improving performance through bilateral utility partnerships
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Improving Performance through Bilateral Utility Partnerships. Meike van Ginneken, World Bank Water Operators Partnership Workshop Johannesburg, April 24th. Outline. Delegated management vs professional support How to ensure accountability for results from both partners? Financial flows - PowerPoint PPT PresentationTRANSCRIPT
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Improving Performance through Bilateral Utility Partnerships
Meike van Ginneken, World Bank Water Operators Partnership Workshop
Johannesburg, April 24th
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Outline
Delegated management vs professional support How to ensure accountability for results from
both partners?Financial flowsSelecting partnersType of fees (fixed or performance based)Contractual arrangements
Parting thoughts
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The public – private (non) divide
Statutory bodyDepartment Govt owned
company
TA arm of public utility
Empresa mixta
Private company
But reality is more complex
Simple slogans…… Why does the state have to do so much? ..there is no need for the state to actually do them, when a competitive market can work so much better.Adam Smith Institute
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…or enter in a professional support
arrangement
..enter in a delegated management arrangement
The real divide: Delegated management and professional support
A utility that has lost its way, can…
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Delegated management contracts
Amman, JordanGhanaKosovo
SenegalCote d’IvoireMozambique
Manila, PhilippinesGdansk, PolandTangiers, Morocco
Service contract
management contract
Lease/affermage
concession
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Professional support models
Riga, EstoniaMozambiqueYemen
Formosa, ArgentinaSiem Reap, Cambodia
consultancy
twinning
Performance based P.S.
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The professional support package
Areas of know-how utility management asset management billing and collection engineering
(construction, O&M) human resources
management procurement etc
Modes of know-how transfer
capacity building systems continuous specialist
assistance special services
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Outline
Delegated management vs professional support How to ensure accountability for results from
both partners?Financial flowsSelecting partnersType of fees (fixed or performance based)Contractual arrangements
Parting thoughts
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Financial flows
utility
utility
supportsupport
Two way partnerships
Many are lauched, but often proof unsustainable
Supportee utility
Supportor utility
fee $$support
Fee for service contracts
Typical consultancy contract, not many
‘deeper’ partnerships
Supportee utility
Supportor utility
support
donor fee $$
Tied donor partnership
Typical international twinning arrangements, little say for
supported utility
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Example: NWSC (Uganda) support to several utilities in Africa
Since 2003; various past and ongoing contracts with utilities in Kenya, Tanzania, and Zambia
Executed through External Services Unit Scope: advisory, commercial and customer
care/IT, block mapping, laboratory services, performance improvement programs, institutional development
Modes: capacity building, systems, continuous specialist assistance, special services
Mostly initiated by donor/NWSC; financed by donors to NWSC
Consultancy contracts: Short term (typically 1-3 years) fixed fees for services
EvaluationNo evaluation available yet, but: arrangement seems to be to
satisfaction of both parties some performance
improvements in supportee utilities (unclear whether can be attributed to this support)
Repeat contracts
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Selecting partners
Initiated by donor/supportorMost international twinning arrangements
Through competitive selectionMost consultancy contracts
Through partnership building exercise Often in preparatory phase
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Twinning between Kaukas (Lithuania) and Stockholm (Sweden)
Duration: 1994-1999 (one of seven twinnings between Stockholm and Baltics in 1990s)
Twinning agreement defines roles & responsibilities: Twinnee: ‘sole responsible to fulfill its obligation
and to ensure the overall success of the project’ Twinnor: ‘only advisory role and responsible to
make best possible use of twinning program’ Performance indicators measure performance of
twinnee not of twinning arrangement Scope: Mngt and admin procedures, Institutional
development. Operational enhancement Financed by Sida to twinnor; fixed fee Initiated by twinnor/donor; parallel to EBRD loan 2-3 full time in-house advisors & visiting specialists
EvaluationAll parties were happy with
arrangements“The overall impact of the
twinning arrangement between KWC and SWC is overwhelmingly positive”
But, arrangement was expensive“If the Baltic utilities have been
given the choice and asked to pay the market price for twinning, very little, if any, twinning in the present form would have taken place”
Sida evaluation, 98/19
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Special services
Support packages over time
Systems and continuous specialist support
$$
time
Capacity building
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Unit fee
Fees over time
Performance-based feeMonthly feeUpfront fee
$$
time
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Balancing services and fees
$$
time
Services delivered
Fees paid
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Formalizing the partnership
Functions: Establish the rules of the game Define objects and obligations
Develop a climate of confidence. Prompting partners to focus on results
Strengthen relationships by giving them periodic opportunities to discuss progress and problems
Contracts Agreements MoUs
the process of introducing, updating and monitoring an agreement is at least as important as formal enforcement
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Some recent (and exciting) examples
Siem Reap and Phnom Phen (Cambodia)
Five year contract (from 2006)
Performance based fee paid by supportee
Scope: utility management, asset management, other areas
Modes: capacity building, systems, continuous specialist assistance
Taiz (Yemen) and Vitens (The Netherlands)
3 years twinning contract (from 2006)
Performance based fee paid by donor
Scope: utility management, asset management, other areas
Modes: continuous specialist assistance
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Summary of various options
Type of supportor
Duration Financial flows fees Contractual arrangements
Partner selection
Consultancy Consultant firm, utility
Short term, punctual
Supportee pays supportor
Fixed Formal competitive by supportee
Twinning Public utility Long term Donor pays supportor
Fixed Informal By supportor
Performance based P.S.
Utility Long term Supportee pays supportor
Performance based
formal by supportee
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Outline
Delegated management vs professional support How to ensure accountability for results from
both partners?Financial flowsSelecting partnersType of fees (fixed or performance based)Contractual arrangements
Parting thoughts
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Opportunity but mixed track record
Performance data are scarce, but: Some partnerships are perceived by both partners as success Not all partnerships have performed well There are many aborted attempts
Lessons learned from success stories Good design is necessary but insufficient ingredient for success Success depends on commitment of partners and trust Accountability is key, including
Transparency: give each other an account of activities and progress Responsiveness: take account of each others’ needs or concerns Compliance: hold each other to account
A balance needs to be struck between legalistic and partnership approach Supportors often do not use own staff but hire external experts this
diminishes the value of having a utility partner
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The P in PPP: is it public, is it private or is it…
Professionalutilities
Small scale providers scaling up
Local private
operators
International private
operators
Local public utilities
Mixed companies
Consortia between actors
Foreign public utilities
TA arms of public utilities
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Accountability, but also trust….
I advise you to turn right
No way: I am going straight
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The role of WOP in bilateral utility partnerships
Match demand and supply
Help mobilize
resources
Monitor & benchmark performance
Disseminate lessons learned
Starting with identifying and supporting existing partnerships
