Catherine Revels, World Bank November 2009
Presentation outline Presentation outline Presentation outline Presentation outline � Overview � Overview � Value chain for water sector � Value chain for water sector � Case studies: triggers for change � Case studies: triggers for change � Mainstreaming GAC in water sector operations at the World bank p 2
Overview: GAC Overview: GAC in Sectors in the World Bank in Sectors in the World Bank Filling the Gap 1.Guidance and Support (Sourcebooks ‘GAC Squad’) (Sourcebooks, GAC Squad ) 2. Growing number of operational models 3
GAC issues cut across the value chain GAC issues cut across the value chain Policy and Policy and Planning, Planning, Service Service Tendering Tendering Construction/ Construction/ Expansion, enabling budgeting delivery, and installation/ quality environment and operations & procurement supply improvements finance maintenance Cross-cutting accountability & effective government regulation (setting stds, tariffs, etc.) 4
Ideal situation Typical situation • Overlapping mandates • Clearly defined roles & responsibilities • No separation; no N i • Separation of roles: policy, independent oversight; regulation, service delivery political interference • Policy objective: financial • • Policies allow political sustainability of service interference and limit service providers providers providers’ ability to borrow providers ability to borrow • Provision for transparent & • No clear subsidy policy equitable subsidies • Nothing to prevent opaque • Requirements for decision making processes transparency, accountability, participation participation
Ideal situation Typical situation • Limited or no transparency p y • Participatory planning and P ti i t l i d and participation in budgeting processes planning • Stakeholders have little or St k h ld h littl • Information provided to I f i id d no information about the stakeholders on amounts budget budgeted and budget utilization l • Subsidies to investment • Subsidies conditional upon and recurrent costs and recurrent costs accountability and tied to accountability and tied to without accountability or performance conditions 6 6
Ideal situation Typical situation • Complicated procedures; • Clear and well lack of transparency understood procurement guidelines requiring id li i i transparency and accountability accountability • Limited government and • Effective monitoring of i d independent monitoring d i i procurement processes by government and independent parties independent parties 7
Id Ideal situation l i i Typical situation • Construction Construction • Lack of independence and • Lack of independence and supervision / quality competence in assurance by qualified, construction supervision / p independent parties quality assurance • Little or no information • Little or no information • Transparency, provided to stakeholders; accountability and little or no accountability y participation in project participation in project for results monitoring 8 8
Ideal situation Typical situation yp • Service providers operate • No performance plans or according to agreed perform ‐ service standards ance plans, service standards l i d d • Performance monitored and • Limited or no reporting and reported to regulatory body p g y y monitoring of performance monitoring of performance • Customers pay a fair price for • Customers unwilling to pay services rendered for low level of service • Service providers have S i id h • Service providers remain sufficient resources to dependent on subsidies operate and maintain from budget from budget systems t • Service providers • Consumer accountability unresponsive to customers p and redressal mechanisms work well 9 9
Ideal situation Typical situation • Opaque and/or ad hoc • Opaque and/or ad hoc • Transparency and T d decision making participation in expansion planning expansion planning • Service providers able to • Insufficient resources afford to upgrade and afford to upgrade and available to expand and available to expand and expand service to meet upgrade services demands demands 10
Vicious Downward Spiral Vicious Downward Spiral Vicious Downward Spiral Vicious Downward Spiral Low tariffs, low connection Consumers use water inefficiently High usage and system losses drive up costs. Investment, maintenance are postponed Service deteriorates Customers are ever less willing to pay Utility lives off state subsidies Dropping efficiency Managers lose autonomy and Utility can’t pay wages, incentives recurrent costs or extend t t t d system Subsidies often fail to materialize System assets go “down the drain” Motivation and service deteriorates further Crisis terrible service huge Crisis, terrible service, huge rehabilitation costs Characteristics of Well-Performing Public Water Utilities. Aldo Baietti, William Kingdom, Mieke van Ginneken Water Supply and Sanitation Working Notes. World Bank Note 9, February 2006. 11
Presentation outline Presentation outline � Overview � Value chain for water sector � Case studies: triggers for change � Mainstreaming GAC in water sector � Mainstreaming GAC in water sector operations at the World bank 12
� Urban WSS coverage and service g levels were among best in Africa � Political interference – service provision transferred from local provision transferred from local governments to national water authority � Spiral downward began – funds S i l d d b f d diverted, qualified staff left, facilities not maintained, services deteriorated, customers stopped paying bills � Cholera outbreak triggered Cholera outbreak triggered emergency response from donors � Process of restoration has begun, b t but…. 13
Lack of Funding triggers change: Lack of Funding triggers change: Lack of Funding triggers change: Chernivtsy Lack of Funding triggers change: Chernivtsy Chernivtsy Chernivtsy � After breakup of Soviet Union, responsibility for UWSS transferred to local governments transferred to local governments � Chernivtsy: � Facilities and service deteriorated – 2hour per day water supply � Revenues dried up industries closed households not paying � Revenues dried up – industries closed, households not paying � No funding available for investment � Utility manager named “Public Enemy No. 1” by NGOs � Planning and consultation process undertaken in anticipation of l d l d k f World Bank funding � Agreement reached: g � City to pay back bills, funds to be used for leakage detection & repair, replace pumps � NGOs and utility to jointly monitor water quality y j y q y � NGOs to support communication campaign on need for customers to pay bills � Service restored to 24 hours per day without outside investment 4 p y 14
DPL preparation triggers change: Rawalpindi DPL preparation triggers change: Rawalpindi DPL preparation triggers change: Rawalpindi DPL preparation triggers change: Rawalpindi � Provincial Govt working with World Bank to prepare Urban Development Policy Loan including WSS: Development Policy Loan, including WSS: � Implemented new regulatory regime; hired new utility managers from the market under incentive contracts g � Benchmarking indicated low level of service, high water losses, over ‐ extraction of groundwater, high power costs � Utility worked with NGO to conduct customer survey and � Utilit k d ith NGO t d t t d contracted out management of 10% of boreholes � Results: � Previously unconnected residents now paying avg. 15% less per month for water and spend 3 ‐ 5 hours less per day collecting water water � Revenues up by 29%, energy consumption and water extraction reduced � Improved communications with customers 15 15
o 20 years of engagement, increasingly focused on governance for results focused on governance for results o Innovative project design – output ‐ based investment financing; improving performance through regulatory and institutional development o Limited number of contracts reduced o Limited number of contracts, reduced Bank oversight, increased advisory role 16
Presentation outline Presentation outline � Overview � Value chain for water sector � Case studies: triggers for change � Mainstreaming GAC in water sector � Mainstreaming GAC in water sector operations at the World bank 17 17
GAC in the World Bank GAC in the World Bank Energy, Transport & Water “GAC Squad” supported by G Governance Partnership Facility supports regional P hi F ili i l operations teams to mainstream GAC in projects � Direct support to operations � Direct support to operations � Sao Paulo – supporting baseline for monitoring results � Uzbekistan and Tajikistan – strengthening customer interface � Paraguay – clarifying regulatory arrangements P l if i l � “Soft touch” support � Support design of studies and projects; pp g p j ; � Review Concept Notes, Terms of Reference, studies, etc. � Provide reference materials � Consultant referral Consultant referral � Knowledge management � Documenting emerging good practice � Support learning events 18
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