Session Finance 4b - Faraj El-awar and Christian Schlosser un-habitat (pptminimizer)

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

2 Global Water Operators’ Partnerships Alliance

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


What are WOPs?

Global Water Operators’ Partnerships Alliance


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


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


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


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


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


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)


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?


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


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


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


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


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


71

53

24

90

40

9

51

16

89

55

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


0

50

100

150

200

Tota

l wat

er p

rodu

ctio

nU

nacc

ount

ed fo

r wat

er

Res

pons

e tim

e to

leak

s/bu

rsts

Met

erin

g ef

ficie

ncy

Act

ive

wat

er c

onne

ctio

ns

Inac

tive

wat

er c

onne

ctio

nsS

taff

prod

uctiv

ity

Billi

ngR

even

ue c

olle

ctio

nsR

ecur

rent

exp

endi

ture

Wor

king

ratio

Water Utility A

Water Utility B

GWOPA Facility – initial findings (2) Achievement against targets of UN-Habitat Performance Improvements Plans (%)


Thank you for your attention!

Documents

Session Finance 4b - Faraj El-awar and Christian Schlosser un-habitat (pptminimizer)