions of each country also play an organization (CBO) management model managers in Mauritania and Niger in the important role. At the system design stage was developed. In Senegal these bodies 1990s. Figure 3 shows the growth of water prevailing assumptions about per capita are called associations d'usagers de forage schemes in Mali. These experiences are water consumption need to be critically and in Rwanda régies associatives. The still used as benchmark references in Africa assessed. In the countries surveyed, the objective of the CBO model was to entrust today. per capita water consumption from piped piped water management to formal and schemes ranges from three to 25 liters legally recognized organizations that were Decentralization ­ An opportunity for per day. This is less than the World Health well organized, while also involving users public-private partnerships. With countries 7 Under the generic PPP arrangement, there is a contractual agreement between the contracting authority, the asset owner, and the operator for the delivery of water services. implementing decentralization reform level of agreed technical, investment and The monitoring or business support agent since the 1990s, the ownership of assets financial responsibilities of the operator, the is in charge of collecting and analyzing has been transferred from central to contracts vary from simple management operational data, and providing advice and local governments. The specifics of contracts, to more complex affermage- decision-making inputs. The collected data decentralization reform vary from country to lease and concession contracts. is also used for regulation. country: for example some of the countries lack implementation laws, while others The regulator is independent from the Responsibilities assigned to stakeholders have decentralized responsibilities without contracting entity and the operator. The vary from country to country but a generic also decentralizing budgets. Those leading regulator ensures contract compliance, framework is presented in Figure 4. the way are Mali, Niger and Rwanda. acts as an arbitrator of disputes, monitors Contracting authority is devolved to local operational risks and gives guidance on governments, but actual implementation As assets were transferred to local mitigation measures to be taken. varies from country to country. In six out governments, most countries wanted to separate ownership of assets from day- to-day operations to ensure that internally- generated water revenues were ring- Figure 4: The PPP stakeholders fenced and not allocated for expenditures unrelated to water service. Consequently, six of the seven countries, namely Mali, Regulatory Agency, central government Niger, Burkina Faso, Benin, Rwanda and Senegal, promoted the contracting of services to either a private operator or a Regulator central legally recognized water user association. government Some countries established or are establishing specific statutory frameworks: in Mali, the law requires local government to contract with a legally recognized user Contracting Operator association or private operator for service authority delivery; in Rwanda, the contracting of Local or central a private operator is emphasized in the government, CBOs Private service providers, national sector strategy. users association Monitoring/ support agent Implementing PPPs ­ Where are we? Private service provider Basic institutional and contracting arrangements Common functions and roles Contracting authority Local governments Under a generic PPP arrangement, there is a contractual agreement for the Operator Private service provider delivery of water services between the Regulator Government services contracting authority, the asset owner, Monitoring and support services Private service provider and the operator. Depending on the 8 Public-private Services For Improving Water Utilitypartnerships The Poor Through Delegated for small piped water Management schemes Sanitation Act (SPEPA) of 2008 however permits the transfer of contracting authority to local governments (communauté rurales) on a case-by-case basis according to criteria to be defined in a decree. Private sector participation ­ The heart of reform. Participation by the private sector is central to the reform process in nearly all the countries. The contracting authorities can contract services out to private, public or community-based organizations, although most of the countries explicitly promote private operators. Consequently, most of the contracts in Benin, Burkina Faso, Mali, Niger and Rwanda are now given to private operators. Women fetch water from a stand post in Rwanda In Mauritania, Agence Nationale d'Eau Potable et d'Assainissement (ANEPA) is of the seven countries surveyed (Benin, exist between the local governments, water a private non-profit association that has Burkina Faso, Mali, Mauritania, Niger and users associations, and private operators. been created to develop and monitor Rwanda), the contracting authority has The water user associations are therefore rural and semi-urban water supplies. In been devolved to local governments. Often formal participants in the decision-making effect ANEPA remains under government however, the asset transfer from central process. control since it receives annual subsidies to local government is not automatic, but equivalent to two-thirds of the cost of done case by case. This is how it was In Mauritania, the central government, water from the government. At the local handled in Burkina Faso, Mali, Mauritania through the ministry in charge of water, level, ANEPA awards contracts to private and Niger. still remains the contracting authority. In scheme managers, which in most cases this case central government has given are individuals, not firms. In 2008, ANEPA In practice, local government contract the regulator, Autorité de Régulation had some 225 scheme managers under authority is in place only in Mali, Rwanda (ARE), the authority to put out tenders and contract. The revision of the Mauritania and Benin. In these countries tendering recommend operators to the ministry as Water Act in 2005 has put the monopoly processes and procurement of services are the devolution of the contracting authority position of ANEPA in question and opened effectively managed by local governments, to local governments in accordance with up the system to all private operators, which are known as collectivités territoriales the legislation is not yet effective. Recent making it more competitive. in Benin and Mali and districts in Rwanda. projects such as PIR Brakna and Projet Eau In Niger, it is mainly the water user Gorgol Guidimakha (PEGG) are, however, Unlike in the other countries, in Senegal, associations which contract out the paving the way for the devolution of water user associations are the main service delivery to a private operator and contracting authority to local governments providers of piped water services, however in turn exercise the role of contracting in Mauritania. private operators are not excluded. The authority. This function should over time be process of delegating the service to transferred to local government as it gains In Senegal water services remain under user associations began in 2000 when the capacity to take ownership of the asset. the authority of the central government's the government entered into interim In Benin, tripartite contract arrangements ministry of water. The Water Services and service agreements (license d'exploitation 9 The great majority of the PPP arrangements adopt affermage-lease principles. The operators are generally given limited financial responsibilities. provisoire) with 183 piped water user in Burkina Faso, Mali and Niger, but they service that can facilitate monitoring and associations (called ASUFORs) under do not generally intervene in rural areas regulation. A system collecting, analyzing a pilot reform project that later led to and often the regional water services and communicating information on key the contracting principles under the departments intervene on behalf of these operational performance indicators is Service Public de l'Eau Potable et de regulatory agencies. The review noted indispensible for regulating contracts. l'Assainissement (SPEPA) act. Whilst the however that ARE in Mauritania (as of The scope of such a system should be decree for implementing the SPEPA act is 2006) and the Rwanda Utilities Regulatory national and (unlike systems for monitoring pending, another 178 service agreements Agency (RURA), as of 2008 have monitored finite projects) this system needs to be were expected to be granted in 2009. contracts themselves under their own sustainable. budgets. Regulation still largely under ministry Mali has since 1993 experimented with control. The regulatory function remains In Senegal, the water ministry's division for business development service providers under the ministries in most cases. In the operations and maintenance (DEM) plays and since 2004 two (soon to be three) BDS countries where the regional water services the dual role of contracting authority and providers ­ known locally as suivi technique departments are relatively well established, regulator. For this reason the authority to et financier or STEFIs ­ have been providing namely Benin, Burkina Faso, Mali, Niger award contracts has not been transferred technical and accounting assistance and and Senegal, these departments play to local government and the sector remains advisory services to the local government an important advisory and arbitration largely unregulated. contracting authorities and the operators. role among local stakeholders (users, The BDS are provided on a cost recovery operators, local governments) and act as Mali and Niger have business development basis to more than 0 operators and the the de facto `local' regulator. service (BDS) providers in place and cost of the service is included in the water There are some sector regulators in place Senegal is piloting a mobile-2-web support tariff (in 2008 this amounted to FCFA 20, Table 3 : PPP stakeholder overview in by county Country First PPP Asset holder/ Regulation Water provider profile No. of PPPs in Performance in place contracting authority authority place (2009) monitoring system Benin 2006 LG MIN PSP 130 TBI Burkina 2009 LG MIN PSP 125 TBI Mali 2006 LG MIN/REG PSP 20 "STEFI" Mauritania 1994 CG REG PSP; ANEPA 350 "CMSP" Niger 1990 LG MIN PSP 298 "BCC" Rwanda 2004 LG REG PSP 230 TBI Senegal 2000 CG MIN CBO 183 "MANOBI" PPP = Public-Private partnership LG = Local Government CG = Central Government MIN = Ministry REG = Regulator PSP = Private Service Provider CBO = Community based organization (*) with service provider agreement TBI = To be implemented STEFI = Suivi technique et financier: Technical and financial monitoring CSMP = Chargé de mission de service public : Responsible for public service mission BCC = Bureau de conseil et de contrôle: Advising and controlling office MANOBI = A Senegalese ICT provider PSP = Private service provider ANEPA = Agence nationale de l'eau potable et de l'assainissement: National agency for safe water and sanitation 0 Public-private Services For Improving Water Utilitypartnerships The Poor Through Delegated for small piped water Management schemes Box 1: mWater Services in Senegal The basic mobile-2-web performance monitoring service in Senegal aims to improve ASUFOR (CBO operators) management of small water schemes. It was developed by a Senegalese ICT provider, Manobi SA, in partnership with the Water Ministry's Directorate of Operation and Maintenance. This service uses a dedicated mobile phone with an application ­ mWater ­ which allows a water scheme manager to forward weekly information from a mobile phone. The information covers: (i) the bulk water meter index, (ii) the saving and current account balances of the ASUFOR, and (iii) the number of days when the service is not available. An alert function is integrated into the telephone which allows the manager to report the malfunction by SMS to the local water services department (Brigade) and the maintenance operator. Data sent to the Manobi SA mobile-2-web platform is archived, treated and analyzed Operator checks readings on a bore hole meter using four indicators: level of production, financial reserves, malfunction rate, and savings/ water production over the past 12 months. Each month respective water scheme managers receive a report on their cell phones with different coloured `traffic lights' for each of the indicators (green = OK, orange = To Monitor, red = Alert). The full equivalent to about 4 US cents per m). In report including performance charts Niger since 2006 similar services have been and comments can be e-mailed or provided by service providers called bureau downloaded online by the ASUFORs. de conseil et controle or BCCs. The cost of the Niger services varies from FCFA 25 to The service was successfully tested 52, which is between 5 and 10 US cents in 2008-2009 with 52 ASUFORs in per m depending on the region. Currently Senegal and is currently being scaled about 20 per cent of the schemes in Mali up. In Mali the service is being and Niger are covered by these services, adapted to facilitate the collection of but the governments are making efforts to operational and financial information extend the services to all schemes in the collected and treated by the BDS respective countries. providers (STEFI). In Mauritania the government is piloting a It will include mobile-2-web PPP monitoring system called chargés de accounting and billing modules. mission de service public known as CMSP Rwanda and Niger are also under the Eau Gorgol Guidhimakha project, planning to introduce mobile-2- supervised by ARE. The functions of the web services. The services also CSMP will not only include the monitoring, facilitate regulation as much needed control and advisory services provided by information is made available to the the STEFIs and BCCs in Mali and Niger regulator in a timely manner and as but will also engage the CMSP in co- the services penetrate the market they will improve governance and management of infrastructure replacement. transparence in the sector. ANEPA on the other hand monitors the performance of the private operators using a few limited parameters, in particular PPPs bring about service improvement and efficiency gains based on water production which is the basis for the calculation of the license fees to be paid by each operator. In Senegal DEM monitors the performance of many schemes and publishes the results on a weekly basis. DEM is also implementing a mobile-2-web service called mWater, which is provided by a local information and communication technology (ICT) provider, Manobi SA. The services were successfully piloted in 2008-9 among 52 operators and at the time of writing, DEM was extending the service to other operators. Number and type of PPP contracts and operator profiles In the countries surveyed about a quarter Office where customers can pay their bills in a village in Senegal of the piped water schemes are under PPP contracts and this should increase to a third once some of ongoing projects are public-private partnership arrangements. are generally given limited financial completed. There are great variations in The great majority of the remaining responsibilities. Most of these arrangements the form of these contracts, but other than schemes are managed by water user have been put in place using generic those in Senegal, all of them include private associations or village committees. contract models made available to local operators. governments/ contracting authorities by The PPP penetration is expected to grow sector ministries: this is the case in Benin, There are more PPP contracts in the rapidly in Benin, Mali and Rwanda, where Burkina Faso, Mali, Mauritania, Rwanda countries that initiated the partnership national action plans are being implemented and Senegal. Under these arrangements, processes early. Mauritania and Niger to rationalize and accelerate this process. the operator takes on all the operating risk introduced public-private partnerships in Rwanda's target for 2012 is that 50 per and rewards. The operator is responsible the early 1990s and have the highest PPP cent of the country's piped schemes (there for billing and payment collection, and penetration rates (100 per cent and 50 per were a total of 840 in 2008) should be absorbs operational expenditures such as cent of the piped schemes respectively). under private management against 20 per those for energy, maintenance, repairs, and With the presence of the non-profit agency cent in 2009. Studies were carried out in personnel. ANEPA, the case of Mauritania is atypical, Niger and Rwanda in 2009 to get a better but at local levels, water services are understanding of issues and challenges The operator also pays a lease fee to the managed by individual private operators associated with the PPP process, and a contracting authority to cover depreciation that started to appear in 1995. similar study was under way in Benin in and replacement costs, and other charges 2010. such as provisions for network extensions, In the other countries where the PPP BDS/ monitoring services, and municipal processes were introduced in the early The great majority of the PPP taxes. Gross income is calculated by 2000s, between 5 per cent and 30 per arrangements adopt management or subtracting operational expenditures and cent of the all piped schemes are under affermage-lease principles. The operators fee/tax payments from revenues. 2 Public-private Services For Improving Water Utilitypartnerships The Poor Through Delegated for small piped water Management schemes In the majority of cases, lease fees are paid Figure 5: A typical PPP financial flow chart on a monthly basis in proportion to the number of cubic meters of water produced or distributed. In Rwanda however fixed lease fees are used. Generally, the lease Local governments (Contracting authority) fees are deposited in a `replacement and Extension and extension fund', which is a bank account Municipal taxes fee payments replacement funds in the name of the contracting authority. To ensure that money is used appropriately some funds require the signature of both Operator BDS/ monitoring the contracting authority and the operator. services/ regulatory fees Payment for water In Benin, Mauritania, Mali and Rwanda the lease fees often include the non-cash Consumers depreciation charges for the pumping and energy equipment. Hence, the operator does not directly bear the financial responsibility of replacing the most critical equipment in a piped water operation. In that regard, these PPP contracts do not guidelines other than those defined in the in the local social fabric. In Niger, Rwanda really meet the criteria of what is generally procurement guidelines and sectoral policy, and Mali nearly 50 per cent of the operators understood to be an affermage-lease which deal particularly with the principle of are individual, self-employed entrepreneurs. contract. The contracts are also shorter cost recovery. PPP standards and model In Mauritania almost all the schemes are than normal, ranging from one to five years, contracts were introduced as a result of managed by self-employed individual rather than five to fifteen years. evaluations of the PPP projects carried out operators. The reason often cited for the in 2007 and 2009. preference for individual entrepreneurs is In Senegal ASUFORs are granted `interim that they reside in the service area and are service agreements' stipulating that they In Mauritania, other than the recent PPP known locally. They are not `foreign'. are responsible for replacing the pumping contracts signed between central or equipment. These are effectively simplified local government and private operators, The GIEs2 , NGOs and very small forms of affermage-lease contracts. the contracts signed between ANEPA enterprises are most often locally Management contracts between ASUFORs and individual scheme managers are established or established especially for a and individual managers exist and are management contracts that fall under a particular PPP. They are often run by former usually 1-year fixed fee-based contracts. contract between the State and ANEPA. water user association representatives who are willing to continue operations under a PPP contracts in Burkina Faso correspond Defining operators. Operators are usually PPP arrangement. In Niger, the category the most closely to affermage-lease individual entrepreneurs, economic interest of operators covers 44 per cent of the contracts. Energy and pumping equipment groups (also known as groupement operators, and 60 per cent of the schemes is the responsibility of the operator under d'intérêt économique or GIEs), non- are run by operators that run more than one 5-year renewable contracts. Except for governmental organizations (NGOs) or very scheme. local government taxes, the contracts do small businesses. The largest group is that 2 A GIE is a legal entity whose activities must be ancillary to those of not provide for any lease fee payments of self-employed entrepreneurs. Individual its members, and, as with a partnership, any profit or loss it makes to the asset owner, which are the local entrepreneurs, such as shopkeepers/ is attributed to its members. Thus, although it is liable for VAT and employees' social insurance, it is not liable for corporation tax. governments. In Rwanda, PPPs were traders and retired civil servants, generally There is no limitation of liability to capital; the GIE can only be an accessory to a member's main activity; and a GIE has a specific put in place by districts with no specific reside in the service area and are entwined mission and a predetermined lifespan. Key service delivery sustainability risks persist: structural operational imbalances, poor maintenance support and management capacities PPP achievements Public-private partnerships bring about service improvement and efficiency gains. The efficiency gains are achieved through improvements in billing and collection (mainly because formal operators are less subject to social pressure than socially- entwined community based organizations) and through more proactive and responsive asset management, which in turn limits losses in the event of leakages etc. The separation of functions also makes it relatively easier for the contact authority to hold the operator accountable. In terms of service quality, The review noted that private operators are better organized to respond to the demand for private connections. The review describes several experiences to A private water connection reduces the distance a young girl has to make to fetch water in Senegal illustrate this. A piped scheme assessment conducted in There are also larger companies operating entrepreneur to run the day-to-day services Niger in 2009 covering 200 schemes, which water schemes. These are most often in return for a fee that includes a variable made up over 30 per cent of the schemes consulting companies or firms carrying element based on the amount of water in the country at the time, concluded that out works in the water sector that wish produced or sold. This is very similar to a although private operators do not solve all to diversify their operations. These are management contract. the problems, they perform better in terms regionally or nationally established small of numbers of malfunction level, replacement and medium sized businesses, which In Burkina Faso, Mauritania, Niger and fund accumulation, and quality of reporting. in some instances are supported by Rwanda, several schemes within a an international business partner (with geographic area are in some cases entrusted In Mauritania the remarkable number of one case in Burkina Faso and Rwanda to the same operator. The advantage of this is household connections (about 32,000) put respectively). Larger operators make up the economies of scale achieved and the fact in place between 1994 and 2004 without less than 10 per cent of the total number that it can interest larger bidders with greater any external subsidies is the proactive of private operators, except in Burkina experience and capacity. This clustering conduct of the self-employed scheme Faso where they constitute a hundred per under a single operator may come about if managers. Similar results were noted in cent of the operators. The large operators an operator wins several successive tenders Rwanda in 2009. tend to come forward when a number of in the same area, as is the case in Niger, or schemes are bundled under one tender, if several schemes fall under one tender as In Burkina Faso the government attracted such as under the regional solar program in Rwanda, Burkina Faso and Mauritania. In international, professional companies in Niger and the reform implementation Burkina Faso and Niger operators manage through `build-operate-transfer' tenders program in Burkina Faso. on average five to ten schemes each. One without any major impact on the price of operator in Niger operates 24 schemes. In water. In Senegal, operating leases are held Rwanda, where each scheme is generally by users associations, which in turn larger, the average is three schemes per While limiting the role of local government in sometimes contract a self-employed operator. service delivery, public-private partnerships Public-private Services For Improving Water Utilitypartnerships The Poor Through Delegated for small piped water Management schemes strengthen local governance. In all the been resisted by water users associations community organizations which have countries surveyed, water is a primary in many places. Until the early 2000s, managed the assets over many years. If concern of citizens, and therefore also of management by user associations had the use of a private contractor is enforced elected leaders, with their tenures often been promoted through significant without the consent of community judged by the performance of the water capacity building exercises. Despite being organizations it leads to opposition. sector. We note that decentralization has much criticized, the community-based Another common community fear in relation given local governments the opportunity management model has shown results, to handing over asset management to to sit at the heart of the decision-making especially in Senegal. These community- a private operator is that tariffs will be process in the water sector, which was based organizations have also become raised, but in fact these generally remain not the case under the community-based important role-players in local development unchanged, with the primary focus being management model. due to their capacity to finance social on increasing efficiency. investments such as cyber coffees, As PPP principles include the ring-fencing ambulances etc as well as important Local governments need to monitor of internally generated funds and local events and festivities. The review noticed contracts. Given that local governments governments are not involved in service that in some places, in order to encourage exercise the role of contracting authority, delivery, transparency and checks and the community to take `ownership', people they should be at the heart of contract balances are imposed. had been told that the water assets monitoring. The review noted however `belonged' to them. that once contracts are signed local PPP challenges: governments tend to focus only on ensuring In cases where basic ownership and that lease fees or taxes owed to them PPP assessments have been carried out management questions have not been are paid. Other performance indicators is Benin, Mali, Niger and Rwanda between clearly resolved, contracting out to the are not monitored and feedback is not 2008 and 2010. Despite evidence of private sector is often seen as unfair by provided on operator activity reports, which achievements, the studies reveal four major challenges in terms of implementing private-public partnerships on a larger Box 2: The diversity of PPPs ­ three successful experiences scale. These have to do with: ownership of the PPP process by local stakeholders; risks to the sustainability of service; As a result of the Yungwe-Bikore `design-rehabilitate-finance-operate' tender (a piped establishment of an effective regulatory network of 250 km serving 190,000 people) a private operator, Aqua Virunga, was system; and sustainable financing of established in Rwanda. Aqua Virunga employs about 40 people and the costs of infrastructure investments. scheme rehabilitation, amounting to US$ 250,000, have been met using initial equity injections supported by a participating loan from the Dutch water fund. 1. The PPP process needs to be owned by the stakeholders involved i.e. In the small town of Moribabougou (8000 inhabitants) at the outskirts of Bamako each stakeholder assumes respective in Mali, a company called Zeina Hydro built a scheme in less than two years with a responsibilities. Despite the overall policy production capacity of 250 m3 per day, 50 km PVC with more than 400 household framework, local stakeholders remain connections. Zeina funded all the investments using equity capital and internally reluctant to contract services out to the generated funds (connection fees). private sector. These concerns needs to be understood and responded to so as to The Ndiass multi-village scheme in Senegal is a successful example of a user ensure that local stakeholders engage in association holding the lease contract and contracting a private manager to run the and own the PPP process. scheme. After proactive management the scheme now produces 365 m3 per day and serves about 20,000 consumers through 650 household connections (in addition to Resistance to private operators. The stand posts). Ndiass has become a national benchmark in Senegal. introduction of private operators had 15 Contracting practices should be improved to ensure win-win PPPs for all parties in turn encourages operators to ignore levels, and as discussed earlier there is diesel generators are used in more than compliance with contract requirements. usually a discrepancy, with consumers often 60 per cent of existing water schemes. In Rwanda, for instance, the PPP process using less than 5 liters per day per person. For effective maintenance, operators need is often seen as an opportunity for local A factor that is frequently overlooked as access to spare parts or technicians with governments to offload their water service well is competition from alternative water the right experience (typically at 1000 responsibilities. Local governments sources such as traditional and modern hours, 3000 hours, 6000 hours etc). generally put more emphasis on the wells, or hand pump operations (these are Although medium to larger operators development of new infrastructure than on often included in lease contracts, but the are likely to have the capacity to carry the quality of existing services. contracts generally don't specify the terms out preventive maintenance, small or of operation and they can be a source of less experienced operators have to rely 2. Risks to sustainable service persist. competition to the formal operator). on external service providers. In Niger Major risks to the sustainability of services it is reported that only 8 per cent of the persist in the form of structural operational During the first two or so years it is operators do so. The issue of securing an imbalances, poor maintenance support, common for operators to have operating adequate maintenance service is high on and lack of management capacity. If deficits (negative cash flow) as potential Niger's agenda as the lack of maintenance PPP processes are to proceed, these consumption has not picked up yet and increases the risk of early malfunction and issues, identified in recent studies in Mali, growth projections have not been met. In system breakdown. Niger and Rwanda, need to be urgently Benin the study found that it may take two addressed. to three years before growth projections are Poor management capacity. Limitations met. This needs to be taken into account in management experience are found Financial operating imbalances. Regardless in revenue projections with, associated amongst community based organizations of the type of operator, schemes are often response measures if needed. and private operators, especially self- not financially viable, and are structurally employed, individual operators that loss-making. This is because some water Preventive maintenance difficult or absent. are selected because they have local schemes are simply too small to generate Maintenance is of strategic importance as knowledge. This was found to be the case a profit, and in some cases PPP feasibility studies were not carried out prior to contracting out services. These problems tend to occur in situations where tendering is restricted to operators from the service area, as the operators may have inadequate experience in water service delivery. A PPP assessment in Niger shows that operators would sign contracts without first doing assessments of their own, and the difficulties would arise once the contract had commenced. Another problem is that contracts are often drawn up using incorrect assumptions. For instance, many pre-feasibility studies use consumption norms to guide business planning (typically 20 liters per day per capita), rather than actual consumption Community members discuss the performance of their water provider in Senegal 6 Public-private Services For Improving Water Utilitypartnerships The Poor Through Delegated for small piped water Management schemes in Rwanda, Niger and Benin. Without initial Mali, Niger and Senegal, described above. scale, however, governments need to support to build capacity, these operators Limited capacity to exercise regulation. put in place leveraging mechanisms that have difficulty performing basic accounting Three interdependent factors explain why could be used to facilitate the project tasks (keeping track of income and contracts are not regulated: the already preparation phase, co-finance investments expenditures, bank account transactions mentioned absence of national-level data to ensure affordability and limit the impact and cash management) and preparing collection systems; the inappropriate on tariffs, and provide partial portfolio activity reports. institutional set-up for rural areas; and guarantees to banks. The governments finally, a lack of training for the staff of Mali and Senegal are currently 3. Establishing effective regulatory members expected to carry out regulation developing such leveraging mechanisms, systems. Effective regulation is challenging tasks. In practice it is the staff of regional while drawing on the experience of the in the rural and small-scale sector. In water departments who very often end up Microfinance and Output Based Aid most of the countries surveyed, the performing a regulatory function, despite project for small providers in Kenya (see regional water services departments the existence of regulatory bodies. The Box 3). usually play an arbitration and mediation interventions of regional staff are informal, role in conflicts between users, or within which means they are constrained in what The rural water financing mechanism in users associations. However regulation they can achieve and enforce, and that Rwanda which has just been designed also involves anticipating and preventing they may lack the required skills. The 2008 is also an opportunity to extend the PPP litigation through the systematic monitoring BDS (STEFI) assessment points out that experience to the local financial sector of performance indicators. As discussed neither regional nor national water services by using the financing mechanism to above, several countries have made consult the reports submitted by the BDS co-finance investments and provide progress in this respect (BDS in Mali providers when carrying out regulation the funding for upfront transaction and Niger, the regulators in Rwanda and tasks. preparation. Mauritania). Nevertheless, none of the countries surveyed has an operational 4. Sustainable infrastructure investment regulatory system covering its national financing is limited. Even with the territory, or sufficient capacity to effectively introduction of private operators, financing Towards more exercise regulatory authority. of investments remains difficult. This is sustainable small often because governments fail to follow There is no national analysis and evaluation through on their commitments, or because piped water PPPs system in place in any of the countries the private operator is unable to provide the and no systems have been set up for needed financing. This is especially critical: One vision, one intervention the collection of national performance we note that often local governments framework indicators. While regular gathering and seem keen to offload `problem cases', processing of data about operations is a where extensive rehabilitation and new The development of coherent public- prerequisite for any regulation process, investments are needed, to the private private partnership action plans in these countries there are technical sector (Mali is one example). supported by key development partners (logistics, communication) and financial can strengthen the PPP process. In (assumption of operation costs) constraints In Mali and Senegal, a study showed order to succeed, several thematic in relation to the establishment of a however that the most pressing investment interventions are needed. Effective nationwide data collection system. The needs would amount on average to regulation cannot be attained without challenge of setting up such a system is all around US$ 100,000 per scheme. There appropriate information systems, and the greater in countries were the schemes is also appetite in the local microfinance sound PPP contracting cannot lead to the are geographically scattered. To build and banking industry to participate expected results without a stable enabling nationwide data collection systems, lessons in the financing of such infrastructure environment. The sector would benefit if can be drawn from the BDS provided in investments. For this to happen on a large all the development partners supporting 17 An enabling environment for the operators to ensure regulation, access to maintenance and financial services and products should be in place PPPs (such as NGOs and bilateral and multilateral donors) pooled their resources Box 3: Financing small provider infrastructure investments ­ the K-Rep Bank experience in Kenya in a more coherent way. PPP action plans should be developed K-Rep Bank's Maji ni Maisha program provides loans for water infrastructure to set out a sequence of objectives and to communities where consumers are willing to pay for clean and safe water. articulate the outputs and the timeline for Investments financed under the program can include: development or rehabilitation each activity. Activities can be regrouped of small piped water systems; development of water sources such as boreholes, thematically or geographically to reflect springs or rivers; construction of water purification and storage facilities; and, the available support and the objectives of installation of metering, billing, technical and financial management systems the various development partners. to improve the efficiency of water supply services. The key features of the loan program are: loans from KES 5 million to KES 10 million (about US$ 75,000 to The action plan needs to be flexible 135,000), covering up to 80 per cent of the project cost against a cash equity and should not enforce the pooling of investment by the community of 20 per cent of total project cost. The maximum resources where this is not attainable, but loan tenure is 6 years and for successful projects there is an infrastructure subsidy it needs to be coherent enough to ensure of 40 per cent, available from the World Bank Global Partnership on Output-Based that each partner can articulate their Aid (GPOBA) program. USAID DCA provides the partial portfolio guarantee to K-Rep contribution and what they expect from to enable them to respond to the demand from the local water operators without the others. The government must lead taking on too much risk. the process and ensure that it is aligned with sector policies. Mali attempted to do Source: K-Rep Bank Maji ni Maisha Handbook: Financing investments in Water. this by developing a coherent three-year action plan in 2008 (see Box 4). The plan is anchored in the Poverty Reduction Strategy Paper (PRSP) and national water and needs to be adapted to each context. agreement it must be possible for a private program objectives and is supported by Some countries may already have operator to generate reasonable revenue, AfD, DANIDA, UNICEF, PPIAF and WSP. implemented some of the suggestions and for the operator to provide an affordable Similar initiatives are underway in Benin, made. The review emphasizes that service. While this might seem obvious, The Niger and Rwanda. performance assessment should be review noted that systematically this has not an ongoing process and hope that the been the case, which has resulted in fragile Building blocks for PPP action plans suggestions made here will serve as a partnerships with a number of stalemate stepping stone in future reviews and contract terminations (in Benin and Rwanda, Based on observations and on this review, that a platform is created to ensure that for instance). In order to mitigate these risks, a framework comprised of four building experiences are shared among countries. the following actions should be considered: blocks that countries can use to move towards more sustainable piped water Improve contracting practices. Sound PPP pre-feasibility analysis. Prior to public-private partnerships is proposed The public-private partnership process contracting out services, detailed technical (as depicted in Figure 5 and described in aims to increase the number of contracts diagnostics of the schemes are needed as detail below). These building blocks are: through taking feasible measures to ensure well as development of a business plan. sound contracting practices; a supportive sustainable water services. The entity The technical diagnostics of the scheme enabling environment; adequate responsible for contracting out water should include an inventory of existing capacity among PPP stakeholders; and services must ensure that the contracting infrastructure, and an updated network appropriate information tools and services. conditions allow for appropriate and plan, and it should identify necessary The framework, which continues to be sustainable arrangements to be put in rehabilitation works and investment needs. developed and refined, is not a blueprint place. This means that under the service This information should be attached to 18 Public-private Services For Improving Water Utilitypartnerships The Poor Through Delegated for small piped water Management schemes Figure 6: Building-blocks for developing PPP action plans 1. Improve contracting practices - Sound pre-feasibility analysis - Optimization of scale 4. Improve information tools and services - Medium and long term contracts - Services to professional users - Improved scheme design rules and transition to BOT contracts - Platforms for the wider public - Monitoring of water quality ACTION PLAN 2. Improve enabling environment - Regulatory framework 3. Build ppp stakeholder capacity - Availability of financial services - Exercising contracting authority -Availability of maintenance services - Professionalization of operators - Exercising regulation and consumer voice the tender documents. This information attractive where there is a concentration of collaboration with the African Development is not so important for new or recent small schemes that may not individually be Bank, is currently exploring the scaling- installations, but it is crucial for projects financially viable, or which, on their own, up of such bundling under the FRUGAL involving infrastructure that is more offer limited potential revenues. Bundling (Forming Rural Utility Groups and Leases) than three years old. The business plan schemes within geographical clusters can initiative. Pilot projects are expected to be provides guidance on the setting of tariffs/ make public-private partnerships more implemented in 2011. lease fees so as to optimize the financing robust as certain fixed and variable costs arrangements (internally-generated funds, can be rationalized and shared across Medium to long-term contracts are operator equity/ debt contributions and schemes and larger transactions will attract needed. Current PPP contracts are subsidies). It is important to remember that small to medium sized operators. This has too short and place limited financial schemes should be viable regardless of the been successfully piloted in Burkina Faso, responsibility on the operators, as operator profile. The profile of the operator Niger and Rwanda. investment provisions are included in the is irrelevant to the success of the scheme if lease fees, with the contracting authority it is structurally unviable. The business plan In practice, bundling of schemes is simpler responsible for carrying out the investments. (turnover and financial profitability) should if they fall under a single contracting It should be noted however that in reality, guide the contracting authority in terms of authority, and more complex when cutting operators are more often in the best position operator profile and contract choice. across several contracting authorities, to carry out investments due to their skills in which case inter-local government and experience. Current contracts are Size optimization: Bundling schemes under structures need to be put in place. WSP, in generally too short and do not encourage a single contract. This option is particularly 19 The capacity of PPP stakeholders needs to be built to ensure that adequate asset holding authority and regulation is exercised and to build a professional private sector operators to invest their own resources. Contracting authorities therefore need to be encouraged to put in place true affermage-lease arrangements of at least 10-15 years. These should incorporate concession elements to ensure that the private operators can participate in the financing of extensions and connections and pump and energy equipment replacements, and if possible also the replacement of heavier infrastructure, such as boreholes and storage facilities. Scheme designs need to be improved and build-operate-transfer (BOT) contracts should be explored. We notice that there is little optimization of systems, which may be either under or over- designed, and there are often technical short comings in the construction of the systems. This needs to be improved, as public-private partnership cannot resolve these issues. Build-operate-transfer contracts could respond to this and offer A maintenance provider at work in Senegal several advantages: the infrastructure is new and constructed by the operator that will run the services; the operator has a the right incentive structures. We suggest analysis and feedback and adopting ICT better understanding of the viability of three immediate areas that should be solutions and BDS to reduce the cost of the system; equipment and infrastructure addressed: regulation, access to sustainable regulation and to make it effective. But mobilized for the construction phase can financing for infrastructure investments, and in order to regulate comprehensively, be used during the operations phase and professional maintenance services. governments need to make sufficient so reduce construction and running costs; resources available for regulating rural and during the construction period the A sound regulatory framework is needed. contracts, not just those in urban areas and operator can establish sound consumer Without control and monitoring, the various small towns. and stakeholder relationships. The parties are not encouraged to perform, but transfer back of the installations at the regulation often falls short due to lack of Sustainable financing of small provider end of the contract period preserves the resources and skills or simply pressure to infrastructure investment. Operators need public character of asset ownership. As regulate. Several countries are addressing access to finance to carry out rehabilitation discussed above, build-operate-transfer this however, and Mali for instance is and to develop the infrastructure. The contracts are currently being piloted in adopting a regulatory framework for public- local financial sector has expressed an Burkina Faso. private partnership. interest in participating in such investments, but to achieve this at scale, it needs to Strengthen enabling environment. Sound The focus is on identifying roles and be structured and government needs public-private partnerships can only exist responsibilities, tools and procedures for to play its role: providing guarantees, within a sound enabling environment with data gathering (technical and financial), co-financing etc in addition to the other 20 Public-private Services For Improving Water Utilitypartnerships The Poor Through Delegated for small piped water Management schemes elements listed in this paper. This has replaces user associations in the day- be incorporated into the services provided been successfully done in Kenya, with to-day management of schemes, water by existing training organizations, and development also underway in Benin, Mali user associations can play a key role in operators should be required to pay a and Senegal. Extending public-private representing the voice of consumers and partial fee to contribute to the costs. partnerships to local financial institutions citizens. For instance, associations can will not only attract more resources to represent the public in investment planning Implementation of effective regulation. the sector, but also provide more reliable and in monitoring water quality. Training None of the countries surveyed has an funding, as donor funding is often ad and outreach may be needed in order to operational regulatory system covering its hoc and governments may fail to meet ensure that associations can successfully national territory, or sufficient capacity to commitments. The participation of local play this new role. exercise the necessary regulatory authority. financial institutions will instill market As mentioned, in most of the countries discipline in the financing and promote Exercise of asset-holding authority regional water services departments very good corporate governance in the sector. by local governments. Given the new often serve as de facto regulators. In that asset-holder role that local governments respect, it is necessary to clarify functions Professional maintenance services need are required to fulfill, it is important and roles and set up capacity building to be strengthened. As over 60 per cent to build their capacity to carry out programs, especially at local level so that of the schemes use diesel generators, tenders, supervise contracts and fulfill personnel can master the complexities of professional maintenance services are their obligations. As piloted in Mali, PPP contracting and regulation critical for the continuity of services, support packages, including model especially where there are self-employed contracts and tools, can be developed Strengthen information platforms and or small operators with low internal to assist local governments to prepare services. For public-private partnership to capacity. There is still much to be desired bidding documents, and the services be successful, information flows need to in terms of ensuring the availability of of consultants can be engaged to help be ensured and business support services good quality consumables such as local governments carry out pre-feasibility are needed. In our sample countries we lubricants and spare parts, as well as the studies. It is envisaged that in the medium- identified several initiatives in this direction, skills needed to undertake more complex term local water departments will provide which could be built on, notably the maintenance services, such as engine more of this type of support. accounting and technical advice services overhauls and pump replacements. provided on a cost-recovery basis in Mali Attempts need to be made to decentralize Professionalization of operators. Capacity and Niger and the introduction of ICTs in and localize the supply chain while constraints at the level of the operators Senegal and Mali. ensuring competition `in or for the market'. have been identified in all the counties surveyed, especially since many operators Information and monitoring services. The project to transfer preventive and are individuals from within the services A sustainable data collection, analysis curative maintenance services to more areas as opposed to larger operating and evaluation system is essential for the than 500 schemes in the central zone of companies. The capacity limits are monitoring of public-private partnerships. Senegal is an example of an innovative technical, administrative, and managerial. This requires three preconditions. First, for approach to maintenance supply among As in a Rwandan pilot project, capacity the organizations in charge of regulation, the surveyed countries. building can be organized around training there must be enough people with or improvement modules for each key the necessary skills to deal with data Strengthen PPP stakeholder capacity. As functions/ posts: stand post vendor, collection: in terms of both the quantity capacity issues are ongoing, sustainable meter reader, pump operator, plumber, of data and the frequency of collection. capacity building solutions need to be put accountant/ treasurer, manager. The This is difficult to balance, however, as in place for all stakeholders. training uses standardized tools and schemes are scattered over extensive Transformation of citizen voice and learning materials. In order to ensure areas. Secondly, sustainable financing is user associations. As the private sector sustainability, the training modules should needed to meet operational expenditure 2 Sound information tools and services to improve lessons sharing, monitoring and reporting in the sector and scheme management need to be developed for the systems. Currently, cost recovering services, where operators and de facto end Box 4: The small scheme PPP action plan in Mali users pay, appear to be the only reliable option, as public resources are scarce and also less consistent, despite issues Since 2008, the National Water Department in Mali (DNH) has supported the efforts of around the recovery of BDS fees. Thirdly, municipalities to adopt alternative solutions to the community-led management model in rural and small town water supply. This is in an effort to professionalize water services the system needs to be officially adopted by forming partnerships with the local private sector. As a result, 21 small piped water by the authorities and all stakeholders in systems are under private management, covering a population of about 300,000. order to reach a scale that ensures cost- Another 25 public-private partnerships are underway. effectiveness. The BDS provision in Mali, Niger, and Senegal, as well as alternative DNH is currently implementing a coherent public-private partnership action plan with approaches, such the `management support fromAfD, Danida, UNICEF, PPIAF and WSP to ensure the success of the PPP center' for the federation of water schemes process. There are four key components to the PPP action plan: i) Local government (ADAE), which supports 22 water schemes support: Municipalities receive support for carrying out bidding processes (scheme in Burkina Faso's Bobo Dioulasso region, diagnostics, business planning etc); (ii) Regulation: DNH is implementing a regulatory can serve as inputs for further reflection framework with adapted tools, procedures, and monitoring/ control measure to ensure about how to develop a national information that the public-private partnerships put in place are effectively regulated; (iii) Scaling up collection and monitoring platform. business development services. Citizen engagement and transparency. Currently 132 water systems are There is still a lot of room for improvement audited (technically and financially) in citizen engagement, which will benefit the by two private BDS providers on a PPP process if it is well managed. For this cost-recovery basis. This is now being purpose, public information portals could be scaled up to include the majority of the used to ensure cost-effectiveness. Countries 700+ small piped water schemes. To can learn from the relative success of the enhance BDS services and facilitate Senegalese Millennium Development Goal information collection and sharing in water program, PEPAM's internet portal the sector, mobile-2-web services are experience in engaging citizens in the sector, being piloted; and (iv) Financing of especially at local level. WSP is currently rehabilitation and scheme expansion needs: As rehabilitation and expansion supporting the WatSan platform (an internet of services have been identified as one of the key bottlenecks to successful public- site with online tools) that will enable private partnership, DNH is exploring partnership options with microfinance institutions countries in Africa to develop rapidly and and local banks, so that operators and municipalities can gain access to funds on a host their own free country WatSan internet sustainable basis for their investment programs. This is especially important in a sector portals to: i) improve governance efforts in in which donor funding often goes towards creation of new systems. the sector at all levels of decision-making by providing public information on access to Source: Action plan for the development of WSS centers operation in rural and semi-urban safe water and sanitation at relevant levels, areas, National Directorate of hydraulics, February 2009 which in turn will encourage transparency and accountability by providing a channel for dialogue with citizens; ii) provide continued Monitoring water quality. In all the counties to laboratories is limited and unit costs are monitoring of installations, including rural water quality indicators are included in high. In addition, water quality monitoring and semi-urban water schemes; and iii) the public-private partnership contracts, needs to go beyond the technical aspects allow effective resource allocation based on but the quality testing provided in the and also include hygiene. reliable and regularly updated data. contracts is rarely undertaken, as access 22 Public-private Services For Improving Water Utilitypartnerships The Poor Through Delegated for small piped water Management schemes Bibliography/References Regional/International - K-Rep Bank, `Maji ni Maisha Handbook: Financing investments in Water', 2009. - SDC-Helvetas-Sandec-Skat, `Promising management models of rural water supply services', Aguasan Workshop Series, October 2008. - WSP, `Comparative Analysis on management delegation systems in 6 countries (Burkina Faso, Ghana, Mali, Mauritania, Niger, Senegal)', report, June 2006 - WSP, `Proceedings and presentations of consultation and exchange workshops with water and sanitation related data base administrators', Initiative of the WatSan platform for the accelerated development and free hosting of national Internet portals, Dakar and Nairobi, June 2009. - WSP, `Management models for small town water supply: Lessons learned from case studies in the Philippines', 2003. Benin - Benin General Directorate of Hydraulics/ FDA, `Summary on process for the transfer of project ownership to the communes', report, April 2009. - Benin General Directorate of Hydraulics/ WSP, Terms of references for the study on the `Evaluation of the rural water supply systems management's professionalization process', March 2009. Burkina Faso - Burkina Faso Ministry of Agriculture, Hydraulics and Fishery Resources/ BAD, `Elaboration of the PN-AEPA Volume 1', June 2006. - Water reform internet site: www.reforme-aep.org. Mali - Mali National Directorate of Hydraulics, `Partenariats public-prive pour la gestion des services de l'eau en milieu rural et peri-urbain au Mali ­ identification de mécanismes de levier pour le financement des investissements', 2009. - Mali National Directorate of Hydraulics/ GTZ, `Technical and financial evaluation of the STEFI', November 2008. - Mali National Directorate of Hydraulics/ GTZ, Action plan for the development of WSS centers operation in rural and semi-urban areas, February 2009. - WSP, `Comparative analysis on management delegation systems in six countries', case study in Mali, June 2006. Niger - Niger Ministry of Hydraulics/ FDA, `Etat des lieux pour l'élaboration du guide des services d'AEP dans le domaine de l'hydraulique rurale', June 2009. Mauritania - Government of Mauritania, Decree no. 2007-107 in relation to the conditions and public water service delegation thresholds, 2007. - Government of Mauritania, Schedule of conditions for the delegation of the public water supply service to ANEPA, November 2007. - WSP, `Comparative analysis of management delegation systems in 6 countries", Case study on Mauritania, June 2006. Rwanda - Rwanda Ministry of Infrastructure/ WSP, `Promotion and establishment of PPP for the management of rural WSS systems', report, August 2007. - Rwanda Ministry of Infrastructure/ WSP, `PPP performances for the rural water supply systems management in Rwanda', report, June 2009. 2 Bibliography/References Senegal - Gouvernement of Senegal, Partenariats public-prive pour la gestion des services de l'eau en milieu rural et peri-urbain au Sénégal ­ identification de mécanismes de levier pour le WSP financement des investissements, 2009. The World Bank - PEPAM-WSP-Manobi, A `basic monitoring' service for rural water supply systems using Hill Park Building `mobile-to-web' technologies in Senegal, communication at the Global Water Forum, Upper Hill Road Istanbul, March 2009. PO Box 30577 - 00100 - Senegal Official Gazette, `The public drinking water supply and collective sanitation service Nairobi, Kenya law', October 2008. Phone: +254 20 322-6334 - Senegal Directorate of Operations and Maintenance / WSP, `Public/private partnership Fax: +254 20 322-6386 initiative for the management of motorized rural water supply systems', final report E-mail: wspaf@worldbank.org constituent 2: Pilot project on water supply service management delegation, February 2009. Web site: www.wsp.org - WSP, `Comparative analysis of management delegation systems in six countries, case study on Senegal, June 2006. - Senegal water sector internet website: www.pepam.gouv.sn About the authors Luc Hoang Gia has worked as a senior consultant at WSP since 2006, advising clients on local development planning, information and monitoring systems and public-private October 200 partnerships. Thomas Fugelsnes is a financial specialist at WSP Africa, based in Dakar, Senegal. WSP MISSION: WSP's mission is to support poor people in obtaining affordable, safe, and sustainable access to water and sanitation services. About the series FINANCIAL PARTNERS: Australia, Austria, Canada, Denmark, Finland, France, the Bill and Melinda Gates Foundation, WSP Field Notes describe and analyze projects and activities in water and sanitation that Ireland, Luxembourg, Netherlands, Norway, provide lessons for sector leaders, administrators, and individuals tackling the water and Sweden, Switzerland, United Kingdom, United sanitation challenges in urban and rural areas. States, and the World Bank. The criteria for selection of stories included in this series are large-scale impact, PREPARED BY: demonstrable sustainability, good cost recovery, replicable conditions, and leadership. Luc Hoang Gia and Thomas Fugelsnes PEER REVIEWERS: Pierre Boulenger, Bruno Mwanafunzi, Taibou Adamou Maiga, Sylvain Adokpo Migan, Seydou Traoré, Christophe Prévost (WSP), Annie Savina and Etienne Bialais (AFD- Mauritania). COMMUNICATION SUPPORT: Serigne Mbaye Seye (WSP) PHOTO CREDITS: WSP, Projet PARPEBA, Projet REGEFOR, Projet PEPAM-BAD, Manobi, SETEM. Design and Layout by Eric Lugaka. The findings, interpretations, and conclusions expressed are entirely those of the author and should not be attributed in any manner to The World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the companies they represent. 2