Full Cost Recovery (Pisit)

8/6/2019 Full Cost Recovery (Pisit)

http://slidepdf.com/reader/full/full-cost-recovery-pisit 1/12

Convention on Water and Wastewater in South East Asia

“Sharing our water experiences, problems and solutions”Hanoi, 7-9 June, 2005

Panel 2 : Full Cost Recovery

Mr. Pisit Hongvanishkul

Director of Policy &Planning Division

PWA, Thailand

Sheraton HotelHanoi, Viet Nam

The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of the

Asian Development Bank (ADB), or its Board of Directors, or the governments they represent. ADB does not guarantee

the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use.Terminology used may not necessarily be consistent with ADB official terms.

THAILAND COUNTRY PROFILE

PROVINCE 76

POPULATION 63 Millions

- Urban ~ 23 (1,129 Municipalities)

- Rural ~ 40 (74,000 Villages)

2



WATER SECTOR INSTITUTIONS

IN THAILAND

URBAN AREAS-MWA- PWA- MUNICIPALITIES

RURAL AREAS

PIPED

- PWA- LOCAL AUTHORITIES

NON-PIPED- LOCAL AUTHORITIES

3



Government Agencies Concerned With WaterSupply Sector in Thailand Agency Major Roles in Water Supply

1. Ministry of Interior 1.1 MWA………………………………….……………………………………………….………………….………..

1.2 PWA……………………………….…. ………………………………………………………....…………...……

1.3 Provincial Adm. Dept………........…… ………..……………………………………………….……………...

1.4 Local Adm. Dept………………………………………………………………………………………………......

6

2. Ministry of Prime Minister’s Office

2.1 NESDB………………………………………….………………………………………………….……………...

2.2 Budget Bureau……………………………………………..…………………………………………….………

3. Ministry of Finance3.1 State Enterprise Policy Office.…………………….……….……………………………………………....

4. Ministry of Natural Resour. & Envin.

4.1 Water Resource Dept.……………………………………………………………………..…………………...

4.2 Ground Water Resource Dept. …………………………………………...………………………………….

4.3 Nat.Res & Env Policy+Plann.Off….………………………………………………………………………….

5. Ministry of Industry5.1 Industr.Estate Authority………………………………….…………………………………………………….

PolicySetting Planning Operation



AREA4

MWA

MWA

AREA1

AREA2

AREA3

AREA5

PWA SERVICE AREAS

225 Waterworks73 Provinces680 Municipalities11 Mill.pop.served(86% Service Coverage)

7

0.00

0.50

1.00

1.50

2.00

1980 2004

2.124MILL.CONNS

DOMESTIC 76%

GOVERNMENT&SMALL BUSINESS

STATE ENTERPRISE&

LARGE BUSINESS

7%17%

P WA

C U S T O

M E R S

Mill.conn.

8



PWA

WATER DISTRIBUTION

DOMESTIC

45%33%

22%

GOVERNMENT&

SMALL BUSINESS

STATE ENTERPRISELARGE BUSINESS

9

315 350 387

421 437 414 434 474 515 550606

0

200

400

600

800

1000

1994 1996 1998 2000 2002 2004

Year 2004

Product : 827 MCM

Sale : 606 MCM

Loss : 26.63 %



Water Tariff Policy

12

• No national or local regulatory body(Independent regulator)

• Tariff would be considered in ad-hocbasis

• Ability-to-pay principle(domestic and non-domesticcustomers)

• Water Charge designed base on progressiverate principle

• There is cross subsidization among customer types

• In case of PWA’s tariff, Every 3-5 years,new tariff would be applied to the cabinet



0-10

11-20

21-30

31-50

51-8081-100

101-300

301-1000

1001-2000

2001-3000

>3000

07.75

08.50

10.75

12.75

14.0014.50

14.60

14.70

14.80

14.90

15.00

09.00

11.75

13.00

14.00

14.4014.50

14.60

14.70

14.80

14.90

15.00

10.00

13.00

16.00

19.00

21.0021.25

21.25

21.75

21.50

21.25

21.00

PWA TARIFF STRUCTURE

Range(cum/month)

PWA Water Tariff (B/cum)

1. Domestic 2.Gov &Small Busi 3.State en. & Indust.

14

Eff. since 1998



Water Charge 84%

Total income 8,892 MB

Data: fiscal yr. 200415

ServiceCharge 9%

Net connectionCharge 4%

Interest & Others3%

PWA INCOME STRUCTURE

personnel 20%

depreciation 28%

Water charges of Private companies

25 %

Total Cost 8,534 MB

chemical+electrical 10%

others 17%

Data: fiscal yr. 200416

PWA COST STRUCTURE



Proportion of Government Subsidy on PWA Capital Expenditure

17

Project Categories(5 Types of Investment Projects)

Proportion of SubsidyGov. Subsidy : PWA

Income)

1. PWA Waterworks Expansion 75% 25%

2. Transferred WWKS Expansion 100% -

3. Water Resources Development 50% 50%

4. Pipe Replacement 100% -

5. Acceleration of rural Water SupplyExtension (only pipe laying) 100% -

KEY CONSTRAINTS TO FCR IN PWA.

18

EXTERNAL :

• Unclear Policy on Water Tariff Structure

• Unclear Policy on Government Subsidy To PWA(Public Service Obligation)

• Non-Unity of Water Supply and Water ResourcesManagement/ Institutions

• Water Tariff Applied Across The Country(Politic Issue)

• No Independent Regulator



KEY CONSTRAINTS TO FCR IN PWA.

19

INTERNAL :

• Unflexible of Management(Due to regulations of State/ Government Sector)

• Disperse of the utilities across the countries(most of service areas of each utilities aresmall and medium )

Rank Top 5 Actions Which Were appliedin Achieving Cost Recovery

Reduction in Physical Losses

Improvement in metering

Improvement in Billing and meter reading

20

Aggressive increase in number of connections

Improvement in operational efficiency

(Reducing power, labor and chemical use)



IMPORTANT FACTORS LEADING TO FCR

Attitudes and professional background

of responsible personnel in the ministries and in the utilities

(there is no independent regulatory body at this moment)

Cooperation and communication among

utilities personnel, customers and the mass media.

21

Customer orientation and services

Customer (ratepayer) education program

SUGGESTION ON FUTURE SEAWUN ACTIVITIESRELATED TO FULL COST RECOVERY

PEOPLE EDUCTION PROGRAM

INFORMATION & EXPERIENCES EXCHANGE

BENCHMARK SETTING

DISCUSSION & MEETING AMONGTHE EXCUTIVES AND OPERATING STAFF

DISCUSSION & MEETING AMONG

THE TOP/SENIOR FROM THE MINISTRIES

FOLLOW-UP OR MONITORING PROGRAM

22



THANK YOU….

Documents

Full Cost Recovery (Pisit)