Urban water supply

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Urban water supply

• The privatization process
• in Mozambique
• Christophe Nothomb
• Barcelona, 21.11.08

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Mozambique

• Population about 20 million
• Urban population 36
• GNI per capita 310 USD
• Aid per capita 77 USD
• Population below poverty line 54
• Life expectancy at birth 42 years
• Mobile phone users 15 per 100 hab.
• Inflation 8 to 10
• Improved sanitation access 31

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RATIONALE OF DELEGATED MANAGEMENT FRAMEWORK
INVESTMENTS OPERATIONS TARIFFS

SUSTAINABLE WATER SERVICES
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Principles of the Delegated Management Framework

• Private Sector Participation (PSP)
• Increase efficiency
• Technical (reduction of water losses, of chemical
  consumption, energy, etc.)
• Commercial (improve customer relations, billing
  and collection, etc.)
• Training and development of HR
• Training
• Responsibilities
• Perspectives

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Principles of the Delegated Management Framework

• Benefits for the consumers
• Service levels
• Cost of water
• Increase coverage
• GoM objectives and MDGs,
• via increase in n of connections
• Sustainability of the sector reforms
• Debt service
• Capacity of attracting funding for investments

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Institutional Framework
Ministry of Public Works and Housing
Council of Ministers

• ARA-Sul
• Issue water permits
• Monitor water resources

• DNA
• (National Water Directorate)
• Sets water and sanitation policy
• Supervises sector and draft investment plans
• Support to semi-urban and rural schemes

• Ministry of Health
• Set drinking water standards
• Monitor quality

Performance contract

• FIPAG (Assets holding and investment company)
• Full investment responsibilities

• Local Authorities (Municipalities)
• Review investment plans

Lease, Management or Technical Assistance
contracts

• CRA
• Economic regulation
• Approval of tariffs
• Protection of customers

Águas de Moçambique
???
Vitens (NL)
Subscription contracts
Customers (14 urban centres)
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Urban Water Supply Reform Process

• Civil war up to 92 very limited investment
• 1991 Water law
• 1995 (revised 2007) National water policy
• Principle of PSP
• 1998 Tariff policy
• Water as a social but also economic good
• 1998 Delegated Management Framework
• 1999 Lease contract award to Águas de
  Moçambique (AdeM) for Maputo
• 2000 Major floods
• 2001 SAUR quits AdeM
• 2004 Revised Lease Contract
• 2008 Periodic Review Process

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Urban Water Service Coverage
MWSP TARGET 73
DELEGATED MANAGEMENT FRAMEWORK
GOVERNMENT TARGET
STATE OWNED UTILITIES
60
40
48
32
35
1980 1990 2000
2007 2009 2015
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Maputo case

• Total population 1.8 Million

• Peri-urban area
• Expansion started in the year 2000
• Population 300.000
• Growth rate 6 to 10

• Cement city
• Population 800.000
• Growth rate 1

• Peri-urban area
• Expansion started in the 80s
• Population 700.000
• Growth rate 2

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Official Maputo Water Supply System

• Maputo/Matola
• 1 700 000 inhabitants,
• (1 250 000 in peri-urban areas)
• Conventional system in a delegated management
  framework
• 15 years lease to private operator (Águas de
  Moçambique - AdeM, since 1999)
• from public asset holding company (FIPAG)
• with an independent regulator CRA
• Main characteristics (2008)
• 1000 km network,
• 100 000 connections,
• 350 functioning standpipes,
• average distribution time 12 hrs/day,
• 38 population coverage
• High level of UFW (55 losses) and low collection
  rate (80)

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Water quality and quantity

• Quality improved
• Quantity

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Key performance standards

• Non-revenue water
• 2000 44
• 2002 53
• 2004 58
• 2008 55

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Collection rates

• 2000 62
• 2002 68
• 2004 60
• 2008 85

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Nr of Customers

• 2000 78 500
• 2002 80 000
• 2004 85 000
• 2008 105 000

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Tariffs
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Cumulative Investment (Maputo)
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Results Evolution of key performance standards

• Quality of water
• Quantity of water
• Nr of connections
• Tariffs
• Investment
• Level of Service
• Customer Satisfaction

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Maputo Water Supply
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Maputo case- Water Supply

• SERVICE PROVIDERS
• Formal AdeM -15 years lease contract
• Informal- 427 SSIP

• ADEM
• Manage the conventional network
• All the historical centre
• Most part of the first expansion area
• FIPAGs Investment

• SMALL SCALE INDEPENDENT PROVIDERS- SSIP
• Serves the two expansion areas with own networks
  (purely private investment)

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Maputo case- SSIP

• Water service metered private connection,
  standpipes
• Water tariffs 1/m3, 100 connection fee (all
  included)
• Water available for the consumers 20h/day
  (average)

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Maputo case- SSIP

• Biggest SSIPs
• Mr. Luís Faquene 7 systems
• with 2100 PC
• Mr. Calmo Nualane
• 2 systems with 2000PC, one with
• 1500 PC
• Mr. Arlindo Xavana
• 2 systems with 1900 PC

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Maputo case- Integration of SSIP

• PRINCIPLES
• Recognition of SSIP role
• Making profit of SSIP know how
• SSIP as potential partners in urban water sector

• CONSTRAINTS
• SSIPs Low technical capacities
• Weak organization 2 associations covering 50 of
  the SSIP
• Higher Number of different types of SSIP Network
  overlaps

• VISION
• Build on the existing capacities to develop
  reliable Mozambican water distribution companies

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Maputo case- Integration of SSIP

• CHALLENGES
• Enabling environment
• Security through licensing
• Opportunities for partnerships with water sector
  institutions and financial entities

• Capacity building through partnership
• On the job training to create national water
  companies
• FIPAG/SSIP contractual arrangement conducive to
  building capacity

• Maputo water market structuring
• Concentration of market fewer and bigger SSIP
• Integration of SSIPs infrastructure

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Conclusions

• Privatization process
• Mixed evaluation private operator
• Positive for consumers on water quality, quantity
  and reliability
• Negative for efficiency and customer services
• Negative for time spent in contract negotiations
• Neutral for tariffs
• Positive evaluation government attitude
• Stability and strenghtening of institutions, open
  attitude
• Financiers confidence
• Negative for speed of investment implementation
• Specific context of small providers services
• Move towards  hybrid system 
• Challenges
• Regulation

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Thank you