2012 Annual Report - National Water Supply & Sanitation ... Reports/nwasc… · 2 Annual Report...

2012Annual Report

Taking care of your water and sanitation interests

2 Annual Report 2012

National Water Supply and Sanitation Council

Annual Report 2012 1


3

T a b l e o f C o n t e n t s

1 Chairperon’s Statement .................................................................2 The Council .............................................................................................................3

2 Director’s Statement ......................................................................4 Management Staff ...............................................................................................5

3 Institutional Information ..............................................................63.1 Core Functions ..........................................................................................63.2 Vision ............................................................................................................63.3 Mission .........................................................................................................63.4 Core Values .................................................................................................73.5 Strategic Objectives ................................................................................73.6 The Council ................................................................................................83.7 Management, Departments and Staff .............................................8

4 Report on 2012 Activities ..............................................................9

4.1 Introduction ...............................................................................................94.2 Licensing .....................................................................................................94.3 Tariffs ......................................................................................................... 104.4 Guidelines ................................................................................................ 124.5 Monitoring Compliance ..................................................................... 124.6 Performance of Providers .................................................................. 154.7 Consumer Engagement and Complaints Handling ................. 184.8 Delivering Better Regulation ............................................................ 20

5 Internal Operations and Development ......................................22

6 Challenges and Constraints ........................................................24

7 Future Outlook .............................................................................25

8 Financial Statements ...................................................................27



Chai

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1 Chairperson’s Statement

In the year 2012, the National Water Supply and Sanitation Council (NWASCO) continued its quest to meet its mission targets of regulating

the water supply and sanitation sector to ensure sustainable service delivery, increased access to affordable water and acceptable sanitation and increased public awareness through various programs while noting remarkable improvements in the sector amidst several challenges.

Positive trends were realised as evidenced in the 2011/12 Urban and Peri-Urban Water Supply and Sanitation Sector Report, which showed improved

service delivery particularly in areas such as water coverage, water quality, metering ratio and even in the age-old aspect of sanitation, which still continues to be a huge challenge in the sector. The need to ensure that deliberate steps are taken to increase sanitation coverage cannot be over emphasised.

Suffice to note that challenges continued to be observed particularly among the smaller water utility companies. The absence of the Boards of Directors of the water utilities coupled with load shedding adversely affected operations of the companies for the most part of the year, inevitably affecting service delivery. In addition, the non-payment of water bills by Government Departments continued to take its toll on the operations of the water companies, who have to supply water and sanitation service on a sustainable basis.

It is anticipated that the implementation of the Strategic Plan 2013-15 will aid in resolving several of these challenges and look forward to improved service delivery.

Levi ZuluNWASCO Council Chairperson



NWASCO Council

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Levi ZuluChairpersonWater and Sanitation Association of Zambia (WASAZA)Representing an association whose membership consists of water sector professionals, Mr Zulu is the Chairman of WASAZA.

Adam HussenChairperson of Technical Advising Committee (TAC)Ministry of Mines, Energy and Water DevelopmentRepresenting the Ministry responsible for water resources, Mr Hussen was the Director of the Department of Water Affairs

Lwimba PhiriChairperson of Administrative and Finance Committee (AFC)Zambia Association of Chambers of Commerce and IndustryRepresenting the Zambia Chambers of Commerce and Industry, Mrs Phiri is the Managing Director of Alexander Forbes Zambia.

Davies ZuluMinistry of Local Government and HousingRepresenting the Ministry responsible for Local Government and Housing, Mr Zulu was the Deputy Director of the Department of Housing and Infrastructure Development

Joe SimachelaMinistry of JusticeRepresenting the Attorney-General, Mr Simachela is the Deputy Chief State Advocate.

VacantRepresenting a private sector institution concerned with public health

VacantRepresenting the Consumer Protective Association of Zambia



Dire

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2 Director’s Statement

The National Water Supply and Sanitation Council (NWASCO) continued with its implementation of various programmes in its efforts to improve

service delivery in Zambia.

There was heightened regulatory oversight of the commercial utilities, which saw most of the directives adhered to by the service providers. The licence of Chambeshi Water and Sewerage Company was suspended due to poor service provision and non-compliance with licence conditions pursuant to the Water Supply and Sanitation Act. NWASCO will not hesitate to take

appropriate action against erring service providers in line with the provision of the Act.

To increase NWASCO’s presence on the ground, the Water Watch Groups throughout the country continued to carry out their regular function of raising consumer awareness of water supply and sanitation and facilitating the resolution of complaints. The NWASCO toll free line and newly introduced Facebook page have had a positive impact in not only increasing consumer awareness but also the timely resolution of complaints by consumers. There is still however, need to increase public awareness and consumer participation in the water supply and sanitation sectors.

To improve its regulatory prowess, NWASCO embarked on a program to refine its benchmarking system through a consultative process. In the period under review, NWASCO continued to be a fertile learning ground for other regulatory bodies throughout Africa who came to Zambia for learning visits.

The sector performance comparative report showed general improvement in all the sector indicators.

The year saw the preparation of the Strategic Plan 2013-15 through a consultative process of major stakeholders which was launched by the Minister of Mines, Energy and Water Development, Honourable Yamfwa Mukanga, and the Minister of Local Government and Housing, Mrs. Emerine Kabanshi. It is anticipated that the implementation of various programs will ultimately translate into improved service delivery and encourage knowledge-sharing among the utilities. It is further anticipated that NWASCO will develop core competencies to augment regulation and enhance its financial sustainability.

Kelvin ChitumboNWASCO Director



Man

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Kelvin ChitumboDirectorMr Chitumbo holds a Masters Degree in Business Administration and a Bachelors Degree in Civil Engineering. He joined NWASCO in 2003 as Technical Inspector and has progressed through the ranks to Chief Inspector and now Director. He has worked for ZCCM, CEC and the Kabwe Municipal Council.

management Staff

Peter mutaleChief InspectorMr Mutale holds a Bachelors Degree in Chemical Engineering. He joined NWASCO in 2007 as Technical Inspector and rose to Chief Inspector. He has worked for KCM, and held senior positions at two water utility companies, Kafubu WSC and AHC-MMS.

Charlotte mweemba ChibomaSecretary to the CouncilMs Chiboma joined NWASCO in 2010 and holds a Bachelors Degree in Law. She is an advocate of the High Court of Zambia and a seasoned litigator having worked as a Legal Practitioner for Simeza, Sangwa & Associates, as well as, Theotis, Mataka & Sampa Advocates.



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3 Institutional Information3.1 Core Functions

The National Water Supply and Sanitation Council (NWASCO) was established by the Water Supply and Sanitation Act, No. 28 of 1997 to regulate the provision of water supply and sanitation services for

efficiency and sustainability. The core functions are to:

• Licence providers;

• Advise the Government on water supply and sanitation matters;

• Establish and enforce sector standards and guidelines;

• Advise providers on procedures for handling complaints from consumers; and

• Disseminate information to consumers on water supply and sanitation issues.

3.2 Vision

Safe, affordable and sustainable water supply and sanitation services for all

3.3 mission

To regulate WSS services focussing on:

• Sustainable service delivery balancing commercial orientation and social consideration;

• Increased access to affordable safe water and acceptable sanitation; and

• Increased public awareness.

Ensuring safe water for all



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3.4 Core Values

• Accountability - to all stakeholders on our mandate

• Legitimacy - in operating within the confines of the law

• Transparency - work shall be executed in an objective and transparent manner in all regulatory functions while maintaining predictability, fairness and confidentiality.

• Integrity and Professionalism- in discharging responsibilities. We shall not allow bias, conflict of interest or the influence of others to override our professional judgment.

3.5 Strategic Objectives

For the period 2010 - 2012, NWASCO set out four strategic objectives to be achieved as follows:

• Strengthen sector performance through advice and participation;

• Strengthen and innovate instruments for regulating service providers;

• Promote engagement and education of the key stakeholders on water and sanitation issues; and

• Promote excellence and innovation within NWASCO

Promoting increased public awareness



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3.6 The Council

The Council (Board) is responsible for the general oversight of the management of the institution. Its main function is to maintain an effective system for internal control that enhances effective and

efficient operations of the organisation. The Council is composed of seven members appointed by the line Minister for Water representing:

• The Consumer Protective Association of Zambia;

• The Zambia Chambers of Commerce and Industry;

• An association whose membership consists of water sector professionals;

• A Private sector institution concerned with public health;

• The Ministry responsible for water resources;

• The Ministry responsible for Local Government and Housing; and

• The Attorney-General.

The Council comprises three standing committees which are; Administrative and Finance, Technical Advisory and Devolution Trust Fund. The membership of the committees includes professionals who are not members of the Council. The committees undertake detailed analyses and scrutiny of issues and thereafter recommend them to the Council for action.

3.7 management, Departments and Staff

Management comprises the Director, Chief Inspector and Secretary to the Council. The main departments are:

• Inspectorate - responsible for monitoring, inspecting and enforcing the provisions of the Act.

• Finance and Administration - responsible for overseeing budgeting and accounting and providing administrative support for daily operations.

• Legal and Human Resources- responsible for providing legal advice and staff recruitment and training.

• Public Relations and Corporate Affairs - responsible for information dissemination and promoting the external and internal image of the institution.

• Knowledge-Management Centre- responsible for knowledge management and information resources for the sector in general.

NWASCO has a lean structure of eighteen members of staff complemented by a cadre of professionals who undertake inspectorate work on a part-time basis. In order to ensure efficiency, NWASCO places focus on rewarding performance and building capacity.



4 Report on 2012 Activities 4.1 Introduction

The National Water Supply and Sanitation Council (NWASCO) regulates the urban water supply and sanitation sector. The mandate to provide water supply and sanitation services to the urban and

peri-urban areas of Zambia has been vested with Local Authorities. To carry out this function, the Local Authorities have formed Commercial Utility (CU) companies under the Companies Act Cap 388 with 100% shareholding at present.

There are eleven CUs providing water supply and sanitation services to the urban areas of Zambia. There is one CU in each province except for the Copperbelt which has three while Northern and Muchinga provinces are serviced by one utility company. Within the service areas of the CU, there are also seven Private Schemes providing water supply and sanitation services as a fringe benefit to their employees. The list of providers is shown in Table 1.

4.2 Licensing

Eleven Commercial Utilities and seven Private Schemes remained licensed in the year 2012. There was general compliance to licence conditions except for Chambeshi Water and Sewerage Company

(CHWSC), which had its license suspended in December due to persistent non compliance. This was after the company was placed on Special Regulatory Supervision for a period of one year from June 2011. Special Regulatory Supervision is a stop-gap measure to avoid the worst case scenario of suspension/cancellation of an operating license for a poorly performing CU. A statutory manager (interim management team), North Western Water and Sewerage Company (NWWSC) was appointed to oversee operations for CHWSC for an initial period of six months. The licence of CHWSC remains suspended.

License amendments were made for Western WSC (WWSC) to include the newly created districts of Shan’gombo, Mwandi and Sichili in Western Province. The CU is already providing services to the three districts.

Table 1: List of Licensed Providers: 2012

Provider Licence No. Expiry Date

Commercial Utilities

1 Lukanga Water & Sewerage Co. L57 10th April 2018

2 Southern Water & Sewerage Co. L34 3rd January 2021

3 Lusaka Water & Sewerage Co. L22 4th January 2021

4 Kafubu Water & Sewerage Co. L15 6th January 2021

5 Nkana Water and Sewerage Co. L30 8th January 2021

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6 Mulonga Water & Sewerage Co. L 25 9th January 2021

7 North Western Water & Sewerage Co. L 31 9th January 2021

8 Eastern Water & Sewerage Co. L 14 17th January 2021

9 Chambeshi Water & Sewerage Co. L46 21st January 2021

10 Western Water & Sewerage Co. L45 19th March 2021

11 Luapula Water & Sewerage Co. PL11 22nd May 2021Private Schemes

12 Kafue Sugar L13 11th May 2020

13 ZESCO L 35 3rd January 2021

14 Larfarge Cement-Chilanga L36 2nd January 2021

15 Maamba Collieries L41 3rd January 2021

16 Konkola Copper Mines Plc L44 14th January 2021

17 Kaleya Small Holding Co. L17 4th January 2021

18 Zambia Sugar Plc. Nakambala L47 3rd January 2021

4.3 Tariffs

It is NWASCO’s mandate to approve water and sanitation tariff adjustments. Comprehensive tariff applications are approved for a minimum period of one year and a maximum multi-year period of three

years. To implement approved multi-year tariffs, a CU must seek a “no objection” from NWASCO annually but subject to meeting at least 75% of prior-given tariff conditions. Tariffs are approved after an analysis of the proposed cost structure to remove unjustified costs.

Table 2 shows the level of tariff adjustment applied for by the CU and the percentage approved by NWASCO for the indicated tariff period. The immediate objective of the tariff approved is to cover Operation and Maintenance (O&M) costs first with progression towards full cost recovery (that is, depreciation, finance costs and specific provisions).

In 2012, NWASCO approved upward tariff adjustments of an average of 12% for four CUs and also granted ‘no objections’ to five CUs to implement approved tariffs for the 2013 period. Luapula and Chambeshi WSCs continued to implement the 2011 approved tariffs pending installation of 400 customer meters and improved service delivery respectively as per tariff conditions.

Tariff approvals came with conditions which could either be specific or general. Among the general tariff conditions given were to:

• Fully meet the Service Level Agreement for 2013;

• Attain 100% compliance to water quality standards;

• Attain at least 85% collection efficiency and

• Ensure external auditing of financial statements is current.



Table 2: 2012 Tariff Approvals

Comprehensive Tariff Applications

CU % Applied for by CU

% Approved by NWASCO

Approved Tariff Period Comments

Lusaka WSC 26 13 2013

Expected to cover 118% of O&M costs by December 2013. One year tariff awarded instead of three years applied for, to take into consideration the anticipated impact of the MCC project (which begun in 2012) on the CU’s operations.

Nkana WSC 9 4 2013

Expected to cover 135% of O&M costs by December 2013.The CU proposed an adjustment for 2013 to cushion the impact of the intended ZESCO tariff increment only. This was in view of ongoing AfDB projects and the anticipated efficiency gains on operations.

Kafubu WSC 13 13 2013

Expected to cover 117% of O&M costs by December 2013.One year tariff awarded instead of three years applied for, in order to incorporate the impact of the JICA funded project on the CU.

Lukanga WSC 17.5 15 2013-15 Expected to reach 100% O&M cost coverage by 2015 from 75%.

Applications for a ‘no objection’ to implement 2013 tariffs

CU % Applied for by CU

% Approved by NWASCO

Approved multi-year

Tariff Period Comments

Southern WSC 19 16 2012-14 Expected to cover 112% of O&M costs by

December 2013.

mulonga WSC 20 12 2011-13 Expected to cover 127% of O&M costs by December 2013.

Eastern WSC 22 22 2012-14 Expected to cover 84% of O&M costs by December 2013.

Western WSC 19 16 2012-14

Expected to cover 104% of O&M costs. The CU applied for a no objection to adjust the metered tariff only as it anticipated increasing metering ratio significantly in 2013.

North Western WSC 25 13 2011-13 Expected to cover 89% of O&M costs by

December 2013.

To make the process of analysing tariff adjustment applications more efficient, NWASCO with support from USAID –SUWASA commenced a project to enhance the tariff setting process by reducing complexity to make it more predictable to determine the level of tariff required.

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4.4 Guidelines

NWASCO establishes and issues guidelines to ensure that service providers operate efficiently and sustainably. Since inception, ten guidelines have been developed and revised from time to time

in response to various needs. In 2012, NWASCO started the process of revising two guidelines and the development of four new guidelines. Consultative meetings were held with stakeholders for input into the guidelines.

Guidelines under revision include:

• Tariff setting - to be in line with the tariff setting model that is being revised to reduce complexity; hence making it more predictable to project tariff adjustments and help providers to better determine the level of tariff adjustment required.

• Water Quality Monitoring - to include water safety planning to ensure providers conduct risk assessment at all stages of water quality monitoring.

New guidelines under development are:

• Prepaid Metering and Ring Fencing of Funds - to improve service delivery and financial viability of the providers while ensuring consumer protection;

• Sanitation – to provide mechanisms for accelerating provision and improvement of sanitation services;

• Non Revenue Water – to adopt the international approach of managing water losses from the current method of using Unaccounted for Water (UfW) and

• Anti-Corruption and Integrity – to promote transparency and accountability in the sector.

Both the guidelines under review and the new ones are expected to be finalised in 2013.

4.5 monitoring Compliance

To monitor compliance with provisions of the Act and license conditions, the regulator employs a number of methods which include inspections, assessing performance from various reports submitted

to NWASCO by the utilities at regular intervals, and involvement of customers through various fora and the Water Watch Groups.

During the reporting period, NWASCO undertook inspections of all eleven CUs and seven Private Schemes. Table 3 shows the major directives issued for non compliance and the action taken by each CU in the reporting period. For Chambeshi and Western Water and Sewerage Companies, NWASCO held meetings with management to discuss inspection findings and measures to be put in place to redress the situation. Western WSC showed improvement while Chambeshi WSC continued deteriorating.

From the private schemes, the major findings were non compliance to the water quality guideline for most of them and hours of supply below the guarantee for Maamba Collieries and Kaleya Small Holders.

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Table 3: Directives issued against major findings

CU Directives issued by NWASCO against major findings Action Taken by CU

mWSC

• Put in place a system to ensure opening ofnew accounts is done within a few days of connecting a customer instead of the current 3 to 4 months lag.

• Open a separate account for ring-fencingsanitation funds as per tariff conditions.

• Justify the water quality results sent toNWASCO for the fourth quarter of 2011 which did not tally with raw data found in districts. This indicated a serious likelihood of falsifying results.

• Zonal teams were introduced tocapture customers immediately they are connected.

• Non compliance due to absence ofBoard for approval of opening of accounts.

• Raw datawas sent to NWASCO andCU was directed to correct recording of water quality results

KWSC

• Immediately stop charging the‘administrativefee’ and only charge new customers the cost of materials over reasonable distances.

• Put in place a system to ensure opening ofnew accounts is done within a few days of connecting a customer .

• Compliedandstoppedcharging

• Anewsectionwascreatedtohandlenew connections in liaison with Engineering Department

NWSC

• Show cause why punitive action should notbe taken for premature implementation of tariff (CU implemented revised tariff before the period approved by NWASCO)

• Retrain operators in water qualitymonitoringand submit a report on the measures put in place to supervise operators in this aspect.

• Improve customer care across the companyincluding complaints tracking which was not satisfactory.

• CU apologised for the oversight andwas given final warning to ensure adherence to tariff conditions

• Complied,operatorsweretrainedandreport submitted

• Roadmapwasavailedwhichincludedsetting up a call centre and toll free line.

SWSC

Justify the water quality results sent to NWASCO with supporting documents for 4th quarter 2011. Further, immediately embark on regular disinfection of water in Chisekesi and Nega-Nega and avail plans to equip stations with workable dosatrones to safeguard public health.

Supporting documents were sent. Dosatrones were installed in Nega-nega and Chisekesi

Water quality compliance is a challenge

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CU Directives issued by NWASCO against major findings Action Taken by CU

EWSC

• AdheretotheWaterQualityguidelinevis-a-visstandards for acceptable limits and number of tests conducted.

• Carry out turbidity tests as perWater Qualityguideline.

• DisplaySLGsasperRequiredMinimumServiceLevel guideline and further show due cause why punitive action should not be taken against the utility for non-compliance in spite of repeated caution on this matter.

• Refresher trainingwas done for staffwho conduct tests in standards, testing schedule and record keeping.

• Jartestingequipmentwasprocuredtoensure adequate testing for turbidity in Chadiza, Lundazi and Nyimba.

• Complied-SLG displayed as perMinimum Service Level Guideline.

LpWSC

• Discontinue billing Kawambwa until watersupply is restored.

• Discontinue charging security deposit todisconnected customers.

• Meter all customers in Mwense as per tariffconditions.

• Complied-discontinuedbilling.

• Complied - discontinued chargingsecurity deposit.

• Metering commenced in the latterpart of 2012.

LgWSC

• ImmediatelyensurechlorineresidueinKabweis within acceptable standards.

• Submitaplanontheunblockingofthesewernetwork in Serenje which was not being attended to in time and thus posing a serious health risk.

• Complied - ensuredChlorine residuewas within acceptable standards.

• Complied and unblocking begunthough the network needs a complete overhaul.

NWWSCImmediately commence conducting all the water quality parameters as required in the water quality monitoring guideline.

Testing equipment was procured and a water quality assurance officer employed.

LWSC

• Improvesupplyhours to theguaranteed levelin Chunga, Chudleigh, Hillview and Chalala in Lusaka, as well as, Luangwa and Kafue districts.

• Harmonise the tariffbands forprepaidmeterswith the approved tariff structure.

• DisplayServiceLevelGuaranteesatallstations.

• CompliedforChudleigh,HillviewandChalala while project works were still underway in Chunga, Luangwa and Kafue.

• The CU decided to replace the oldprepaid meters which had software limitations with a new model which has more robust software.

• Complied. Service Level Guaranteeswere displayed at all stations.

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4.6 Performance of Providers

Performance analysis of providers is done using a defined set of indicators and is elaborated in detail in the annual Urban and Peri-Urban Water Supply and Sanitation (WSS) Sector Report. The WSS Sector

Report for the 2011/2012 (April to March) period was successfully launched in August 2012. The launch was officiated by both the Minister of Mines, Energy and Water Development, Honourable Yamfwa Mukanga and the Minister of Local Government and Housing, Honourable Emerine Kabanshi, which are the two line ministries in charge of water and water supply and sanitation respectively.

The 2011/12 WSS Sector Report showed that the sector continued to show a positive trend from the 2010/11 period though marginal with most of the indicators trending towards the set sector benchmarks though still below. Table 4 summarises the performance of the urban WSS sector for selected indicators against defined benchmarks.

Table 4: Performance of the Sector against Sector Benchmarks

Indicator minimum

Acceptable Sector Benchmark

Sector Performance

2010/11

Sector Performance

2011/12

Water coverage (%) 80 76 81

Sanitation coverage (%) 80 53 55

Water quality (%) 95 91 94

Hours of supply (hours) 18 16 16

metering ratio (%) 100 58 61

Unaccounted for water (%) 25 46 45

Collection efficiency (%) 85 84 80

Cost coverage by collection (%) 100 101 101

Extending coverage

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i). Water coverage

The water coverage indicator rose from 76% in 2011 to 81% in 2012 to reach the acceptable sector benchmarks. In absolute terms this reflects over 280,000 new people getting access to reliable and safe water supplies through individual domestic connections, communal taps and kiosks.

ii). Sanitation coverage

Though the sanitation coverage indicator showed a slight improvement of 2% from 53% to 55% in 2012, the indicator is considerably below the sector acceptable benchmark of 80%. Therefore, there is need for more focus on sanitation to negate its detrimental consequences. Poor sanitation poses a serious public health challenge and significantly contributes to deterioration in quality of water resources.

iii). Water quality

The water quality indicator also showed marginal improvement from 91% to 94% but still fell short of the acceptable benchmark of 95%. The biggest failures were recorded in Western Province owing to ineffective manual dosing processes of chemicals. NWASCO pays particular attention to water quality due to the immediate impact that poor quality water may have on the health of consumers.

iv). Hours of supply

The average hours of water supply remained stagnant. Luapula Province received the least hours of supply averaging only 6. It must be mentioned though, that power interruptions and load shedding hampered the provision of water supply which were experienced in most parts of the country. Load shedding was more pronounced in Eastern, Western, Luapula, Northern and Muchinga Provinces lasting for prolonged periods. Electrical power was being shut down three days a week for 12 hours for about three months in the first quarter of 2012. Power supply interruptions continued to be experienced for the remainder of the year.

v). Metering ratio

The metering ratio improved by 3% (from 58% to 61%). Despite this improvement, the indicator is considerably below the acceptable sector benchmark of 100%. Notable efforts in metering were made by Lusaka WSC and Eastern WSC. Luapula WSC and Western Water and Sewerage Company had the lowest metering ratios of 4% and 17%, respectively though considerable efforts were being made to improve this through DANIDA funding.

The benchmark for metering is 100%

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vi). Unaccounted for water

The loss in revenue due to water lost through leakages, illegal connection, faulty measuring equipment or unregistered consumptions, continued to be a worry for the sector. In 2012, over ZMW 330 million was lost through unaccounted for water. This was partly attributed to dilapidated infrastructure and low metering. This calls for increased capital injection in the sector to reverse this scenario.

vii). Collection efficiency

The collection efficiency dropped from 84% to 80% as a result of poor payment culture, particularly by government institutions which account for as much as 40% of some utility’s billings. Hence, delayed payments by such customers impacted significantly on the operations of affected utilities. In total, utilities were owed about ZMW 126 million by end of 2012.

viii). Cost coverage by collection

Despite the reduction in collection efficiency, the cost coverage by collection remained the same at 101%. This is just about the desired sector benchmark. Nevertheless, there is still need for utilities to employ cost control measures to swiftly move towards achieving operational sustainability.

ix). Ranking of CUs

NWASCO ranks the performance of CUs in the above mentioned indicators. This is done to stimulate competition among providers and ultimately improve service delivery. In the 2011/12 period, providers were ranked as shown in Table 5.

Table 5: Ranking of CUs 2011/12

Rewarding exemplary performance

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4.7 Consumer Engagement and Complaints Handling

NWASCO promoted a number of activities aimed at disseminating information to safeguard consumer interests which included among others the following;

4.7.1 Water Watch Groups

With an objective of getting feedback from the ground on water supply and sanitation services, NWASCO has established voluntary consumer groups known as Water Watch Groups. There are a total of eleven Water Watch Groups throughout the country located in Lusaka, Kabwe, Kapiri Mposhi, Ndola, Kitwe, Kalulushi, Mpika, Kasama, Livingstone, Mongu and Solwezi. These groups undertook sensitization activities in their respective towns promoting the Service Level Guarantees (SLGs) which mandate water providers to guarantee the services provided and state exactly the level of service entitled to consumers. Water providers are obliged to give customers guarantees which give a basis for customers to complain when the service standards are not met. SLGs are accessible at pay points, public stand posts and on public notice boards of water providers.

Other activities undertaken by the WWGs was the promotion of NWASCO’s toll free line on Zamtel aimed at expediting complaints resolution. A total of 230 complaints were handled by the eleven WWGs in 2012 and these included erratic supply, leakages, disputed water bills, sewer flooding and contamination.

4.7.2 Provincial Consumer Forum

In its efforts to heighten public awareness, NWASCO held its second Provincial Consumer Roving Forum in Solwezi. The forum which took place at Civic Centre grounds brought together Solwezi residents, NWASCO and North Western Water and Sewerage Company. The Forum provided an opportunity for consumers to raise a number of issues related to:

• Erratic water supply;

• Effects of load shedding on service delivery as the CU does not have generators to pump water when there is a power outage;

• Inaccuracy of water bills;

• Late or non-delivery of customer bills;

• Need for a water kiosk in Kyalalankuba community in Solwezi and

• Water contamination at Solwezi Teacher’s College of Education which has its own supply system.

• North Western Water and Sewerage Company pledged to remain relevant to the expectations of the customers and government. The Utility Company also called on government to desist from indiscriminate drilling of boreholes in its service area as it was conflicting with the Utility’s mandate of providing the service.

Publicity materials in the form of leaflets, brochures and books were distributed to residents who also had a chance to visit various exhibition tables which demonstrated and explained water and sanitation issues.

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4.7.3 media and Communication

The media as well as other communication channels such as the NWASCO website (www.nwasco.org.zm) and Facebook were utilized to disseminate information on consumer rights, responsibilities and complaints handling procedures. These communication tools also provided feedback on the quality of service through complaints received.

NWASCO produced a number of literature aimed at reinforcing NWASCO’s role in consumer protection by informing and educating the consumers on regulatory services as well as enforcement tools. These publications included brochures on ‘Good Consumer Practices’ and the quarterly bulletin dubbed ‘Water Voice’.

With social media being at the centre of communication today, NWASCO set up a Facebook account and continued to use its website to propagate messages aimed at informing, educating and influencing best practices on water and sanitation.

4.7.4 Complaints Resolution

NWASCO received a total of 94 complaints which were all resolved. The complaints ranged from erratic supply, disputed billing, disconnections contamination, poor service, low pressure to sewage flooding. The majority of complaints were received from Lusaka WSC (35), Nkana WSC (17) and Kafubu WSC (14).

Consumer Forum - Solwezi

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4.8 Delivering Better Regulation

NWASCO continuously reviews its own performance in a bid to enhance the efficiency and effectiveness of regulation.

4.8.1 Improving Strategic Plan Performance

NWASCO undertook an evaluation of its performance in implementing the second Strategic Plan which had been set for the period 2010-2012. The evaluation was done internally, as well as externally using a Consultant and stakeholder feedback. The evaluation revealed that implementation of the Strategic Plan suffered a number of setbacks including the lack of an appropriate implementation, monitoring and evaluation framework, and the lack of funding in some cases. Nevertheless, of the planned activities, on average 75% were completed successfully. The lessons learnt from implementing the first two Strategic Plans were used to refine and improve the third Strategic Plan developed for the period 2013-15.

4.8.2 Refining the Benchmarking System

NWASCO begun the process of refining its existing benchmarking system as an outcome of a Benchmarking training of trainers attended in Germany where a number of lessons were picked up on how to enhance the NWASCO benchmarking system. A stakeholder meeting was held in December to discuss the sector benchmarking system currently being used by NWASCO, how it ought to work and get feedback from the various stakeholders on how it can be enhanced. Stakeholders proposed a revision of the definition and calculation of indicators and to emphasise on performance improvement and not just performance assessment. Arising from this, NWASCO undertook to engage a consultant to revise the benchmarking system to ensure transparency and objectivity of the outcome.

Obtaining stakeholder input through consultative meetings

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4.8.3 Enhancing Regulation by Incentives

NWASCO has been using Regulation by Incentives (RBI) since 2008 as a tool to accelerate service improvements through rewards for good performance. The concept of RBI was incorporated in the tariff approval process by assigning weightings to tariff conditions given to a CU. Attainment of at least 75% of the tariff conditions would qualify a CU for an upward tariff adjustment. A further enhancement was that incentive regulation should be incorporated in benchmarking. Hence, NWASCO begun working on elaborating new criteria for awarding performance either monetarily or otherwise.

4.8.4 Knowledge Exchange Visits

NWASCO hosted a twenty-three member delegation from Bauchi State in Nigeria in April 2012 for a learning visit on water and sanitation reforms. The delegation representing different ministries and institutions among others, Ministry of Water Resources and Rural Development, State Water Board, House of Assembly, Ministry of Justice, Office of Head of Service, Sustainable Water and Sanitation in Africa (SUWASA) and USAID.

In November, NWASCO hosted another delegation of small scale operators from Nampula province in Mozambique who were on a learning visit on implementing water kiosks.

4.8.5 mainstreaming HIV/AIDs

Having recognised the impact of HIV/AIDS in the workplace and in contributing to the national fight against HIV/AIDS, NWASCO has been spearheading the mainstreaming of HIV/AIDS in the workplace among the CUs since 2003. To further augment this, with support from German International Cooperation, groundwork has begun to introduce an HIV/AIDS indicator in assessing the performance of CUs. This will recognise CUs that are consistently implementing HIV/AIDS mainstreaming activities in the workplace.

Exchanging knowledge through visits

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5 Internal Operations and Development 5.1 Revision of the NWASCO Strategic Plan

Following the lapse of the Strategic Plan 2010-2012, the process of formulating a new Strategic Plan for the period 2013-2015 was begun. A thorough assessment of NWASCO’s performance over the last

three years was conducted taking into account successes and challenges. The process, which was through a consultative process of major stakeholders, took into account various changes in the sector and the need to align NWASCO’s key strategic objectives to key national strategies for the sector, including among others, the Sixth National Development Plan, Millennium Development Goals, the National Urban Water Supply and Sanitation Programme (2011-2013), the National Rural Water Supply and Sanitation Programme (2011-2015) and Vision 2030. This process culminated in the development of four strategic objectives namely;

• To improve information dissemination and engagement with the public;

• To strengthen and enhance enforcement of regulation;

• To enhance performance in water supply and sanitation service delivery and

• To improve operations and sustainability for NWASCO and service providers.

The Strategic Plan was launched on 2nd November 2012 at a ceremony held at the Southern Sun Hotel and graced by the Minister of Mines, Energy and Water Development, Honourable, Yamfwa Mukanga and the Minister of Local Government and Housing, Honourable Emerine Kabanshi. A true reflection of the legitimacy and endorsement of cardinal stakeholders of the Strategic Plan.

5.2 Changes to the Council (Board)

In the year under review, Dr Cosmas Musumali who was Chairperson resigned as board member due to work commitments that required his extended stay out of the country. Hence Mr Levi Zulu who was Vice

Chairperson was elected as Chairperson and no Vice Chairperson elected owing to the impending lapse of the Council’s tenure of office. The representation for the institution concerned with public health which Dr Musumali represented as well as the Consumer Protective Association which remained vacant from 2010, were not replaced by the end of the Board’s tenure.

The Council’s three year tenure of office expired on 9th November 2012. The appointment of a new Council by the Minister of Mines, Energy and Water Development as provided for by the Water Supply and Sanitation Act was being awaited as at the close of 2012. As an interim measure NWASCO reported to the Permanent Secretary, Ministry of Mines, Energy and Water Development pending the appointment of the new Council.

5.3 Recruitments and Vacancies

At its meeting held on 7th June 2011, the Council resolved that a consultant be engaged to conduct a job evaluation and review of the NWASCO organisational structure to keep abreast with changes in

institutional objectives, following the revision of the Strategic Plan and the sector in general. Following recommendations by the Consultant, the Council approved the creation of six new positions namely,



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Administration and Finance Manager, a second Technical Inspector, Resource Centre Information Officer, Resource Centre Assistant, Procurement Officer and Knowledge and Efficiency Management Specialist.

Further changes included job titles, descriptions and grade alterations to various positions. Some of these include:

• Financial and Commercial Management Inspector to Senior Inspector-Financial and Commercial Management.

• Technical Inspector to Senior Inspector-Technical.

• Public Relations and Communications Officer to Public Relations and Communications Manager.

• Commercial and Financial Officer to Commercial and Financial Inspector.

• Technical Officer to Technical Inspector.

• Systems Specialist to Systems and Corporate Analyst.

5.4 Capacity Building and Development

As a highly dynamic organisation, training and development of staff lies at the core of NWASCO’s objectives. This ensures that learning is inculcated in the organisation and performance constantly

improved. To enhance efficiency and effectiveness of staff performance in line with societal and technological dynamism, NWASCO continued to train and develop its staff in various identified areas including water resources management, leadership, organisational development, climate change and internal audit and risk management.

Approved NWASCO organisation structure



6 Challenges and Constraints NWASCO faced various challenges in enforcing compliance to regulations due to the following:

• The Act lacks sufficient enforcement provisions as most penalties contained therein attract criminal sanctions. This makes it difficult to enforce the provisions which impact the timely resolution of issues relating to non-compliance, thereby adversely impacting service provision. Further , the Act does not contain regulations for the interpretation of the various statutory provisions. The amendment of the Act and the drafting of regulations will address these critical issues

• Deplorable and inadequate infrastructure aggravated by the low financing of some commercial utilities slowed service delivery improvements

• Erratic payment of bills by consumers especially government institutions affected the financial viability of the Commercial Utilities and hence service quality.

• ZESCO power supply outages adversely affected service provision in terms of reduced service hours and reduced revenue. Further, high/low voltage damaged electrical installations for a number of CUs which are very costly to replace.

• All Commercial Utilities operated without Boards of Directors for the entire period which affected a number of important decisions with negative consequences. This situation is contrary to the principles of good corporate governance.

• Inadequate coordination in developmental planning between Utilities and Planning Authorities in new development areas for the provision of water supply and sanitation services.

• Poor conditions of service in some rural based CUs such as Luapula, Western and Chambeshi thus failing to attract and retain qualified staff.Ch

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7 Future Outlook In planning for the future, NWASCO will undertake the following key activities:

• Incorporation of the newly created districts in the licensed service areas of CUs. The creation of new districts has expanded the opportunity for the sector to increase access and aide meeting the Vision 2030 of universal coverage for water supply and sanitation services.

• Promote commercial sustainability of CUs by ensuring continued progress towards reaching full cost recovery coupled with improvements in service delivery.

• Advocate for the revision of the Water Supply and Sanitation Act to strengthen regulatory enforcement.

• Support the development of a coherent policy on sanitation being spearheaded by the Ministry of Local Government and Housing.

• Enhance Corporate Governance for the sector through revision of existing guidelines.

• Harmonise the definitions of water coverage and acceptable sanitation with the Central Statistical Office for uniform reporting on the status of the WSS sub-sector.

• Extend the use of Incentive Regulation in regulatory activities to reduce the command and control approach of regulation.

• Promote universal metering as an aide to controlling water losses, as well as ensuring customers pay for what they consume and induce water conservation habits.

• Support the holding of an annual forum for discussing sector issues and improving coordination of sector players.

• Evaluate the role NWASCO could play in improving WSS service delivery in rural areas.

• Contribute to efforts within the sector to enhance the protection of water resources.

• Improve and increase information dissemination to stakeholders and the general public.

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Financial Statements for the year ended

31st December 2012


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MKM Solutions 5497 Lunsemfwa Road

Kalundu Post Net Box 109 P/B E 835Chartered Accountants and Business Advisors Lusaka Zambia Tel: +260 211-292759 Fax: +260 211-292759 E-mail: [email protected] of the Independent Auditors To the council members of National Water Supply and Sanitation Council (NWASCO) Report on the Financial Statements We have audited the financial statements of the National Water Supply and Sanitation Council (NWASCO), which comprise the Statement of Financial Position as at 31 December 2012, and the Statement of Comprehensive Income, Statement of changes in Equity and Statement of Cash Flows for the year ended, and a summary of significant accounting policies and other explanatory notes set out on pages 6 to 21. Council Members’ Responsibility for the Council’s Report and Financial Statements The Council is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards (for SMEs modified to take into account the nature of the organisation)and the separate grants agreements. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISAs). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evalu-ating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of National Wa-ter Supply and Sanitation Council (NWASCO) as at 31 December 2012, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (for SMEs modified to take into account the nature of the organisation) and the Water Supply and Sanitation (WSS) Act No. 28 of 1997. MKM Solutions Registered Auditors Nambayo Kalaluka Partner


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National Water Supply and Sanitation Council (NWASCO)Council’s Report And Financial Statements for the year ended December 31, 2012

Council Members’ Responsibilities and Approval The Council is required by the Water Supply and Sanitation (WSS) Act No. 28 of 1997, to maintain adequate accounting records and is responsible for the content and integrity of the financial statements and related financial information included in this report. It is their responsibility to ensure that the Council’s report and financial statements fairly present the state of affairs of the Council as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with International Financial Reporting Standards, ( for SMEs modified to take into account the nature of the organisation). The external auditors are engaged to express an independent opinion on the financial statements. The Council’s report financial statements are prepared in accordance with International Financial Reporting Standards ( for SMEs modified to take into account the nature of the organisation) and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgement and estimates. The council members acknowledge that they are ultimately responsible for the system of internal financial control established by the council and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the council sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the council and all employees are required to maintain the highest ethical standards in ensuring the council’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the council is on identifying, assessing, managing and monitoring all known forms of risk across the council. While operating risk cannot be fully eliminated, the council endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The council members are of the opinion, based on the information and explanations given by management, that the system of internal controls provides reasonable assurance that the financial records may be relied on for the prepa-ration of the council’s report and financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss. The council members have reviewed the council’s cash flow forecast for the year to 31 December 2012 and, in the light of this review and the current financial position, they are satisfied that the council has or will have access to adequate resources to continue in operational existence for the foreseeable future. The external auditors are responsible for independently reviewing and reporting on the Council’s financial statements. The financial statements have been examined by the council’s external auditors and their report is presented on page 3. The financial statements set out on pages 31 to 34, which have been prepared on the going concern basis, were approved by the council members on and were signed on its behalf by:

Mr Levi Zulu Mr Kelvin Chitumbo CHAIRPERSON DIRECTOR


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164 Mulombwa Close, Fairview LusakaP O Box 34358, Tel: +260 211 226941/2

Fax: +260 211 226904E-mail: [email protected]: www.nwasco.org.zm

Taking care of your water and sanitation interests

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