A key consideration in satisfactory performance of a water utility is proper pricing and recovery of revenue from users. Experiences from the literature reveal that level of service decreases when utilities do not recover the bills issued against services delivered. Willingness to pay, tariff structure and overall level of service are important determinants in such scenarios. In Karachi, the Karachi Water and Sewerage Board is the water utility responsible for the supply of water to consumers. The board prescribes a tariff structure for the water supply service to different categories of users, which is revised at intervals. The utility recovers only 7% of all the water service bills issued to its consumers, which leads to financial problems. A study was conducted in 2009-2010 to investigate the relationship between tariff structure and the willingness to pay by consumers. Research methods adopted for this study included 47 semi-structured interviews with residents, key officials of the utility organisation, selected mayors, consultants and community organisations. The findings and conclusions reveal that inclusion of stakeholder perspectives, capacity assessment of utility and effective liaison between users and utility are vital factors with respect to policy and procedures. Municipal Engineer Volume 166 Issue ME1Tariff structure and willingness to pay: case of Karachi Ahmed
There is a need in South Africa for institutional innovations aimed at increasing the coverage and reliability of water services, and sustaining those services. The paper describes an alternative service delivery institutional concept, viz the franchising of the operation and maintenance of water services, and outlines the need to formulate a franchise model that could be developed and made available to emerging entrepreneurs as the basis of a viable business. The franchise would be in respect of components of the water services value chain that are suitable for small business in that they can be readily systematised.
Pilot projects in South Africa have demonstrated how the institutionally innovative and very practical social franchising partnership approach can be used as an alternative approach to more commonly encountered options, for the routine maintenance of low-technology water and sanitation infrastructure. The strength of this approach is that it is built on a robust foundation of mutual support and incentives. The paper describes how franchise partners have been working with schools and municipalities to address operational issues. The Eastern Cape provincial Department of Education now has a proven model which it is rolling out to further school districts, beyond the initial pilot in the Butterworth education district. Municipalities in the area are also employing the franchisee microbusinesses to undertake maintenance services. Further opportunities lie in applying the approach to operation and/or maintenance activities within the water and sanitation services delivery chain, and thereafter extending it to other types of infrastructure (e.g. roads and electricity reticulation).
Water Research Commission (WRC) of South Africa studies have found that franchising partnerships could alleviate and address many challenges in the operation and maintenance of water services infrastructure. Franchising brings appropriate training to those on-site, and also offers backup off-site skills together with the incentive to both call for those skills and to make them available. Findings indicate that many opportunities lie in the franchising of suitable elements in the water services value chain, and a selection of these has been modelled on paper. Procurement issues have been identified. Principles for embarking on water services franchising (for use by water services authorities, potential franchisors and potential franchisees) have been drafted.
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