WATER Feature Stories ISSUE 6 | March 2006 Rehabilitating the Urban Water Sector in Cambodia 46191 B etween 1998 and 2004, the Urban Water the Urban Water Supply Project. The project focused Supply Project supported the turnaround of on two cities: Phnom Penh and Sihanoukville. two water utilities of Cambodia. The Phnom Penh Water Supply Authority (PPWSA) became a financially viable public enterprise operation under BOOSTING WATER SUPPLY IN commercial law. 750,000 people gained access PHNOM PENH to water supply services in Phnom Penh. The Siha- noukville Water Supply Authority (SWSA) became In 1997, PPWSA was established as a public enter- more autonomous in its operations and extended prise operating according to commercial practices. water supply services to 18,000 people in its poor PPWSA introduced and implemented fully automat- service area. By 2004, both utilities improved ed systems for accounting, management and bill- their operational and financial performance sub- ing. The new billing system replaced often corrupt stantially. The project also assisted in developing bill collectors and introduced public offices where a national water supply and sanitation policy to customers would pay their bills instead. PPWSA foster sustainable well-performing and autonomous incorporated a profit sharing system that monitors public utilities. corruption practices by all the employees. PPWS installed meters for all connections, enforced heavy fines for illegal connections, and built in innovative STARTING THE INSTITUTIONAL technology to reduce leakage in the distribution sys- REFORM tem. Moreover, PPWSA established a revolving fund to finance domestic connections to help the poor After the 1991 peace accord in Cambodia, the connect to the network. donor community started substantial support to the By 2004, PPWSA’s number of connections government in the form of physical rehabilitation had increased almost 9-fold from 10,777 to more of infrastructure, technical assistance, and capacity than 105,777. This translates into approximately building. 750,000 people gaining access to piped water The government, with assistance of the World 24 hours a day. Water quality meets international Bank, took its initial steps to reform the institutional standards. The utility itself was transformed into a framework of the water supply sector in Cambodia. financially viable and strong organization. Unac- The government enacted a law to provide greater counted for water declined from 57% in 1998 to autonomy for PPWSA, created a Coordinating 17% in 2003. Committee for the Water and Sanitation Sector, and The revolving fund financed 6,708 water con- restructured water supply tariffs. nections targeted to the poor. The program has In 1997, after three years of policy dialogue proved popular among the low-income groups and with the government of Cambodia, the World Bank has not resulted in a deterioration of the overall fi- provided a US$30.96 million IDA credit to support nancial health of the utility. THAILAND LAO P.D.R. Cambodia at a glanCe Human Development Index ranking: moRe inFoRmation Population: 13.6 million – urban 18%, 130 out of 177 Implementation Completion Report, Cambodia – Ur- VIETNAM CAMBODIA rural 82%; % below the basic needs poverty line: 36% ban Water Supply Project, World Bank, January 2004. Phnom Penh 1.7% annual growth rate % with improved water access: 34% Project Appraisal Document, Provincial and Peri-Urban Surface area: 181,000 km2 % with improved sanitation access: 16% Water and Sanitation Project, World Bank, March 2003 Gulf of Thailand Life expectancy: 54 years Output-based aid in Cambodia: Private operators and local communities help deliver water to the poor, GNI per capita: US$ 320 Yogita Mumssen, GPOBA, 2004. FEATURE SToRiES AN ALTERNATIVE APPROACH IN for the Water and Sanitation Sector in drafting and SIHANOUKVILLE approving a long-term national strategy for the sus- tainable and cost effective urban water supply and Sihanoukville is a provincial city with many low- sanitation sector as well as a new policy framework income residents. Reforming the Sihanoukville Wa- of the sector. This framework consisted of two na- ter Supply Authority (SWSA) took into account these tional policies: The National Policy on Water Sup- specific circumstances. The reform did take a differ- ply, and the National Policy for Urban Sanitation. ent approach than that in Phnom Penh. Both policies fostered demand-based approaches to system planning and investment, private sector The IDA credit was channelled through the Min- participation, and cost recovery tariffs. istry of Industry, Mines and Energy (MIME). How- ever, SWSA started to maintain its own ‘ringfenced’ accounts separately from those of MIME. This gave GOING FORWARD the authority more autonomy and made it account- able for the appropriate costs of rehabilitation and In continuation of this project, the World Bank expansion of its system. approved another IDA fund of US$19.9 million in assistance to the Government of Cambodia During the project period, SWSA increased and PPWSA. The Provincial and Peri-Urban Water the number of connections from 886 in 1997 to and Sanitation Project started in 2003. It supports 1,318 in 2003. water supply and sanitation investments target- This meant an additional 18,000 people got ing provincial towns and peri-urban communities. access to water supply services. Water sales have The project is assisting the government to extend increased correspondingly during the same period innovative financing mechanisms through which from 550 thousand m3 to over one million m3. low-income communities can participate as full- The operating capacity increased as a result of the fledged paying customers of piped water supply training provided to the staff. Collection efficiency systems—building on the success of the PPWSA remained well over 90%. Unaccounted for water revolving fund. kept fluctuating between 25 and 30 percent, due to The government is seeking ways to bring the technical losses in the ancient distribution system. benefits of privately run water services to unserved areas and especially to poor people in secondary TECHNICAL ASSISTANCE towns across the country. Expected service providers are local, private, small-scale operators. In six pilot Throughout the reform process, PPWSA, SWSA towns, Output Based Aid (OBA) approach contracts and other relevant governmental agencies ben- have been awarded to expand access of basic wa- efited from significant technical assistance (TA) ter and sanitation services. An additional two con- and capacity building. This included training, tracts are under evaluation and eight new contracts workshops and funded post graduate studies for are to bid out by March 2006. The first system will the utilities’ staff. start to operate by May 2006. The second phase of the pilot projects will scale up the program to new The World Bank’s assistance was complemented towns, and then possibly nationwide by a US$250,000 grant from the Australian Gov- ernment that financed a twinning arrangement be- tween two Australian water utilities and PPWSA. The experience improved the institutional effectiveness. RELEVANT PROJECTS Urban Water Supply Provincial and Peri-Urban NATIONAL ACCOMPLISHMENTS Project Water and Sanitation Project The TA component of the Urban Water Supply Proj- Project ID P045629 Project ID P073311 ect also supported the Coordinating Committee Water Feature Stories are published by the Water Sector Board of the World Bank. They are available online at www.worldbank.org/water and in hardcopy from whelpdesk@worldbank.org. 2