Transcript WOP: How to make them even better Experiences on partner modalities to tackle NRW reduction of water operators Philippe Marin Sr.

WOP: How to make them even better
Experiences on partner modalities to tackle
NRW reduction of water operators
Philippe Marin
Sr. Water Specialist, World Bank
30 May 2013
Let’s start with non-WOP modalities…
Concession: the “strongest” modality of PPP
• A private operator comes from outside and
takes over for long duration
• Full control including financing and
investment
• Case of Morocco: quality data, set of
concessions and public utilities to compare
Experience with concessions:
case of Morocco
Morocco: Comparison of NRW % for 4 concessions and 6 large public utilities
Start year
60%
Last year
49%
47%
45%
36%
33%
28%
30%
46%
43%
33%
34%
36%
49%
33% 34%
28%
25%
23%
19%
23%
20% 21%
15%
0%
Casablanca
(1999-05)
Rabat
(2001-05)
Tangiers
(2001-05)
Tetouan
(2002-05)
Marrakech
(2001-05)
Morocco: Evolution of water losses per connection (m3
per day) under private concessionaires
0.50
Tangiers
Tetouan
0.40
Meknes
(2001-05)
Kenitra
(2001-05)
0.40
0.30
0.30
0.20
0.20
0.10
3
0.10
1999
2000
2001
2002
2003
2004
Oujda
(2001-05)
Marrakech
Fez
Agadir
Kenitra
Oujda
Meknes
0.60
Rabat
0.50
Agadir (200105)
Morocco: Evolution of water losses per connection (m3
per day) for the 6 largest municipal utilities
Casablanca
0.60
Fez
(2001-05)
2005
1999
2000
2001
2002
2003
2004
2005
Another non-WOP modality…
Management contract: closer to a WOP
• Private management but the utility remains
public, under same institutional framework
• Usually short duration
• Sharing of functions and responsibilities
between the parties
Experience with 14 management contracts
• Track record is mixed (only 5 projects out of 14 were
clear success)
• Seem more efficient for dealing with commercial
losses (rapid gains), than with physical losses
Comparison of NRW % reduction in 14 Management Contracts,
before the entry of the private operator and at the end of the contract
Before start of MC
By the end of the MC
90%
75%
60%
45%
30%
15%
0%
Yerevan Monagas
(5)
(4)
Kosovo Rioja (3)
(4)
Lara
(3)
Zambia
(4)
Gaza
(7)
Amman
(6)
Kampala
(3)
Trinidad
(4)
Chad
(3)
Mozam.
(4)
Joburg
(5)
Gabon
5
(4)
Another non-WOP modality…
Improvement under public management, without
any scheme involving an external operator:
• Case of Phnom Penh
• Case of Morocco
Moroccan concessions since 2005
(NRW in liters / connection.day)
NRW reached a plateau for the 4 concessions in 2007
600
AMENDIS - Tanger
AMENDIS - Tetouan
500
LYDEC
400
REDAL
300
200
100
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
6 largest municipal public utilities
in Morocco (NRW in liters / con.day)
Improvement took longer, but they have now reached
levels comparable with the concessionaires – under
pressure from government and benchmarking regulation
600
500
RADEEF
RADEEMA
RADEEO
RADEM
RAMSA
ONEP
400
300
200
100
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
What about WOPs?
the Taiz case in Yemen (VEI)
• From a baseline NRW at 45%
– Wells: production overestimated by 5%
– Physical losses: reservoir overflows, installing
control valves reduced losses by 4%
– Commercial losses – fraud with meters reading/
billing  firing of financial accountant 
commercial losses down by 5%
• Overall NRW went easily down to ~ 30% - but then
hitted a wall: lack of interest from utility
management to make further progress!
9
WOP in Taiz / Yemen
• Improvement in NRW still better than most MCs
• The few MCs which showed NRW improvement
usually went the same route (finding low lying
fruits) but charged more 
• “Low lying fruits” are good, but not enough in a
country where there are huge needs for saving
water: WOP as it was designed failed to address
the core NRW issues (leakages, metering)
What makes for successful NRW
reduction?
• Not just technical, not just about skills
• Need to deal with the whole organizational and
incentive structure
• This usually means addressing difficult issues:
• Corruption and frauds, but also…
• Special interest groups (material standards, focus on
increasing production capacity vs. leakage reduction)
• Inherent conflict between technical and commercial
departments (pointing fingers at each other)
11
• With MC: external partner typically does not
have enough control nor time to push for true
NRW improvements
• With WOP: external partner has no control to
push for improvement: frustrating!
NRW reduction requires an integrated
approach at the utility level
• Arguably, this is may be best dealt with if there is
a clear line of command: “only one in charge”
– Concession: a private operator with clear financial
incentives
– Successful public utility: a champion able to push for
the internal and institutional reforms
• Having two actors may create more opportunities
for confusion or conflicts, which can be used by
those opposing the changes at utility level (MCs)
NRW sustainability and short-term
schemes
• Improvement under concessions and successful
public utilities tend to be sustainable: long term
view (contract duration, institutional reform)
• MC or WOP tend to be short term
• Short term contracts may be include features to
improve sustainability, but no magical formula
• Second generation MC tend towards longer
contracts, with knowledge transfers (Algiers MC)
A new modality: Performance Based
Service Contracts (PBC)
• Utility remains under public management,
external operator brought to carry out NRW
reduction activities, paid on results i.e. meeting
objective targets (m3 of water saved)
• Advantages:
– Sharper set of financial incentives
– Focus on specific activities that can be ringfenced from utility management
• New IWA taskforce on PBC
Can the PBC approach be adapted to WOP?
• Taking more risks and responsibility for results would
move WOP to giving more control to the external
partner, under specific ring-fenced activities
• The “P word”: profit does not equate profiteering,
especially if fair remuneration for efforts and results
achieved while taking risks: what PBC is about!
• Would sharing financial benefits from effective NRW
reduction be against the spirit of WOP?
• Making profit in some cases would allow to take on
more risks elsewhere, on more projects…
Purpose of 5th Symposium
Thank you for your attention
Philippe Marin
Sr. Water & Sanitation Specialist, The World Bank
[email protected]