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Roundtable Discussion on Private Sector Participation in Urban Water Supply in India
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Most people living in cities would like to be connected to a 24-hour supply of piped water. Unfortunately, in most Asian cities, less than 30% of the residents are enjoying 24-hour water supply. Low service coverage and intermittent supply have become a norm rather than exemption.
In South Asia, the prevalence of intermittent water supply is so high that most people regard this as normal and are therefore not greatly motivated to do anything about it. In Kathmandu, in the dry season, most people get water for about one hour every day. In Indian cities, two or three hours of water a day is considered good.
The cost of intermittent water supply to consumer is considerable because households have to invest extra money in pumping, storing and treating the water. If households are already spending this much, wouldn't they be willing to pay for an improved water service that will assure them of 24-hour service?
The scope for working towards 24-hour water supply in Asian cities like in India is so huge and this is not just a question of whether there are enough resources to finance the gap but also a question if the required institutional arrangements and business processes are in place to support a more responsive approach to implementing water supply and sanitation projects.
Business as usual will no longer work. New ways of doing things have to be tried, thus a need for shift to "business unusual".
What we mean by "business unusual"-a shift in products, business processes, and partnerships. Products, in the form of new technology and services, must be innovative. Pilot and demonstration of innovative, small scale ideas that are quickly implemented and possible for scaling up have to be supported. Other innovative ideas, such as small piped water networks and zonal approaches to service upgrades, are new approaches to fast-track implementation of water projects that must be adopted.
To meet the water supply and sanitation MDG target, business processes of all stakeholders-ADB, governments, civil society and the private sector-must be streamlined for time efficiency. People needed water yesterday.
Partnerships with civil society and the private sector must also be explored to maximize resources and demand. A variety of new public-private schemes are being tested. Business unusual means thinking outside the box. Demand has never been higher and supply more limited. This is the time for new ideas, new attempts, new success stories.
Water Uses. Drinking water is a food or medicine. People have to buy it to sustain life. About 1 to 2 liters per capita per day (lpcd) is the average individual consumption for drinking water and 10 to 20 lpcd for other uses such as cooking, bathing, laundering and other uses. Water should be available 24 hours a day and for the service to be sustainable, the full cost of delivering it should be recovered. Water cannot be produced. It can only be harvested.
Informed. Water service providers-whether public, private or both-must be informed with current, comprehensive and relevant data, demand surveys that are statistically sampled and address water sources, quantity, quality, cost, access, reliability and sanitation. This is the rationale for undertaking diagnostic water market assessment or water audit. What you can't measure, you can't manage.
Innovative. Large water infrastructure projects require years to finance and implement. While the approach is not obsolete, other interim solutions must be explored. Small piped water networks is an example of an interim solution to supply water with volume, convenience and lower costs. This approach also engages local entrepreneurs in providing the service and engages community for financing, installation, maintenance and repairs. On a larger scale, as cities undertake wider service improvements, a zonal approach allows them a manageable unit to survey for demand, implement improved services and adjust tariffs according to service improvements.
Capacity Building. A water utility is capable of building the capacity of its own staff as well as whole communities when the commitment is there. Both public and public-private utilities have proven that investing in people pays back. Internally, human resources must manage user communities at the lowest practicable level, such as zones, rather than centralizing all of management. Utility employees must also be empowered with the freedom and confidence to manage, by investing in their skills development that in turn creates responsibility and accountability. Their performance must then be rewarded. The water sector has the examples of the private water provider such as Manila Water Company and a public utility such as Phnom Penh's public administrator Ek Sonn Chan.
Water supply and sanitation projects of $50-$100 million can take up to 10 years to implement. The consequences are: (i) very slow development not responding to needs, (ii) increased opportunity for corruption, (iii) higher costs, (iv) eroding credibility with potential beneficiaries, (v) snowball effect of time as conditions change, (vi) political frustrations, (vii) millennium development goals not even remotely achieved. It's time to change all that. The objective should be to expeditiously implement water supply and sanitation projects and this objective must be shared by all stakeholders involved, principally the funding agency and government.
It costs service providers and potential users more when processes gets stalled, which can happen as a result of mundane red tape or special circumstances, such as changes in the political environment, social factors or sudden economic constraints.
Time is of the essence. All stakeholders must agree to streamline their respective processes if delay in service delivery is to be averted and water is to be made available at the time people need it.
Government/public sector. Governments need to modify their role from one of service provider to regulator and should delegate service provision to autonomous and accountable service providers. Government should not invest its scarce resource in developing in-house capacity for direct provision of a service that could best be delivered by the private sector or an autonomous government entity vested with such mandate, e.g. Phnom Penh Water Supply Authority, an autonomous and accountable public utility in Cambodia that has been heralded as a success story of a public utility enjoying operational and financial autonomy and has put customer accountability on top of its mission.
Private sector involvement. ADB's water policy notes that private sector initiatives and market-oriented behavior are expected to improve performance and efficiency, particularly in service delivery. The capacity of private sector not only to invest in water but also to share its expertise in managing utilities in a more efficient and commercial manner should be maximized.
Civil society involvement. NGOs in India are being credited for implementing water supply projects in less than 1 year. Their passion for both the urban and rural poor, their knowledge of local communities and will to implement makes them invaluable resources for both public and private suppliers. In addition, the strength of civil society as partners in advocacy work and capacity building should be utilized. They should be empowered as government's partner in catalyzing reform.
Other multilateral development banks and bilateral donors. Partnership with other multilaterals and bilaterals should be strengthened as they have the capacity to provide policy advice and facilitate reforms. In a comparative analysis of sector reforms recently commissioned by ADB, one of the factors identified as influencing reforms in countries are activities of external support agencies which are serving to disseminate to many countries a substantially common approach to analysis of issues and have had a substantial influence on the water sector in many countries.
Urban-Rural. Investment in upgrading and expansion of urban water supply should slowly move towards self-financing. Tariff reform is key. Tariff must be set at a level where revenues would be sufficient to connect the urban poor. Overseas development assistance should be slowly shifted to rural areas where majority of the poor live and where the need is greatest.
24 hours water supply need not remain a dream. It is achievable. But stakeholders in government, private sector, financing institutions and non-government organizations must first agree that business as usual will not make 24 hours water supply possible. The name of the game is innovation, streamlining and expeditious action.
People needed water yesterday. Time is of the essence.
The human body is a great workshop from which we can learn a lot. Water utility providing drinking water in a city can be compared to the circulation of blood in the human body. It has to operate an uninterrupted supply of water, not intermittent. There are two systems, the pulmonary & the hepatic circulation, that support the main blood circulation. The role of the government is like that of the pulmonary circulation. Just as the pulmonary system regulates the flow of oxygen to ensure continuous oxygen supply to the lungs, the government has to play the regulatory role to support the water utility in ensuring continuous supply of water. Private sector participation (PSP) can be likened to hepatic circulation which refers to the flow of blood and lymph through the liver and kidneys which are crucial to the process of elimination or excretion. PSP brings efficiency in the water supply business through good governance practices that ensure cost recovery and sustainability of the water supply systems.
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