How Water Utilities Can Strengthen Themselves

Many a water utility has been overwhelmed by the prospect of developing a capacity building and institutional strengthening program (CBISP). Where do they start? Which aspects are negotiable and which ones aren’t?

An effective CBISP for a water utility should enable the utility to:

• develop full autonomy within the organizational structure
• define managerial responsibility and accountability
• implement integrated business, operation, and financial planning
• achieve financial self-sufficiency
• manage competitive human resources.

An effective CBISP should review, define, and implement the following functionally-linked activities:

• Business Planning
• Human Resources Development (HRD)
• Information Technology (IT)
• Management Information Systems (MIS)
• Financial Management Development (FMD)
• Financial Modeling and Tariff Development
• Geographic Information Systems (GIS).

The conventional approach to developing CBISP is to have a consultant assess the water company’s status [...]. The downside of such an approach is that the usually expensive international consultants work in isolation from the client. As such, they produce a “best practices” report that does not have much client ownership. In many cases, the programs ensuing from such an approach are doomed from the start.

To enhance this conventional approach, utilities can start working on a business plan guided by the standards set by the International Organization for Standardization (ISO), such as:.

• ISO 9001/9002 (Quality)
• ISO14000/18000 (Environmental Management and Safety)
• ISO 24510: Guidelines for the improvement and assessment of the service to users
• ISO 24511: Guidelines for the management of wastewater utilities and assessment
• ISO 24512: Guidelines for the management of drinking water utilities and assessment of drinking water services.

[...]

Strengthening an institution requires a strong leadership that can drive a top-down transformation process [and] good governance [without which] capacity building efforts will have a more than usual uphill battle.

Source: Hubert Jenny, Asian Development Bank, Sep 2008

Privatization Revisited: Lessons from Private Sector Participation in Water Supply and Sanitation in Developing Countries

A study [1] by the Asian Development Bank (ADB) shows that private sector participation (PSP), has not shown encouraging results in the water supply and sanitation (WSS) sector. In particular, private resources have not been adequately mobilized to solve WSS sector problems as anticipated by the proponents of PSPs. PSPs in the WSS sector managed to succeed in environments where effective regulation, good governance, and contract enforcement were prevalent. Effective demand for improved WSS services and innovative approaches for competition also paid an important role. Experience also showed that public water utilities can work well when anchored on reforms with ingrained internal and external accountability, customer orientation, and autonomy. While ownership itself hardly influences the efficient provision of WSS services, the interdependence of the public and private players should not be overlooked; a reasonably well-functioning public sector is a precondition for the success of private provision of WSS.

[1]  Gunatilake, H. and Carangal-San Jose, M.J.F. (2008). Privatization revisited : lessons from private sector participation in water supply and sanitation in developing countries. (ERD working paper ;  no. 115). Manila, Philippines, Asian Development Bank. 49 p. Download here [PDF file, 2 MB]