Urban Water Supply Regulation

1. Introduction

The urban water and sanitation sub-sector has been undergoing a series of reforms since year 2001 to ensure that services are provided with increased performance and cost effectiveness and the burden on Government to provide these services gradually decreases while maintaining its commitment to equitable and sustainable services.

Significant achievements have been made under the implementation of the reformswhich include the commercialization of water supply and sewerage service operations, promotion of private sector participation in delivery of services, devolution of service delivery to Water and/or Sewerage Authorities, institutional capacity development ( i.e. strengthening of Management Information Systems especially in the areas under the National Water and Sewerage Corporation, formulation of Business Planning Tools etc) and the introduction of Performance and Management Contracts to enable the ministry exercise oversight governance on the Water and/or Sewerage Authorities.

Extensive consultations have been conducted among key stakeholders on the mode of regulation for the urban water and sanitation sub-sector and consensus has emerged that in the short to medium term, the regulatory functions remain the responsibility of the Ministry of Water and Environment as per the Water Act Cap152 and mode of regulation be by contracts. The option of establishing an independent regulatory entity for the sub-sector is under consideration and a decision will be taken after an in-depth cost/benefit analysis has been conducted.

One of the major challenges still facing the urban water and sanitation sub-sector is the inadequate framework for effectively regulating the sub-sector to improve service delivery while protecting the interests of consumers as well as those of the public and private parties. Areas of weakness that have been identified include but are not limited to contract management/compliance, performance monitoring and evaluation, water quality monitoring, penalties, sanctions and rewards systems, dispute resolution mechanism, increasing transparency and accountability in the sector, pro-poor interventions, assets and investments management and tariff setting and adjustments.

In order to address some of the above challenges, a decision has been taken by the ministry to establish a separate Regulation Unit within the Directorate of Water Development to specifically focus on executing regulatory functions in the entire urban water and sanitation sub-sector. This Unit could in the medium to long term be transformed into an established structure within the Ministry, or form the starting point for an Independent Regulatory Body or part of one, depending on the final and long term decisions on the mode of regulation.

2. Functions of the Regulation Unit

The functions of the Regulation Unit are as follows:

  • Setting standards for services provided to consumers
  • Setting requirements and targets in relation to asset management, technical inputs and operational performance.
  • Monitoring and ensuring compliance with contractual obligations among the parties to the Performance and Management Contracts.
  • Monitoring operational performance of service providers against set targets and /or requirements.
  • Monitoring and enforcing service standards.
  • Imposing penalties or remedies for sub-standard performance.
  • Creation of comparative competition in the market.
  • Reviewing and approval of requests network extension and major rehabilitation plans.
  • Monitoring the quality of investment and infrastructure in water supply network assets to ensure that construction of new systems in done according to approved designs and standards.
  • Reviewing requests and proposals for new tariffs, and adjustment of existing tariffs before submission to the Director and Minister for approval and ensuring that only approved tariffs are applied.
  • Keep stakeholders and the public informed about service performance and activities of the service providers through information dissemination.
  • Reviewing Business Plans and establishing the need for subsidies to Water Authorities that may genuinely require such support and to ensure that the subsidies are applied specifically to the functions for which it was requested.
  • Promotion of pro-poor service delivery.
  • Determining consumer rights and monitoring consumer complaints.
  • Enforcing customer service rights.
  • Resolving disputes

3.Increasing role for the private sector

  • The Private Sector is now destined to be a major player in the water management.
  • The water supply system is supposed to be self sustaining i.e. The market will allocate resources.
  • Competition will influence type quantity and quality of products and services.
  • Government to ensure Fair Competition and facilitate modern regulation.
Key Performance TargetsBaselineYear 1 In Line TargetsYear 2 In Line TargetsYear 3 In Line TargetsRelative weightingDefinition of key termsMeans of Verification
    2009/10   2011/12      
FINANCIAL            
Return Capital Employed 3.16% 4.00% 4.50% 5.00% 5.0% Defined as EBITDA/Total assets-current liabilities Annual AuditedAccounts
Water Sales 44.5 45.6 47.2 50.3 12.5% Volume of water sold growing by 2.5% in yr1, 3.5% in yr2 and 6.5% in yr3 Annualized Water Sales based on Area Reports

Average receivables collection days

155

140

135

130

7.5%

Average Receivables/sales x 365

Arrears Lists + Audit Accounts

Capital Works Implemented as a %age of budget

70%

75%

80%

85%

12.5%

Capital expenditure incurred Vs planned capital expenditure (from internally generated cash only)

 

Management Accounts

               

TECHNICAL EFFICIENCY

             

NRW (%) Kampala

42.9%

41.9%

40.5%

38.0%

5.0%

100 basis point annual improvement

Annualised Water Production and Sales from Kampala

NRW (%) Rest

16.7%

15.7%

14.7%

13.7%

10.0%

 

100 basis point annual improvement

Annualised Water Production and Sales from Other areas.

               

COMMERCIAL EFFICIENCY

             

Increase in New Sewerage Connections

285

312

341

373

5.0%

Growth in new sewerage connections key .

Area statistics Reports

Increase In New Water Connections

22,637

23,000

23,500

24,000

12.5%

Growth in new water connections key in measuring access to services.

Area statistics Reports

               

CUSTOMER ORIENTATION

             

Customer Satisfaction Index

NIL

60%

NIL

70%

5.0%

Average Score (1-7)/Best Satisfaction Score (7) *100%

Independent Survey

               

QUALITY OF SERVICE / ENVIRONMENT

             

Compliance with National Standard for Drinking (potable) water, 2008

95%

95.0%

95%

95%

5.0%

(# of Samples passing National Standards /Total Samples Tested) X 100%

Reports from Water Quality and DWR

Compliance with all 54 Effluent discharge parameters.

(< 60%)

65%

65%

65%

5.0%

(# of samples passing National Effluent Standards/Total Samples Tested) X100%

Reports from Water Quality and DWR

               

PRO POOR ORIENTATION

             

Increase in number of connections on subsidized Tariff (PSP Tariff)

2%

3%

4%

5%

5.0%

Growth in Pro-poor Connections

Statistics from CUSTIMA Billing System.

               

TRANSPARENCY/GOVERNANCE

             

Percentage Of Internal and External Audit Recommendations Implemented during the yr.

75%

77.5%

80%

85%

10.0%

(# of Audit queries resolved/Total number of Audit Queries)X100%

Audit Reports to the Board

 

  • The new Generic Performance and Management Contracts for the Small Towns are in are being signed by both parties. The key performance targets are included in the performance contracts.
  • Together with DED, participated in the Strategic Planning workshop for the development intervention in supporting the implementation of the Pro-Poor Strategy.
  • Reviewed the Management Audit Report 2009 on Water Authorities, analyzed and captured critical operational issues. Action plans to address these issues are now being formulated.
  • Together with GTZ/RUWASS, the Business Planning Tool has been updated and regional training sessions for the Town Engineers, Urban Water Officers, District Water Officers and TSUs were implemented.
  • Reviewed a number of monthly performance reports from Water Authorities and captured the information on our Reporting System.

5. Future Planned Activities.

  • Continue with the training of Town Engineers, District Water Officers and TSUs in the use and application of the updated Business Planning Tool.
  • Support the Water Authorities in the development and utilization of Business Plans.
  • Ensuring the usage and understanding of Town Specific Performance and Management Contracts.
  • Awareness and sensitization of Water Authorities and Private Operators on the New Tariff Policy and the New Performance and Management Contracts.
  • Formulation of Operational Guidelines for the transparent and competitive procurement of Private Operators
  • Conduct an options study on the small towns clustering concept.
  • Develop a concept note on the “Uganda Water Vision 2025” (Creation of Regional Water Utilities/ State Enterprises)
  • Design and implementation of the Website for the Regulation Unit
  • Follow up on the Management Audit Report action plans.
  • Formulation of water quality monitoring strategy
  • Performance monitoring of National Water and Sewerage Corporation small towns Water Authorities.
  • Independent Technical Audits of the National Water and Sewerage Corporation and the small towns Water Authorities.
  • Preparation of the EU Water Facility Proposal on Asset Registration and Management.
  • Update of water supply systems profiles for small towns, rural growth centres and large gravity flow schemes.
  • Design and implementation of effective Management Information System/ Update of the Performance Monitoring software.
  • Development of the Billing Software