Transcript Consultative Workshop on management of water affairs at

Consultative Workshop on
management of water affairs at urban level
Objectives of the Workshop
Presenting and discussing complex issues,
confronting opinions and possibly acquire valuable
ideas and insights to elaborate a Common
Approach for the management of water affairs at
urban level in the Puntland State of Somalia.
“Common approach” = bottom-up elaboration of keydocuments (i.e. Customers’ Charter of Rights, Water Use
Policy, Water Tariff Structure) to provide guidelines for a
comprehensive reform of the existing PPP contracts for
water service delivery at urban level (consistently with the
national policies and regulations in force)
Proposed drivers for the debate:
Day 1
1. Customers’ rights and role
2. Tariffs
Day 2
3. Responsibilities of the PPP company and the
public sector (“the parties”)
4. Service levels
5. Other (as suggested by the attendees)
"Ice-breaking":
the basics on PPP
Public - Private Partnership
A government
agency
A privatesector
company
A contractual relationship (i.e. rights
and obligations) for the
management of a public
infrastructure which is essential for
the delivery of a service of general
interest
A PPP is an agreement that, ideally, should bring
together, for mutual benefit, a Public body
(either of central or of local level) and a Private
counterpart (a company or a group of investors)
in a long-term joint-venture for the
management of an infrastructure which is
essential for the delivery of a quality public
service.
In the case of PPP for urban water supply, the cost of using the
service is ideally borne by the end users of the service itself (and not
by the public sector by way of general taxation).
Ideally, under a PPP for urban water supply a Tariff Structure is
agreed upon by the Parties:
- To ensure social equity (who consumes more pays more),
- To reduce/avoid waste of the scarce water resources available (the
more one consumes the more one pays),
- To recover all costs born to extract and deliver water to customers,
- To generate resources for the maintenance of the water supply
system, and for investments for upgrading/expansion of the service,
- To ensure a reasonable profit to the private company which
manages the infrastructure.
Customers’ rights and role
Customers’ rights and role (1)
The right to water (the UN definition)
Entitlement of each individual to a system of water supply and
management that provides equality of access opportunity for people,
present and future generations.
The rights has three main substantive dimensions:
① sufficient (i.e. min. 20 litres per capita per day within 1 km from the
source) and regular availability of water for some basic personal and
domestic uses (i.a. drinking, food preparation, body and cloths hygiene);
② quality of the water supplied (i.e. safety for consumers’ health and
acceptability of features such as colour, odour and taste);
③ physical, economic and social accessibility to water by everyone without
discrimination (transparency of information concerning water issues is also
enumerated as a form of accessibility)
→See provided Focus Box No. 1
Customers’ rights and role (2)
Topics to drive the debate:
a) Which aspects of the right to water should be included
in a Customers’ Charter of Rights (in turn to be
annexed/linked to the PPP contract)?
b) How to make the right to water effective in the scope of
a PPP?
-
-
Should the PPP contract include a timed plan for the gradual
connection of all urban zones to the water distribution system, at
least by means of kiosks?
Should donors make their grants conditional to water distribution
projects which are more inclusive from a territorial point of view?
Customers’ rights and role (3)
Topics to drive the debate:
c) What role for customers (as individuals and organised
groups) to implement the Charter and, more in general, to
enhance water affairs management at urban level?
-
-
Should information on water management be made accessible to
enable a bottom-up monitoring of the PPP company’s performance
(based on pre-set indicators linked to the right to water)? Which
information? How to make this information accessible?
Should customers be involved in the identification of priorities for
investment projects (especially as regards distribution to new
zones) as well as in initiatives (i.e. fund raising, land donation)
aimed at extending the water supply network (complementarily to
PPP company’s investments)?
Customers’ rights and role (4)
Topics to drive the debate:
d) How could customers’ role be concretely formalised in a
PPP contract?
- Should the PPP contract attribute to individual customers’ (and
organised groups) the function of on-the-spot antennas to
monitor, in conjunction with the public sector, the performance of
the PPP company and report (to whom? how?) on breaches of the
Charter of Rights?
- But what if the public sector itself is not compliant with the PPP
contract or breaches the Charter? Maybe complaints concerning
the public sector should be addressed to a credible third party?
Which?
Tariffs
Tariffs (1)
Topics to drive the debate:
a) Flat tariffs (i.e. the price of 1 cum of water does not vary
based on the number of cums actually consumed) do not
discourage waste of the scarce water available.
-
Should surcharges be established for the water consumed in
excess of pre-determined baseline ceilings applicable to each
category of customers other than kiosks?
b) Flat tariffs are not socially equitable.
-
-
Is it acceptable that non-piped customers fetching water at kiosks
pay more than piped ones for the same quantity of product (i.a.
households, companies)?
Should higher tariffs be introduced for piped customers in zones
clearly recognizable as “rich/wealthy”?
Tariffs (2)
Topics to drive the debate:
c) The tariff applied to kiosk operators may not reflect the
price actually paid by non-piped final consumers.
-
Should a binding and credibly controlled “cap” be established, if
not existing yet, on the sale price at kiosk to prevent at source
the chain of incremental price distortion to the detriment of the
poorest segments of the demand?
Tariffs (3)
Topics to drive the debate:
d) Privileged piped customers (i.a. some schools, and
hospitals which, on the basis of local “customs”, are not
paying for water) may waste water.
-
-
Should solutions be explored to orient privileged customers
towards more efficient consumption without ignoring their social
role within the community? (e.g. discounted/minimal price for
each cum? Or ceiling of consumption below which no price, or a
discounted price, applies?)
Should, for the sake of transparency, water provided to
privileged customers be metered, and invoiced for, even when
the implicit tariff is zero?
Tariffs (4)
Topics to drive the debate:
e) As the overall availability of water resources for a
certain city drops, kiosks are usually the first which suffer
supply restrictions; this happens also because the tariffs
structure does not discourage, in situations of chronic
scarcity, excessive consumption by piped customers.
-
Should kiosks be protected from unfair supply restrictions by
tariffs mechanisms operating at the level of piped customers?
For instance, how about scenario-specific tariff surcharges
applicable to piped customers any time the water resources
available fall below a critical level (to be fixed in advance)?
Tariffs (5)
Topics to drive the debate:
f) The principle of full cost recovery, though affirmed in
PPP contracts, is not accompanied by a binding and
transparent breakdown of eligible costs, including
ordinary and extraordinary maintenance and
investments for expansion of the infrastructure (spread
over a reasonable amortisation period).
-
Should the structure of eligible costs, including ordinary,
extraordinary maintenance and investments, be fixed in
advance in the PPP contract?
Tariffs (6)
Topics to drive the debate:
g) PPP contracts lack precise provisions on who should
decide in matter of tariff review and, most critically,
based on what factual circumstance a tariff review could
be proposed by one of the parties to the PPP contract.
-
-
-
Should the PPP company justify any proposed tariff reviews by
making reference, with adequate evidence, to the relevant item in
the structure of eligible costs?
Should the public sector be able to assess, from a quantitative
perspective, the reasonableness of any proposed adjustments to plus
of the tariff?
Should the public sector require the PPP company to reduce the tariff,
to the benefit of the customers, any time a major cost reduction has
occurred (based on available information)?
Tariffs (7)
Topics to drive the debate:
h) Should water prices be differentiated based on the
actual costs borne by each and every PPP company in its
specific urban context? Otherwise how can it be said that
the principle of “full cost recovery” is the basis for tariff
calculation?
i) Donors’ support may not be available in the future; how
to build an investment-friendly water tariff structure?
-
Should an increasing block tariff scheme be introduced to fund
investment projects?
Should tariff-generated funds be channelled to a binding Financial Plan
in the scope of a comprehensive Service-specific Local Master Plan
(both annexed to the PPP contract)?
Responsibilities of the PPP parties
Responsibilities of the PPP parties (1)
Topics to drive the debate:
a) PPP contracts fail to formally define “ordinary” and
“extraordinary” maintenance, as well as to allocate
responsibilities between the parties.
-
-
Should the PPP company be fully responsible for ordinary and
extraordinary maintenance (based on the principle of full cost
recovery)?
Should the tariff structure be designed to generate sufficient
resources to actually enable the PPP company to do so?
Responsibilities of the PPP parties (2)
Topics to drive the debate:
b) Long contract duration is not paralleled with a clear
allocation of roles, responsibilities/risks as regards the level
of investment needed to accompany demand growth
throughout the time (unsustainability of the service).
-
Should the PPP contract require a verifiable periodic level of private
investment for the expansion of the public infrastructure?
Should PPP contract integrate mechanisms for lowering the financial risk
sufficiently enough to stimulate a desired level of private investment
(coherently with the expected profitability)? E.g. binding amortization
schedule to protect the private investment in case of early termination of
the agreement; “non-politicizeable” tariff review modalities to protect
the expectation of reasonable return on investment from the risk of cost
escalation throughout the contract duration.
Responsibilities of the PPP parties (3)
Topics to drive the debate:
c) Investment for infrastructure expansion is highly
dependent on continuous injection of external grants.
-
-
Is it correct to consider the donors’ community as a “hidden”
party to the PPP contract (as regards investment obligations)?
Or should the primary responsibility for investments be assigned
by the contract to the PPP company (by linking this responsibility
to tariff-generated resources)?
What role for other stakeholders? Earmarked funds from the
municipal budget? “Purposed tax” from the potential customers
of a targeted urban area?
Responsibilities of the PPP parties (4)
Topics to drive the debate:
d) Responsibility for land acquisition for infrastructural
projects aimed at improving/expanding the service is
not defined in the existing PPP contracts.
-
-
Should it be a responsibility of the public sector to make land
available for infrastructure expansion?
What role for other relevant stakeholders (e.g. potential
customers in an urban area which may benefit from the
concerned infrastructural project)?
Service Levels
Service Levels (1)
How would you define “service levels” and
“oversight” in the scope of a PPP contract for
water supply at urban level?
Within the notion of “oversight”, how would you
define “monitoring”, “control” and “evaluation”?
Service Levels (2)
Topics to drive the debate
a) Urban water supply at urban level has been outsourced
via PPP contracts without developing an adequate
oversight capacity by the public sector (including the
concerned municipality) over the private partner.
-
How should the deficit of oversight be tackled? By redesigning
PPP agreements (i.e. detailed and credibly enforceable provisions
on service levels and oversight mechanisms by competent
bodies)? By training specialized civil servants within the
competent public administration? By making available own
resources to hire external experts tasked to perform some of the
most complex contract management functions (which even in
developed countries are outsourced to experts)?
Service Levels (3)
Topics to drive the debate
b) The existing PPP contracts do not include a
technical annex on service levels.
-
Which service level topics should be integrated in the PPP
contract?
How could they be made measurable?
→See provided Focus Box No. 2
Service Levels (4)
Topics to drive the debate
c) The existing PPP contracts lack provisions on the
oversight function.
-
-
Who should be tasked to monitor, control and periodically
evaluate the PPP company’s compliance with the pre-set
service levels?
What role can be envisaged for the municipality in terms of
oversight function?
Should customers be actually involved (and how) with an
active role in the oversight function?
To whom, within the local public administration, should
customers report?
Service Levels (5)
Topics to drive the debate
d) The existing PPP contracts lack enforceable
provisions on corrective measures.
-
-
What types of actions, and redress mechanisms, should be
taken by the public sector in case of persistent noncompliance with the fixed service levels?
What if the public sector is not complaint with its
contractual obligations (i.e. how to protect the
rights/position of the PPP company)?
A continuous Workshop
Interactive debate on line
This workshop will continue for the entire duration of the
Project on the dedicated website:
www.terresolidali-water.org
Please invite people you know to participate and, if you wish,
contribute with any further
opinion by posting it in the relevant FORUM sections!
(NB there is a forum for each of the 4 drivers for debate used
during this Workshop)