Editorial»
Kathmandu’s water supply
JAN 06 - The government’s decision to hand over the management responsibility of Kathmandu Municipality’s (KM) water supply facilities to the private sector has created some controversies. The centre of the debate appears specifically in two fronts. First, to what extent do the local people support the process of privatisation. And the next, whether the government has adequate mechanisms and capacity to regulate water supply quality and quantity that would at least not minimise consumers’ welfare.
Reforms in the existing policy and institutional mechanisms require better understanding of the users’ perceptions on the existing links between water quality and human health risks, existing water supply and management systems, and users’ willingness to pay (WTP) under improved water quality and supply services. In this context, this brief article attempts to highlight on these aspects by presenting the results of the household survey carried out in 459 households in seven locations of the KM (Tahachal, Chagal, Thaihiti, Dilli Bazaar, Old and New Baneswor, and Bhimsengola areas) for the Department of Water Supply and Sewerage. These different locations were chosen in consultation with the officials of Nepal Water Supply and Sewerage Corporation (NWSC). Though the survey was conducted about three years ago, the results are presented here as water supply and water quality situation has not significantly changed from the survey period and provide a sound basis for addressing these emerging issues.
The survey results on users’ perception of the existing water supply indicated that: i) the majority of the users’ face water scarcity problem in all seasons (households in all of the study areas reported frequent interruptions in water supply throughout the year, from minimum 1 to 4 days to a maximum of 17 to 30 days during the dry season with higher interruptions in tail areas such as Tahachal area), ii) the level of water supplied to the households as reported by the respondents was also found very low (average consumption was estimated to 3,395 liters per household per month); iii) existence of faecal coliform above the WHO limits in more than 28 percent of the tap water samples tested in different localities. When the households were directly asked, more than 73 percent of the respondents reported that they were not satisfied with the existing quality of water.
Likewise, the survey results also indicated that: i) about 50 percent of the users were receiving water on the flat rate basis without metering systems; ii) on average, users were paying water fees in the range of Rs 112.0 to Rs 191.70 per household per month; iii) users’ are paying comparatively high water charge (Rs 95/cubic meter) while purchasing water from the venders; iv) majority of the residents in the KM (about 97 percent in New Baneswor area to 79 percent in Tahachal) treated the tap water before using it for drinking purposes (the treatment cost varied from Rs 66.0 to Rs 125.0 per month); and iv) deteriorating water quality has imposed high health costs (e.g., days suffered from water-borne diseases, actual treatment costs, work loss days, etc.) which varied from Rs 2.0 to Rs 420 per household per month in different localities.
The users’ WTP for improved water supply and water quality were highly significant. The average mean value of all locations were estimated to be: i) Rs 5.80 to 7.60 per cubic meter under existing water supply conditions; ii) Rs 13.20 to 16.20 per cubic meter for improved water supply; and iii) from Rs 3.80 to 4.40 per cubic meter for improved water quality. Thus the users’ WTP for improved water supply and water quality (e.g., Rs 17 to Rs 20.60 per cubic meter) were found to be quite high.
Users were also asked to express their opinions on the existing management of water supply system and about alternative institutional mechanism they would prefer in order to improve the water supply conditions in the KM. First, the majority of the users in the study areas were found unsatisfied with the present water management system as no timely and adequate water was being delivered. Second, the majority of the users also responded that strengthening of the NWSC possibly could improve the water supply systems than handing over the management responsibility to the KM or to the private sector. Households favoring the strengthening of the NWSC varied from 68 percent in Chagal area to 45 percent in Old Baneswor. Users’ response to privatisation varied from as high as 40 percent in Old Baneswor area to 18 percent in the Chagal area. Very few respondents favored handing over the management responsibility to the KM (5-10 percent).
These findings have several important policy implications. First, no potential low-equilibrium trap prevails in KM’s water supply such as those found in rural water supply projects. Though the NWSC is in financial crisis, and the users’ maximum WTP still lies far below the average incremental cost (AIC) (users’ in KM are paying only 60 percent of AIC), financial sustainability could be achieved if both the water supply/quality could be improved and the operating costs could be lowered down significantly. Second, contrary to the government decision, the majority of users do favor strengthening of the NWSC than handing over responsibility to the private sector. The respondents also expressed fear that the present level of water price would be significantly increased without increase in service delivery or the quality, if the management system were handed over to the private sector.
Next, the analysis of incidence of costs and benefits of the pricing policy reforms to the different income groups also indicated that household’s surplus would be negative to the lowest income group which varied from 2 to 18 percent in different locations. Experience of other countries also indicates that consumers’ welfare would decrease, especially of the lower income groups, when the water supply facilities are privatised. Though privatisation could be part of wider reform agenda, handing over responsibility to the private sector without proper monitoring mechanisms, quality control, other effective regulatory measures and compensation mechanism to the urban poor would, no doubt, lower the consumers’ welfare. Finally, however, the existing structure of the NWSC has to be changed, as its performance is quite poor, as perceived by the users.
Thus, a mix of market-based mechanism (pricing policy reforms with metering and strict adoption of block pricing system with capture of users’ WTP under existing water supply conditions) and regulatory policies with re-orientation of existing institution would be an optimal solution at present. A Water Supply and Water Quality Control Board could be developed at the municipality level with well-decentralised structure (at the head, middle and tail parts of the water supply system or at the ward level) for proper operation and maintenance, adequate monitoring, and collection of water use fees/pollution charge.Posted on: 2004-01-06 02:38
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