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Global Water Operators Alliance activities to improve financial management
of Water Operators
Faraj El-AwarGlobal Water Operators’ Partnerships Alliance/UN-HABITAT
&Christian Schlosser
Transport and Energy Policy Section/UN-HABITAT
International Symposium on Sustainable Rural Water ServicesKampala, Uganda, 13-15 April 2010
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UN-HABITAT to host
the Global WOPs Mechanism with the
help of partners
Many countries are off track to meet
the water & sanitation MDGs
Urgent need to accelerate Progress
Response to a Global ChallengeEnhancing Water
Operators capacity is essential to achieving
the MDGs.
Capacity development through PARTNERSHIPS
between operators
Water Operators’ Partnerships a
key component of UNSGAB’s
Hashimoto Action Plan to step up
effort to achieve MDGs
Global Water Operators’ Partnerships Alliance
GWOPA formed as an alliance of partners to
help increase the scope and impact
of WOPs
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What are WOPs?
Global Water Operators’ Partnerships Alliance
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The Global WOPs Alliance is an Alliance of Partners working to increase the scope and impact of WOPs, by:
• Establishing and Supporting WOPs Platforms around the world
• Bringing together support partners • Promoting Key Principles• Supporting WOPs implementation with
• Brokering• knowledge Mgmt• capacity building • advocacy• financial guidance
What GWOPA doesGlobal Water Operators’ Partnerships Alliance
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financial guidanceo identifying and helping extend access to
existing WOPs funding sources at all levelso propagating successful financial and legal
support mechanisms for WOPs o establishing a financing and advisory
facility to support public utility improvements
What GWOPA doesGlobal Water Operators’ Partnerships Alliance
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Links between small urban and rural water operators (1)
SMALL URBAN CENTRES IN AFRICAo Intermediaries between big or
medium-sized cities and rural settlements
o Important engines of economic growth for the rural sector
o Sharing many features with rural settlements
Water Utilities of small urban towns are facing similar challenges and problems
as rural water operators
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Many solutions developed for the problems of small towns are applicable for rural settlements
Links between small urban and rural water operators (2)
Business-type approaches in water provision are getting popular in rural areas
Opportunity to expand urban Peer-to-Peer Twinning approaches to support entrepreneur’ capacity
in operation and financial management
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Financial challenges for African Water Utilities Strong reliance on subsidies from national government
treasuries for major rehabilitation works Overstaffing, yet also limited qualified and trained staff Poor financial management systems High share of non-revenue water Lack of revising / adjusting tariffs
to capture increasing costs of services Lack of enforcement of regulations Lack of sufficient financial resources
to fund new facilities Draught -> shortage of water to supply
-> reduction of sales volume -> reduction of revenues
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WOP Africa Utility Performance Assessment
Variations in capital expenditures by Water Operators in East Africa:Average capital expenditures 2001-2006 (US$ per connection)
Source: GWOPA Africa Utility Performance Assessment (2009)
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Assist utilities to enhance their overall financial management to attract external funds
Enable utilities to improve operationalefficiency and revenue collection
Assist utilities in developing business plans for identifying strategic investments for service extensions & extended coverage
Integrate technical assistance towards higher operational efficiency and improved financial management into general Capacity-Building activities directed at water utilities such as the GWOPA Twinning Programme
What can be done?
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Water Operators Advisory & Financing Facility - 1
OBJECTIVETo support the work of GWOPA in improving
operational efficiency in the public water sector
FOCUSTo improve financial management
of public water operators
GOALTo address the capital shortage
of water utilities and facilitate increased investments for expanding services to the poor through improved financial, operational & environmental efficiency
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Water Operators Advisory & Financing Facility - 2
ACTIVITY AREASPre-investment technical
assistanceMobilization of seed capital
SPECIFIC SUPPORT SERVICESProvision of information, expertise and technical assistance in financial managementBrokering of assistance by other partners, provided to partner operators in form of technical support, loan guarantees and/or loans for investment
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GWOPA Facility - Expected AccomplishmentsExpected Impacts of improved financial management & operational efficiency of water operators:Significant reduction of total costs and cost coverage tariffReducing the working ratio (operating expenses vs. operating revenues)Reducing subsidy requirements from national government or other bodiesIncreasing coverage of water supply services without drawing on additional external sourcesEnabling utilities to access finance from domestic financial resources (local banks) at commercial rates
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GWOPA Facility - Implementation
TIMELINE Start of the initiative in early 2010 First steps:
- developing a financial analysis methodology- selecting 2 pilot utilities in the Lake Victoria Region to test the analytical framework and develop recommendations for improvements
Next steps: - analyze results, develop investments strategies- Refine methodology- Identify further utilities & partners for up-scaling
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GWOPA Facility – initial findingsImproving operational efficiency & financial management of water operators can result in:Significant reduction of total costs
and cost coverage tariffIncreasing per capita consumption of waterReducing subsidy requirements from national government or other bodiesReduction of the working ratio (operating expense to
operating revenue ratio)Increasing the coverage of water supply services
in the absence of additional external sourcesEnabling utilities to access finance from domestic financial resources (local banks) at commercial rates
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Percentage ofinactive
connections tototal connections
Unaccounted forWater (%)
Staff per 1000active
connections
Collection /billing efficiency
(%)
Currentproductioncapacity as
percentage ofdesign capacity
Water Utility A
Water Utility B
GWOPA Facility – initial findings (1) Performance Indicators of 2 Water Utilities analyzed
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Water Utility B
GWOPA Facility – initial findings (2) Achievement against targets of UN-Habitat Performance Improvements Plans (%)
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Thank you for your attention!