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WSS performance and the creation of Maluti-a-Phofung

Water

Presentation for Local Dialogue

15 May 2009Maluti-a-Phofung

Municipality

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Structure of presentation

Introducing the research team The objectives of the research The methodology Background and overview

Institutional entities and their roles Institutional comparisons

Key technical indicators Community perspectives Summary of major issues

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The research team

Project leader: Anne MayherResearchers: Sibusiso Khanyile and

Brand NthakoFinance research: Cobus OosthuizenAdditional analysis and editorial support:

Glen Robbins

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Objectives of the research To examine the impact of the institutional

arrangements introduced to fulfill the WSS function in terms of: Performance against key indicators Community perspectives Including some comparison with previous arrangements

To draw on this research to inform: Local advocacy through a Local Dialogue Themes for the broader Water Dialogues – South Africa

process with particular attention paid to institutional issues.

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The methodology

Examination of available documentation (primary and secondary sources)

Interviews with key informantsCommunity participatory workshopsSourcing of specialist financial informationExpert input from Water Dialogues

stakeholdersFeedback sessions with local

stakeholeders

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Overview of Maluti-a-Phofung Municipality Maluti-a-Phofung is a local

municipality and forms part of the Thabo Mofutsanyana District

Major centres: Harrismith, Phutaditjaba, Kestell

Population of 360 790 (2001 census) – now estimated at 400 000

84% of population in former Qwa-Qwa homeland areas

Economic focus on agriculture with limited industrial and tourism development

Unemployment estimate at 65% Migrant employment remains

important Major historical services disparities

between former Qwa-Qwa areas and Harrismith/Kestell

Maluti-a-Phofung is located in the south-east of the Free State Province

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WSS institutional timeline 1994

DWAF assumes control of former QwaQwa WSS arrangements Harrismith TLC incorporates surrounding schemes

1998 DWAF contracts Sedibeng to handle for QwaQwa scheme

1999 Harrismith explores obtaining external support in the running of its WSS

arrangements 2000

Newly created Maluti-a-Phofung Municipality contracts Rand Water (Amanziwethu) to assist with management and expertise in running of the Harrismith-Intabazwe-Tshiame WSS

2001 Sedibeng contract renewed by MaP Municipality in partnership with DWAF and

extended to cover Kestell area 2003

Section 78 process proposes creation of external entity, wholly owned by the MaP Municipality to handle integrated WSS for MaP areas as a whole.

Sedibeng and Amanziwethu contracts renewed on short term basis. 2006

Maluti-a-Phofung Water Pty (Ltd) created and assumes WSP role Uzinzo (WSSA and Amanzabantu) contracted on 6 year deal to provide

management and expertise to enable MaP Water to function sustainably in the future

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Institutional background of WSP entities (I)

Sedibeng (1998-2006) Serviced former QwaQwa areas with mandate from

DWAF (and funding) Sedibeng is a public Water Board that has sought to

extend its activities outside its original scope of operations to raise revenue

Scheme involved bulk and reticulation activities with a focus on Phutaditjaba and surrounding peri-urban areas

Sedibeng provided the full management of the function Until Sedibeng assumed responsibility for Kestell it did

not have a significant billing function in the area (thanks to a DWAF subsidy)

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Institutional background of WSP entities (II)

Amanziwethu (2000-2006) An entity created by Rand Water (a public Water Board)

to supply services to Harrismith TLC Serviced Harrismith and surrounding areas through

support of WSS activities of the Harrismith TLC and subsequently the MaP Municipality

Amanziwethu officials seconded to work with municipal staff around priority support areas in a “business unit”

Scheme involved mostly reticulation activities for town of Harrismith and surrounding townships

Amanziwethu sought to assist Harrismith and later MaP Municipality to raise revenue levels and quality of services

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Institutional background of WSP entities (III)

MaP Water Pty (Ltd) (and Uzinzo) (2006 - ) A publically owned entity created to provided integrated

WSS to the entire MaP area – a WSP Entity given a mandate by its “shareholder” (MaP

Municipality) with the mandate administered through the WSA function in MaP Municipality

Uzinzo consortium contracted in by MaP Water to provide management services and to build sustainable capacity within the MaP Water entity

Uzinzo a JV between two private sector entities active in the WSS sphere (WSSA and Amanzabantu Services)

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Motivation for establishment of MaP Water According to respondents and Section 78 process the

key factors informing the decision to create MaP Water Pty Ltd were that: External providers have always been operating in the area

resulting in a lack of existing internal capacity and difficulties with sourcing skilled personal to work for municipality

There was a need for an entity to house formerly separate schemes and to manage complex integration process (eg harmonisation of conditions, services)

The prospects for raising additional resources were higher outside the institutional structure of the Municipality (both debt and donor)

The institutional arrangement would allow for corporatisation with potential benefits of dedicated management and ring-fencing of assets and activities from other municipal services

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WSP entity service comparison (I) In terms of services rendered the entities were substantially different making

a direct comparison difficult. Different policy contexts Different funding basis Different institutional forms Different services and scales of operations

The figures below are presented to provide an broad sense of the nature of service coverage. However, it should be noted that they also capture dynamic shifts – for example the conversion of standpipe connections to residential connections by MaP Water from the previous Sedibeng (in QwaQwa).

8909 Residential Connections

600 Communal Standpipe Access

0 Water Tanker Access0 Unserved

39328 Residential Connections

36030 Communal Standpipe connections

1350 Water Tanker Service

3292 Unserved

85934 Residential Connections

2620 Communal Standpipe connections

0 Water Tanker Service16500 Unserved

Amanziwethu (‘00-’06) Sedibeng (’98-’06) MaP Water (’06- )

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WSP entity service comparison (II) It is notable how under MaP Water the service arrangements have

changed with a strong focus on the shift from standpipes to residential connections (QwaQwa) and the overall rise in metered connections along with a ongoing decline in the unserved.

QwaQwa 2004/5

QwaQwa 2008/9

HarrismithIntabazweTshiame

2004/5

HarrismithIntabazweTshiame

2008/9

0

2500

5000

7500

10000

12500

15000

17500

20000

22500

25000

27500

30000

32500

35000

37500

Number of Connections

Service Level Comparison Water Connections

Source: WSDP 2004/5 and 2008/9

Metered Residential

Unmetered Residential

Communal Standpipe Access

Unserved

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WSP entity service comparison (III)

Overall in, backlog terms, each successive entity has reduced total backlogs from over 1/3 of the population to less than 10% since 1994.

WSA

Total Water Backlog - April 1994

Total Water Backlog - Oct 2001

Total Water Backlog - April 2007

Maluti a Phofung Local Municipality - FS194 140,284 75,852 30,970

Source: DWAF NWIS

15WS

P e

ntity

ser

vice

com

paris

on (

IV) Note:

This table provides a comparison of consolidated financials of Sedibeng and Amanziwethu (adjusted to 2007) against those of Map Water (2007)It highlights:(1) Increase in water sales revenue under MaP Water(2) High level of DWAF grant allocations for MaP Water(3) The losses incurred by the municipality with the previous arrangement compared to net profit generated for reinvestment in service upgrading under MaP Water (but DWAF grant driven)

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Issues arising from technical study:Comparing the institutional arrangements

On the institutional reform process (from Sedibeng & Amanziwethu to MaP Water): Concerns were raised about the rigour of Section 78 process and related

lack of public engagement On the institutional comparison (between Sedibeng, Amanziwethu and

MaP Water): Different mandates, geographic focus areas, structures and funding aside,

MaP Water does appear to have successfully integrated the services with a surplus being generated for reinvestment.

However, the surplus is in large part a function of increased DWAF subsidies which are not necessarily guaranteed in the future.

In terms of service comparisons (between Sedibeng, Amanziwethu and MaP Water): Major progress has been made on backlog eradication and MaP Water has

significantly raised the number of residential connections (converted from standpipes).

This process has also involved a shift to metering which was not a major priority for Sedibeng

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Issues arising from technical study:MaP Water Pty Ltd’s performance In order to reflect on MaP Water’s performance it is critical to understand

the allocation of institutional roles and responsibilities that inform what it does.

An institutional “supply chain” exists in which the performance of each entity is very dependent on the performance of others.

Municipality WSAMaP Water(Pty) Ltd

Uzinzo

Roles:Section 78 processPolicy directionWSA approvals andoversightBillingOperating and capitalAllocationsCapital projectImplementation (bulks)

Roles:WSS planning (WSDP)WSS coordinationWSS standardsWSP contractingWSP oversightWSP M&E

Roles:Implementation andmanagement of WSDPProgramme including Budgeting, administration,HR, strategic and technicalcapabilitiesReticulation schemeDesign, implementation& maintenance

Roles:Entity establishment &consolidation (systems,Procedures, technology,knowledge transfer)Expert supportCapacity building

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Issues arising from technical study:MaP Water Pty Ltd’s performance

Major issues identified included: Municipal staff, MaP staff and Uzinzo consortium members agree

they are still on a learning curve with respect to roles and responsibilities

A key challenge has been the turn-over of skills/staff at MaP Water – in particular with regard to seconded staff form the Uzinzo consortium

The effectiveness of the Municipal billing arrangements remains a concern with low priority given to recovery of water revenue form customers thereby limiting Uzinzo’s ability to secure and improved incentive in terms of operations.

The quality and responsiveness of capital programmes in the Municipality, on which MaP Water depends, needs ongoing attention.

The high DWAF subsidy level might not continue leaving a requirement for major revenue adjustments/efficiency improvements.

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Issues arising from community workshops (I)Rationale for selection of community

participatory workshop sites: Since 84% of the population live in the former

QwaQwa area and 15% live in Harrismith (the other 1% live in Kestell), 3 communities were chosen in the former QwaQwa area – Bolata, Thaba Bosiu, and Riverside - and 1 was chosen from Harrismith – namely, Intabazwe (urban township and informal settlement)

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Issues arising from community workshops (I) Key issues identified by areas:

“Urban” QwaQwa issues were around: The introduction of metering and the impact this will have on poor

consumers Quality of service (pressure and downtime) Lack of consultation/communication

Peri-urban/rural QwaQwa: Uneven access and lack of FBW Lack of access to water mains and cost of connection “Illegal” connections where residents connected themselves under

circumstances where there was no provision or they could not afford connection cost

Intabazwe Reliability The introduction of metering and the impact this will have on poor

consumers Use of restrictors Lack of sanitation and standpipes for informal settlement Lack of consultation and communication Weak reporting lines/accountability

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A summary of core issues identified In terms of the institutional arrangements/model:

Oversight, monitoring, planning and policy issues are still evolving but there are apparent gaps (eg irregular mtgs and no independent review in place)

Public engagement and communication matters have remained quite marginal around WSS matters

Planning for a declining subsidy environment needs attention as does the effectiveness of revenue management by the Municipality

Building local capacity must be a focus of attention As backlogs are reduced the quality and level of services as well as their

affordability needs consistent attention: Planning, delivery and operations management must become more

consultative and informed by user perspectives Particular service delivery matters needing attention include:

The roll out of metering The approach to free basic services The cost of connections and water supply Lack of standpipes in informal and peri-urban settlements Quality and responsiveness of service providers

Communication and consultation must be enhanced to secure greater accountability and user voice