Private sector participation in water Management: Malindi water supply case study

Abstract

Most of the existing water supplies in the urban areas in Kenya are generally poor in terms of technical and financial performance. Service coverage is inadequate, levels of service are low, and in many cases the situation has been deteriorating. The main reasons for the poor water service delivery are considered to be rooted in the past and current institutional and organisational arrangements. The Government has since the early 1970s been introducing measures to deal with these problems. These changes include use of different management options in the provision of water supply and sewerage services especially in urban water utilities. The primary objective of this study was to evaluate the performance of the management contract which is the Private Sector Participation (PSP) option in use in Malindi water supply with a view of determining reasons for its adoption and the extent to which it has improved service delivery. The secondary objective was establishing the critical factors that have made the PSP operator to succeed in order to come up with lessons that can be replicated in other urban water utilities. Questionnaires and interviews both in the field and in Nairobi were used in the study. In addition, various reports were synthesised to identify the prior problems in the water supply and achievements of the PSP operator in accordance with the contract performance targets. The study revealed that the management contract entered into between the operator and the client was strong in financial provisions, however, the incentives I, and penalties were based on poor performance standards. The findings also indicate that the introduction of PSP in the utility was as a result of desire to improve operational and strategic management in the utility; enhance technical capacity; excessive donor pressure; demand for professional management; need to increase tariffs and need to introduce new technology and efficiency in the scheme. The study findings shows that the PSP operator has improved the financial performance of the scheme, through substantial increase in collection efficiency; the fear that PSP leads to staff reductions has been proved wrong as the PSP operator increased staff numbers from 20 to 61persons; the PSP x operator has introduced professional management in the utility operations. Furthermore, the PSP operator allocates adequate funds to operation and maintenance (O&M) and has improved customer relations and introduced use of information technology on the scheme. Indeed 51% of the respondents are of the view that the supply is more reliable than before PSP. However, the research also revealed that 55% of the respondents are not satisfied with the water quality; customers who buy water from kiosks or vendors pay a higher price than customers with a water connection. There were complaints that the PSP operator unnecessarily delays approval for establishment of additional water kiosks and does not adequately address complaints. Views were also expressed that the PSP operator is too strict therefore his contract should be terminated. The lessons learnt are that professional management of a water utility, sufficient funding for operation and maintenance, good customer care and realistic tariffs will lead to efficient sustainable and reliable water supply. Training and proper remuneration were identified as important aspect of motivation for staff in any water utility. It was also recognised that for PSP to succeed, it should be preceded by commercial development of a water utility which includes reducing UFW, introducing computerised billing, developing comprehensive O&M management based on preventive maintenance and prompt completion of repairs and improving customer services. The lessons learnt are that professional management of a water utility, sufficient funding for operation and maintenance, good customer care, proper information to customers and realistic tariffs will lead to efficient sustainable and reliable water supply. Training, focused work assignment and proper remuneration were identified as important aspect of motivation for staff in any water utility. It was also recognised that for PSP to succeed, it should be preceded by commercial development of a water utility which includes reducing UFW, introducing computerised billing, developing comprehensive O&M management based on preventive maintenance and prompt completion of repairs and improving customer services.