Transcript CSIR - Dr. Kevin Wall - Gauteng Provincial Treasury

HOW MUCH POTENTIAL
HAVE PPPS TO ASSIST
SUSTAINABLE WATER
SERVICES DELIVERY AT
LOCAL LEVEL?
Kevin Wall
CSIR
Gauteng municipal PPP conference
1
Johannesburg,
18 February 2010
The CSIR Mandate
“The objects of the CSIR are, through
directed and particularly
multidisciplinary research and
technological innovation, …….. to
contribute to the improvement of the
quality of life of the people of the
Republic.”
2
(Scientific Research Council Act 46 of 1988,
as amended)
Contents
1. Public-private is a continuum
2. Some South African realities:
operation and maintenance
3. Case study: microentrepreneurs
in a partnership model
3
Public-private is a continuum ….
Public ownership of assets and control of policy
Private ditto
High
Degree
of PSP
Other Activities
Major Design
Low
Construction
Purely
public
operation
4
Selective outsourcing:
-- design
-- construction
-- maintenance (not O&M)
-- niche operation
Contract for Private
full O&M
operation
What have we learned?
• Water and wastewater utilities are the engines of the
economic well being of cities
• Problems associated with water and sanitation service
provision in lower and middle income countries are
increasing, not shrinking
• The potential contribution of private sector support
in the form of specialized knowledge and general
know-how is significant
• Discussion of PSP/PPP has been overshadowed for 15
years by one form of PSP, i.e. full delegation of
responsibility to the private sector in the form of
concessions or affermage arrangements
5
Why look wider?
• Full delegation approaches to PPP have been
controversial, in part because of
real/perceived lack of control by public
sector and community
• Need to look at broader range of
possibilities for improving service delivery
in the water sector.
• The traditional private sector marketplace
has evolved in a way that could provide
additional tools for strategic outsourcing
• Other forms of PPP – forms which allow
public sector to retain full ownership
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and more managerial control
New service offerings:
• Increasing use of management contracts
• Performance-based outsourcing of specific
functions (e.g., leakage reduction)
• At the same time, non-traditional resources
are emerging
– Public sector utility service providers
– Contributions through Water Operator
Partnerships
– Scope for supporting microentrepreneur
operators, and raising their standards
7
Moving on (1):
Develop a common understanding that
– Recognizes that water and san are special
– Acknowledges that high (or low)
performance not necessarily
characteristic of either public or private
– Broadens the discussion beyond utility
management to the entire supply chain
– Acknowledges that in the ”grey zone”,
both public and private operators have
role to play
8
Operating in the Grey Zone
Public ownership of assets and control of policy
Private ditto
High
Degree
of PSP
Other Activities
Major Design
Low
Construction
Purely
public
operation
9
Selective outsourcing:
-- design
-- construction
-- maintenance (not O&M)
-- niche operation
Contract for Private
full O&M
operation
Moving on (2):
• Make the needed commitments
– Performance standards
– Accountability, and mechanisms for monitoring and
rewarding performance
– Sufficient institutional underpinnings are in place
– Financing needs addressed
• Recognize each unique situation – one size does not fit
all
• Facilitate capacity development to support process
– Understanding of different modes of private
participation and when/where each are appropriate
– Alternative procurement models
– Risk management
10
Contents
1. Public-private is a continuum
2. Some South African realities:
operation and maintenance
3. Case study: microentrepreneurs
in a partnership model
11
Regulator
(i.e. DWAF)
Regulation
Capital and ops funds
WSA
Contract
payments
– e.g. ES, MIG
Funding
partner
Contracts
Service
WSP
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e.g. WSA,
Water board,
NGO, SMME
Service agreements
Payment of service
charges
Customers
e.g. govt,
donors
• In South Africa, ownership of water
infrastructure to serve the public can only
be by the public sector – in the case of
water services infrastructure, invariably by
the statutory water services authorities
(WSAs) or water boards.
• However the public sector owners can, and
often do, use private sector for specific
tasks.
13
What problems with public service
delivery?
Understand origins of decentralisation in SA:
• Uncommon to decentralise to local
government so
quickly
• Particularly when some of the institutions
did not even exist
14
A product of negotiations for a peaceful
transition
• Minority wanted some autonomy to retain
control of their lives
• ANC supported decentralisation -- and
vision of participatory local democracies
How are we doing with WS
IAM?
SAICE report card 2006
15
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How does infrastructure get to
be “bad” or “ugly”?
• Poor operation. Or too little
maintenance. Or both.
• Ageing infrastructure » growing
replacement need
• Maintenance backlog of existing
infrastructure
• Why?
17
Why?
• Too little O&M budget. And/or
• O&M budget during year got diverted
to other things. And/or
• Staff insufficiently skilled. And/or
• Staff insufficiently motivated.
And/or
• Wrong infrastructure (i.e. too complex,
not robust, wrong process (e.g. in
relation to local water types), etc.
18
Numerous studies have pointed
to skills shortfalls as the main
problem area
What skills?
• Simply put, higher up the ladder, the
greater the scarcity
• But, lower down the ladder, training,
supervision, quality control, and
mentorship are needed.
19
20
65% =NC
22.8%
=NC
65% =NC
Current Employed: C&NC Process
Controllers
268
Vacant Process Controllers
Amount of Employed Personnel NC
69
175
21
Current Employed & C Plant Managers
Vacant Plant Managers
Amount of Employed Personnel NC
57
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What is required to ensure that the
infrastructure delivers the service
reliably and safely? For example, in
the case of water infrastructure,
drinking water quality standards are
met, and the water is fit to drink?
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There are no quick fixes!
• Essential: the correct infrastructure.
• Essential: sufficient budget (for repairs,
for planned maintenance, for spares, for
infrastructure refurbishment and
renovation, etc).
• Essential: that the staff are competent
(training and experience) and committed
(i.e. have correct attitude).
23
• Can the private sector more
effectively be held to
performance criteria than the
public sector can be held?
24
Way forward (1 of 2):
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• Public provision, led by local
government, will remain dominant model
• Conventional consultant/contractor role
will remain important
• Finding the right skills will remain a
challenge, whatever model
• Franchising partnerships could enable
central specialists, standardisation,
training.
• Regionalisation of public domain could
Way forward (2 of 2):
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• Already many different partnerships in
different contexts
• Traditional partnerships, will continue
• Consultants will develop long term
relationships with clients
• If procurement rules allow
• More plant outsourcing?
• More functional outsourcing?
• Some “contracting” to local operators
• or to community itself?
• makes practical sense,
• but may be hard to put into practice.
•Availability of funds is key and will remain
limited.
•Between the extremes, a variety of options
There must, at least
sometimes, be a strong case
for more outsourcing.
Especially (but not only) for the more
remote municipalities that can’t afford (and
it isn’t warranted anyway) to employ the
higher skills – and/or don’t have the more
experienced staff to supervise and mentor
those less experienced and/or skilled.
27
South Africa has further issues:
•Aside from finance and perceptions of “private”,
further complicated by identity issues
•Must consider representativity
•Communities may prefer “black” to “white”
company. (But does not mean an easy ride for
“black business”)
•Attitudes to private sector still apply
•May also prefer “local”
•Perceptions also apply to “external” public
organisations, not under local political control, as
profit-seeking contractors
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M Muller
Contents
1. Public-private is a continuum
2. Some South African realities:
operation and maintenance
3. Case study: microentrepreneurs
in a partnership model
29
Can a partnership model, making use
of the basic principles of franchising,
be applied – where appropriate – to
water services operation and
maintenance?
And thereby improve service
performance – particularly reliability?
30
A partnership model
• A partnership model …
• To assist the owners of water
services infrastructure …
• To operate and maintain …
• The infrastructure that they
continue to own.
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Levels of skill – and obligations
• Each person correctly skilled, and contractually
bound
• On most days, nothing extraordinary happens. Lowlevel skilled staff able to cope.
• When major maintenance, or upgrading, or
breakdown – those staff know who to call, who will
bring the higher level of skill
• And they know that the people they call WILL help,
because there is a binding contract
• Cost of the higher-skilled, who are needed only
intermittently, is spread among many sites – thus
cost per site is low
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Franchisor
Franchisee 1
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Franchisee 2
• Microenterprise
franchisee receives
business ‘know-how’
from franchisor; and
provides services or
products to customers
• Franchisor monitors
quality of
product/service to
customers
• Customers pay
franchisee for
products and services,
and a % is passed back
to the franchisor
What a franchisee of municipal
infrastructure could typically
look after
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Clients:
• Owners of municipal engineering
infrastructure.
• Owners of engineering
infrastructure for education and
health facilities (schools and clinics),
hostels and the like
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Pilot project in the
Butterworth Education
District, Eastern Cape
Province
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What a schools sanitation
franchisee could typically
look after
What a schools sanitation franchisee
typically looks after
39
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Scope of franchisee training:
Franchisees have been trained in:
 Correct use of on-site sanitation facilities
and rural water systems
 Pit emptying using on site sanitation
methods
 Occupational Health & Safety, including
basic First Aid
 Environmental management practice
 Health and hygiene education
 Basic plumbing / rainwater harvesting
 Pump operation and maintenance
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procedures
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Scope of franchisee services:
The franchisees do the following:
 Clean inside the toilet facilities
 Undertake basic maintenance of facilities
 Remove foreign material and dispose
safely at designated solid waste site (solid
waste management may be added to scope
later)
 Remove excess liquid, dispose liquids safely
through irrigation
 Educate learners and teachers on
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water & sanitation
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45
46
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Health and hygiene education
Explain to learners correct
usage of toilets and good
hygiene practices
Hand washing and hand
sanitizing
practice
48
Conclusion:
There is surely, at least sometimes, a
strong case for more outsourcing.
Public ownership of assets and control of policy
Private ditto
High
Degree
of PSP
Other Activities
Major Design
Low
Construction
Purely
public
operation
49
Selective outsourcing:
-- design
-- construction
-- maintenance (not O&M)
-- niche operation
Contract for Private
full O&M
operation
50
Pay heed to the words of a wise old
man:
“You don’t have to do extraordinary
things to get extraordinary results.
Just do ordinary things
and do them well.”
- Warren Buffett
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• “Private sector involvement. The private
sector can be involved in a wide range of
ways, including but not limited to the
following: acting as an external water
services provider in terms of a contract
(service delivery agreement) with a water
services authority, investing in a public
utility (provided ownership control vests
with national government), and supporting
other water services providers as water
services agents.
• Public preference. The provision of water
services by public institutions is preferred.”
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SFWS 2003
IRISH AID
(Donor Funder)
Funding Agreement
WRC
Water Services Franchising
Research Project
WRC
(RESEARCH
COMMISSION)
CSIR
(Research Team
Leader)
Amanz’ abantu
Services
(Sub-consultant)
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Eastern Cape
Department of
Education
Service
Level
Agreement
CSIR
(Technical
Assistance)
Service Level
Agreement
(Optional)
Implementing
Agent (IA)
Licensing
Agreement
Butterworth Schools
Sanitation and Water
Pilot Project
Amanz’ abantu /
Impilo Yabantu
(Franchisor)
O&M Contracts
SMME
Franchisee
Franchise
SMME
Agreements Franchisee
SMME
Franchisee