NATIONAL WATER SUPPLY AND SANITATION COUNCIL. Urban and Peri-Urban Water Supply and Sanitation Sector Report 2015

Transcription

1 NATIONAL WATER SUPPLY AND SANITATION COUNCIL Urban and Peri-Urban Water Supply and Sanitation Sector Report 2015

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3 Table of Contents List of Abbreviations and Acronyms... ii Foreword... v Executive Summary... vi 1 Summary of Performance for CUs for the Year Full Cost Recovery and Sector Investments Service Provision to the Low Income Areas The National Water Supply and Sanitation Council (NWASCO) Asset Management Progress on Meeting Service Level Agreements and Adherence to Service Level Guarantees Comparative Performance of Commercial Utilities Performance of Private Schemes Regional Benchmarking of Large WSS Utilities Conclusion...87 i

4 List of Abbreviations and Acronyms CEO-Chief Executive Officer CHWSC-Chambeshi Water and Sewerage Company CPA-Community Participatory Assessment CU-Commercial Utility DANIDA-Royal Danish Embassy DTF-Devolution Trust Fund ESAWAS-Eastern and Southern Africa Water and Sanitation EWSC- Eastern Water and Sewerage Company GF-General Fund GIZ-Deutsche Gesellschaft fuer Internationale Zusammenarbeit KfW- Kreditanstalt fuer Wiederaufbau KWSC-Kafubu Water and Sewerage Company LA-Local Authority LGWSC-Lukanga Water and Sewerage Company LPWSC-Luapula Water and Sewerage Company LWSC-Lusaka Water and Sewerage Company MCA-Millennium Challenge Account MDGs- Millennium Development Goals MEWD-Ministry of Energy and Water Development MLGH-Ministry of Local Government and Housing MWSC-Mulonga Water and Sewerage Company NRW-Non-Revenue Water NUWSSP-National Urban Water Supply and Sanitation Programme NWASCO- National Water Supply and Sanitation Council NWSC-Nkana Water and Sewerage Company NWWSC-North-Western Water and Sewerage Company ii

5 O&M-Operation and Maintenance PEF-Performance Enhancement Fund PS-Private Scheme PTI-Part-time Inspector SI-Service Indicator WWSC-Western Water and Sewerage Company ZABS-Zambia Bureau of Standards ZAWAFE-Zambia Water Forum and Exhibition ZEMA-Zambia Environmental Management Agency ZPPA-Zambia Public Procurement Authority SLA-Service Level Agreement SLG-Service Level Guarantee SWSC-Southern Water and Sewerage Company WARMA-Water Resources Management Authority WSC-Water and Sewerage Company WSS-Water Supply and Sanitation WTP-Water Treatment Plant WWG-Water Watch Group iii

6 Ensuring Better Services and Fair Value All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means without prior permission of the copyright owner. 2016, NWASCO

7 U r b a n a n d P e r i - U r b a n W a t e r S u p p l y a n d S a n i t a t i o n S e c t o r R e p o r t F o r e w o r d The reporting year, 2015, is a milestone year as it marks the end of the period for the attainment of the Millennium Development Goals (MDGs). In compiling the 2015 peri-urban and urban sector report, the interest was not only to gauge the progress in performance of the sector, but also to benchmark against the MDGs. We have introduced a number of new indicators in this report in order to enhance the benchmarking system and also give stakeholders more information on the performance of the CUs. Among the indicators included, are those on maintenance efficiency, gender mainstreaming and energy efficiency. The year was indeed a challenging one owing to extensive load shedding, dwindling water resources and generally the economic downturn that was experienced particularly in the latter half of the year. These challenges resulted in supply restrictions, escalated cost of doing business, low billing and revenue collections. The launch of our fourth Strategic Plan for the period 2016 to 2020 will position us to even spur further to exploit new and better ways of regulating, as well as, equip us to better able manage the anticipated risks, most of which stem from the challenges experienced in the year under review. On the whole, it is delighting to note that as a sector, we managed to score one victory, that is, meeting the MDG target on access to water and sanitation. Nonetheless, for sanitation, a lot more effort is desired in order to improve access, as well as raise awareness. It is our sincere hope that the contents of this report will continue to influence decisions, particularly in areas where the performance was not acceptable. We remain open to partnerships and positive criticism, as we strive to attain our goals. Nevertheless, as NWASCO, we did not depart from our focus to ensure better water supply and sanitation services and fair value for the Zambian people. We continued to soldier on and evidently, the sector continued on the path of growth as more people accessed water supply and sanitation services. Kelvin Chitumbo Director-NWASCO v

8 U r b a n a n d P e r i - U r b a n W a t e r S u p p l y a n d S a n i t a t i o n S e c t o r R e p o r t Executive Summary The performance of the sector for the reporting period 1 st January to 31 st December 2015 continued to show minimal progression. In the year under review, 101,041 and 143,526 more people accessed water supply and sanitation services respectively, against an increase in population. Metering ratio also improved from previous year, with just over 30,000 additional connections metered. However, there were a number of setbacks in indicators such as hours of water supply, collection efficiency and O&M cost coverage, mainly owing to external factors such as power load shedding, a downturn of the local economy and diminishing water resources. Other topics discussed are Comparative Performance of the Commercial Utilities highlighted in chapters 1 and 7, Service Level Guarantees and Agreements in chapter 6 and the activities of DTF and NWASCO in chapters 3 and 4 respectively. The report also includes a chapter on the Performance of Private Schemes in chapter 8 and a new chapter on Regional Benchmarking in chapter 9, which is a comparison of performance for large utilities within the Eastern and Southern African region. Chapter 10 gives the conclusion and focuses on how the sector has performed against the MDGs and the strategies going forward. Key topics discussed in this report are: Full Cost Recovery and Investment in chapter 2 - which are key elements for sustainability, and Asset Management in Chapter 5 - a new phenomenon in enhancing efficiency in water supply and sanitation service delivery. vi

9 1 SUMMARY OF PERFORMANCE FOR COMMERCIAL UTILITIES FOR THE YEAR 2015

10 Summary of Performance for CUs for the Year 2015 WSS Sector Report 2015 This Chapter summarises the performance of Commercial Utilities (CUs) for the period 1 st January to 31 st December The detailed analysis is in Chapter Seven. Most of the indicators in this report are based on the Minimum Service Levels (MSL) which are part of the license conditions. Additional indicators have been included to provide the reader with a broader understanding of the CUs performance. Table 1: National Urban Water Supply and Sanitation Coverage Total Urban Population 6,122,284 6,270,425 Total Urban Population Served with Water 5,131,657 5,232,698 Total Urban Population Served with 3,704,470 3,847,996 Sewerage National Urban Water Coverage 83.8% 83.5% National Urban Sanitation Coverage 60.5% 61.4% 1.1 NATIONAL URBAN WATER SUPPLY AND SANITATION COVERAGE Commercial Utilities are the main providers of water and sanitation services in urban areas. There were about 6.27million people living in the CUs service areas, of which 0.8% were serviced by six Private Schemes which are companies that provide water supply and sanitation services to their employees as a fringe benefit. Table 1 depicts the National Urban Water Supply and Sanitation Coverage, which is a combination of coverage for the CUs and the Private Schemes. During the reporting period, an additional 101,041 people were served with potable water supply while 143,526 persons accessed sanitation services. However, the overall percentage coverage for water reduced slightly against an increasing population while sanitation coverage showed a marginal increase. 2

11 WSS Sector Report 2015 Summary of Performance for CUs for the Year PROFILE OF COMMERCIAL UTILITIES A general overview of each CU in terms of its age and size using various parameters, is presented in Table 2. Table 2: Operating Conditions of Commercial Utilities Commercial Utility Abbreviation Start of Operations No. of Towns/Centres Serviced Total Population in Service Area No. of Connections No. of Staff Lusaka WSC LWSC ,246,825 94, Nkana WSC NWSC ,782 58, Kafubu WSC KWSC ,530 60, Mulonga WSC MWSC ,160 51, Lukanga WSC LGWSC ,081 23, Southern WSC SWSC ,335 45, Chambeshi WSC CHWSC ,308 19, North Western WSC NWWSC ,979 12, Eastern WSC EWSC ,840 17, Western WSC WWSC ,185 12, Luapula WSC LPWSC ,400 5, The funding received by the CUs in the reporting period is presented in Chapter 2. 3

12 Summary of Performance for CUs for the Year 2015 WSS Sector Report OVERVIEW OF SECTOR PERFORMANCE The performance of the CUs in nine key performance indicators is summarised in Table 3. The performance of a CU is compared to the previous year, against the benchmark and against the sector average. Table 3: Overview of Sector Performance 4

13 WSS Sector Report 2015 Summary of Performance for CUs for the Year CU PERFORMANCE RANKING Commercial Utilities are ranked according to indicators and respective weightings shown in Table 4. A higher weighting reflects how critical the indicator is to the quality of service and financial viability of the CU. Table 4: Performance Indicators and their Weighting Factors Indicator Weighting 1 Water Quality 20 points 2 Collection Efficiency 20 points 3 Metering Ratio 15 points 4 Hours of Supply 15 points 5 O+M Cost Coverage by Collection 15 points 6 Non Revenue Water 10 points 7 Staff Efficiency 10 points 8 Water Coverage 05 points 9 Sanitation Coverage 05 points To arrive at the ranking, the total score is derived by aggregating the result of: [The indicator weighting] x [the score against the benchmark (1,3,5 in Table 3)] x [the CU performance (in Table 3)] The performance ranking of the CUs is shown in Table 5. In order to provide readers with the performance trends, the rankings for the previous four years have also been reflected. It must be noted that a CU moving down in the ranking does not necessarily mean that it performed worse than the previous period, but it could also mean that it was outperformed (see Table 3). Table 5: Ranking of CUs CU Ranking Ranking Ranking Ranking Ranking / /12 SWSC NWWSC EWSC LWSC LGWSC NWSC WWSC MWSC KWSC LPWSC CHWSC SWSC bounced back to the 1st position, five years after it last held it. LGWSC made a drastic leap from the 10 th to 5 th position. MWSC and KWSC dropped dramatically in the rankings, largely as a result of lower metering ratio and collection efficiency. 5

14 Summary of Performance for CUs for the Year 2015 WSS Sector Report Recognitions of CUs for Exemplary Performance CUs are recognised for exemplary performance in specific areas and indicators. The recognition is made in two categories as follows: Category 1: Best performer in an indicator Category 2: Most improved towards or above the benchmark given that performance is above the average sector performance. Therefore the highest performing CU may not be recognised as the best performer if the performance is dropping more than a given threshold (acceptable tolerance limit) from the previous period. Whereas the most improved from the previous period may not be recognised if the performance is below the sector average. The best performer is excluded from Category 2, unless in very exceptional circumstances where the magnitude of improvement, far exceeds the rest. Table 6: Recognition of CUs for Exemplary Performance Area of recognition BEST CU MOST IMPROVED Non Revenue Water North Western WSC Southern WSC Water Quality Southern WSC Lukanga WSC Metering Ratio North Western WSC Western WSC Eastern WSC Water Service Coverage Mulonga WSC - Sanitation Service Coverage by Network *does not consider data on septic tanks Mulonga WSC Hours of Supply Kafubu WSC - Nkana WSC Staff Efficiency Mulonga WSC Nkana WSC Collection Efficiency Southern WSC Western WSC O&M Cost Coverage by Collection Southern WSC Western WSC Area of recognition Most Improved Significance of improvement in all indicators collectively Best in Servicing Peri-Urban Areas Performance in implementing projects and general management of water kiosk operations Best Submitted Data Completeness and accuracy of data submitted in the NWASCO Information System and least queries raised for verification CU Lukanga WSC Southern WSC Lukanga WSC 1.6 rewarding CEO s Performance Chief Executive Officers play a critical role in driving the company vision, mission and objectives. In order to motivate the CEOs to take responsibility for the performance of their companies, a CEO s award is given. The performance assessment for the CEO award is based on the following criteria: The ability of the CEO to: i. Build a high performing management team; ii. Give the company strategic direction and implement a clear plan of creating value for the company; 6

15 WSS Sector Report 2015 Summary of Performance for CUs for the Year 2015 iii. Drive continuous improvement in the performance of the CU; iv. Mobilise resources for capital projects; v. Ensure successful implementation of both short and long term company objectives. Further, the CEOs for each CU nominate two top fellow CEOs in order of hierarchy, based on their view of the contribution made by the nominated CEO in advancing the company they represent CEO of the year award 1.7 Sector Achievements and Challenges Achievements The notable achievements during the period under review were: increased metering ratio from 70% to 73%; increased number of people with access to water supply and sanitation services; and average collection efficiency remained at the acceptable benchmark of 85% despite economic challenges. 1 st Position Mr. Charles Shindaile Southern WSC 3 rd Position Ms. Diana Makwaba Nkana WSC 2 nd Position Mr. Arnott Chilwesa North Western WSC 4 th Position Mr. George Ndongwe Lusaka WSC Challenges/Concerns The sector challenges included the following: Extensive power load shedding which disrupted water supply; Poor cost coverage due to higher increases in costs compared to revenue as a result of an economic downturn; Delayed payment of bills especially by Government institutions; Increased water losses, mainly attributed to dilapidated infrastructure, low metering and poor water network management; Reduction of raw water from both surface and ground sources due to climate variability and anthropogenic activities; Poor water quality due to pollution of water sources and inadequate infrastructure for treatment; and Uncoordinated development planning, culminating in retarded progress in service coverage. 7

16 Summary of Performance for CUs for the Year 2015 WSS Sector Report CU OPERATING ENVIRONMENT AND COMMENTS ON PERFORMANCE The CUs operate under varying conditions which may impact their performance. Therefore, the operating environment, as highlighted hereunder should be taken into consideration when analysing the performance of CUs and making comparisons. It is worth noting that, in the latter half of 2015, the operating environment was greatly affected by two main factors. Firstly, the power utility company intensified load shedding countrywide which adversely impacted water production and consequently, hours of water supply and revenue generation. Secondly, an economic downturn saw a depreciation of the Kwacha and an increase in interest and inflation rates, which substantially raised the cost of doing business. LUSAKA WSC Operating Environment Services the capital city, Lusaka, and five other districts (Luangwa, Chongwe, Chirundu, Kafue and Chilanga) in Lusaka Province; High economic activity; The bulk of infrastructure needs major rehabilitation and expansion; and Good complement of highly qualified staff. Comments In addition to installation of new meters, the CU embarked upon massive replacement of malfunctioning meters; Pre-paid meters exposed the CU to a lot of customer complaints due to malfunctioning; Need to concert efforts to improve most indicators which either dropped or remained static; and Devise hedging strategies to ensure that exchange losses are minimised. NKANA WSC Operating Environment Operates in three predominantly mining towns on the Copperbelt Province namely Kitwe, Kalulushi and Chambishi; Major raw water sources susceptible to industrial pollution; High economic activity; and The bulk of infrastructure is under major rehabilitation and expansion. Comments Increased water and sewer connections by over 5,000 and 3,000 respectively; Improved hours of supply in areas that were problematic, such as Chamboli, Mindolo and Wusakile; Had good staff efficiency in relation to billing and collections; Need to improve water quality in Kalulushi; and Devise strategies to improve collections. KAFUBU WSC Operating Environment Operates in three towns (Ndola, Masaiti and Luanshya) on the Copperbelt Province; Medium economic activity; Poor quality of raw water in the southern part of Ndola; and The bulk of infrastructure is under major rehabilitation and expansion. Comments Added over 4,000 new water connections; Made efforts to secure funds for investments; NRW was extremely high and needs urgent reduction strategies, such as prompt response to leakages; Devise strategies to improve collections;and Need to prioritise network rehabilitations. 8

17 WSS Sector Report 2015 Summary of Performance for CUs for the Year 2015 MULONGA WSC Operating Environment Operates in three predominantly mining towns on the Copperbelt Province (Chingola, Chililabombwe and Mufulira); Major raw water sources susceptible to industrial pollution; High economic activity; and The majority of infrastructure needs rehabilitation and expansion. Comments Maintained good staff efficiency; Metered over 4,000 connections; Need to address poor water quality in Chingola and Mufulira; and Improve meter management and address illegal connections in order to reduce NRW. Lukanga WSC Operating Environment Operates in eight towns in the Central Province namely Kabwe, Mumbwa, Serenje, Mkushi, Kapiri Mposhi, Chibombo, Chisamba and Itezhi-tezhi; Medium economic activity; and Relatively new infrastructure in all towns but dilapidated sewer infrastructure. Comments Reduced NRW; Improved water quality compliance but need to improve further in Mkushi and Serenje; Need to improve staff efficiency; Concert efforts to complete ongoing projects; and Need to increase water and sanitation coverage. Southern WSC Operating Environment Has the highest number of service towns/centres(21); Medium to low economic activity; and Fairly good but inadequate infrastructure. Comments Increased water connections by over 4,000; Improved NRW; Maintained high collection efficiency and O&M cost coverage; Need to improve meter management and replacement; Improve water supply in pockets of Livingstone and Choma; and Concert efforts to improving sanitation coverage. Chambeshi WSC Operating Environment Operates in 12 towns (Kasama, Mpika, Chinsali, Nakonde, Isoka, Mbala, Mpulungu, Luwingu, Mporokoso, Kaputa, Mungwi and Chilubi) in the Northern and Muchinga Provinces that are spread over a wide geographical area; Low economic activity; and The bulk of infrastructure is under major rehabilitation and expansion; Comments General improvement in all indicators; Increased water connections by over 2,500; Need to further improve metering ratio and billing efficiency; and Concert efforts to increasing WSS coverage. 9

18 Summary of Performance for CUs for the Year 2015 WSS Sector Report 2015 North Western WSC Operating Environment Operates in eight towns in North-Western Province; namely Solwezi, Kasempa, Mwinilunga, Zambezi, Kabompo, Chavuma, Manyinga and Mufumbwe with the largest town being a predominantly mining area; Medium to low economic activity with potential for growth; and Fairly good state of infrastructure, but needs expansion. Comments Slight decline in most indicators such as NRW, water and sanitation coverage; Need to improve meter management and replacement; Concert efforts to improving billing efficiency; and Increase sanitation coverage. Eastern WSC Operating Environment Operates in ten towns (Nyimba, Chipata, Petauke, Katete, Chadiza, Mambwe, Lundazi, Vubwi and Sinda) in the Eastern Province and Chama in Muchinga Province; Relatively new infrastructure in almost all towns; and Seasonal, medium to low economic activity dependent on farming periods. Comments Improved NRW; Minimal improvements in most indicators; Need to improve meter management and replacement; and Improve commercial operations and the internal control environment. Western WSC Operating Environment Operates in ten towns in the Western province (Kaoma, Mongu, Kalabo, Senanga, Lukulu,Sesheke, Mulobezi, Mwandi, Shang ombo and Limulunga); Low economic activity; and Inadequate infrastructure needing major overhaul. Comments Improved collection efficiency and O&M cost coverage; Tremendously improved metering ratio; Need to improve water quality; Serious need to increase the customer base and reduce the number of inactive customers; and Improve WSS coverage. Luapula WSC Operating Environment Operates in seven towns in Luapula Province namely Mansa, Samfya, Nchelenge, Kawambwa, Mwense, Chiengi and Milengi; Extremely low economic activity; and Very low customer base. Comments Performance declined in a number of indicators; Cost coverage is of serious concern, making the CU unsustainable; and Need to concert efforts towards increasing number of connections for both water and sewer. 10

19 2 FULL COST RECOVERY AND SECTOR INVESTMENTS

20 Full Cost Recovery and Sector Investments WSS Sector Report BACKGROUND Zambia embarked on water sector reforms in 1993 under the auspices of the Ministry of Energy and Water Development in order to address, among others, inadequate financial resources to cover costs of providing services and investments in the water sector. The vision of the Government of the Republic of Zambia (GRZ) for the water sector reform as enshrined in the 1994 National Water Policy was: The WSS sector shall be developed to improve the quality of life and productivity for all people by ensuring an equitable provision of an adequate quantity and quality of WSS services at acceptable cost and on sustainable basis. To achieve this vision, seven sector principles were adopted and enshrined in the 1994 National Water Policy to guide the implementation of the reforms. Among the principles, were two which related to full cost recovery in the long run from user charges, and increased Government investment and priority spending in the water sector. Since their formation, CUs have been striving to reach full cost recovery. According to a background paper to the 1994 National Water Policy, the Final Discussion Document: Proposed Institutional Framework for the Water and Sanitation Sector, one of the financial objectives of the CUs was to achieve financial viability within ten years from their establishment (WSSSDG, 1994, p. 21). Full costs are defined as O&M costs plus finance costs, depreciation and any allowed provisions. Allocating costs among consumers according to the burden they impose on a delivery system has been incorporated in the tariff adjustment process by NWASCO thus assuring a reasonable degree of stability and avoiding large tariff fluctuations from year to year. To the extent possible, the tariffs reflect both the cost and the true economic value of a commodity and thereby provide the right signals to consumers. NWASCO has developed a simple but effective tariff adjustment process based on the principles of fairness and equity including social consideration. The immediate objective of tariff setting is to cover O&M costs with progression towards full cost recovery. The ability to cover costs is based on acceptable collection efficiency and production loss, (Non-Revenue Water). Progress has been made in the sector with the average O&M cost coverage of about 91% from less than 40% in 2000, if utilities collected at least 85% of their billing. Nevertheless, there have been up and down movements towards meeting these costs due to a number of factors and the progress has been rather slow. NWASCO has, since 2000, gradually adjusted upwards tariffs proposed by CUs in order to move them towards full cost recovery. Investment for WSS from the national treasury has been very low and although an increment has been observed in the last few years, the allocation has never exceeded 3% of the total national budget despite GRZ recognizing water as a priority. The situation is worsened by the low releases from the GRZ budget particularly for investments in the sector. Funding has been largely provided by cooperating partners. There is also a very worrying trend on the rising debt owed to CUs on water and sewerage bills by Government institutions, posing a serious threat to the sustainability of the water supply and sanitation sector. 12

21 WSS Sector Report 2015 Full Cost Recovery and Sector Investments 2.2 PROGRESS TOWARDS FULL COST RECOVERY Chart 1 shows the average progress made by the CUs towards meeting full cost recovery in the last 10 years. It should be noted that the figure has been fluctuating due to a number of factors described in section 2.3. In 2008, the sector average dropped significantly as a result of low collections in the period that only averaged about 78% collection efficiency. 2.3 FACTORS INFLUENCING FULL COST RECOVERY There are many elements/factors that influence the attainment of full cost recovery by the CUs. These are both internal and external. The following are the key factors: (i) Investments in CUs The state of infrastructure is fundamental to cost recovery. This is because with good infrastructure the quality of service and efficiency of the CU tend to be good. Further, the costs of rehabilitation and replacement are lower for a CU with good infrastructure. Investments are a vital ingredient in improving both service quality and operational efficiency. CUs, such as NWWSC, SWSC, LWSC, MWSC, NWSC, EWSC and KWSC, that have had some investment considerations, are much more likely to reach full cost recovery in the short to medium term. Without capital investments in the CUs, cost recovery in the water and sewerage business becomes a challenge. Construction of sedimentation tanks- Kitwe, under Nkana WSC 13

22 Full Cost Recovery and Sector Investments WSS Sector Report 2015 (ii) Size of the Utility Each CU has an optimal size at which it should operate. For utilities that are smaller than the optimal size, such as LPWSC, NWWSC and WWSC, it becomes a struggle for them to attain cost recovery because they mainly rely on the tariff which too, is dependent on the ability and willingness of people to pay. (iii) Metering Ratio, Non-Revenue Water and Collections The fundamental principle of water supply and sanitation services is to be able to measure what you price. Low metering ratio has a devastating effect on billing and consequently Non-Revenue (NRW) and collections. Without 100% metering, billing figures and NRW cannot be accurate and often tend to be understated. The effect of this is that the collections are lower than expected. For CUs that are not fully metered, quantities billed are assessed using an assumed consumption for the various consumer categories. The assessed consumption volumes are then used to arrive at the tariff. During the year 2015, only NWWSC and EWSC were 100% metered, hence had a much more accurate billing and cost reflective tariffs. In the absence of 100% metering, it is difficult to calculate a cost recovery tariff because only the cost side is known, the revenue is an assessment. (iv) Service quality The quality of service has an impact on the billing and consequently the collections. Intermittent supply of water, limits consumption by customers particularly when they are metered because they only pay for what they consume. This would mean a lower billing for the CU. For the customer, quality of service is perceived from the hours of supply and water quality. For CUs which have less than the acceptable benchmark hours of supply, such as CHWSC, WWSC and LPWSC, the quest to full cost recovery becomes very challenging. (v) Tariffs and Tariff Setting Process NWASCO uses a cost-plus approach to set tariffs which can be up to a period of 3 years. In projecting the costs, assumptions are made on future production figures and water losses. Further, the CUs make forecasts of economic indicators that have a direct impact on their business such as inflation, exchange and interest rates. Other predictions made are on the staffing levels, costs of electricity, fuel and chemicals. Without accurate predictions of the future operating conditions, it becomes a challenge for the CUs to attain full cost recovery. Metering ratio has a high impact on the ability to recover costs Projecting costs includes assumptions on electricity usage and price 14

23 WSS Sector Report 2015 Full Cost Recovery and Sector Investments Dam construction works in progress - CUs must make accurate predictions of future production figures in order to correctly set the tariff 2.4 GOVERNMENT FINANCING AND PRIORITY SPENDING ON THE WSS SECTOR OVER TIME One of the seven principles of the 1994 National Water Policy is increased GRZ spending priority and budget spending on water supply and sanitation. Increased GRZ spending priority means that the percentage of the national budget that is allocated to the water sector increases. While budget allocations have more than doubled between 2007 and 2015, for instance, the percentage of these allocations relative to the national budget shows decreasing trend as shown in Chart 2. To the extent that the underlying trend in the amounts allocated and released by GRZ is upward, this principle is being partially implemented. With the National Urban Water Supply and Sanitation Program (NUWSSP) fully operational for the period , it is envisaged that it will help Government determine appropriate investments requirements for the sector and ensure coordinated financing. The NUWSSP investment is estimated at about US$200 million per year for the 20 years, (US$4.081billion in total) compared to about US$81million average annual budget allocation. However, it should be noted that the average budgetary allocation does not mainly include loans and grants given to CUs, for which GRZ is a guarantor. The estimated total investment in the NUWSSP may not be enough considering the changes in the sector, including creation of new districts and power shortages in the region that will require alternative energy sources. 15

24 Full Cost Recovery and Sector Investments WSS Sector Report WAY FORWARD Cost reflective tariffs and improved operational efficiencies should be at the centre of tariff adjustments. Under the fourth Strategic Plan for , NWASCO intends to develop a tariff migration path for achieving full cost coverage from short to medium term for each CU and also an equitable basis for determining and charging sewerage tariffs based on actual cost of service provision. Achieving 100% metering within the medium term will go a long way in helping CUs achieve full cost coverage. Revision of NUWSSP by MLGH to incorporate changes in the sector and finalise the financing mechanism should be done as a matter of urgency. Development of a WSS specific framework under which the private sector can participate in the provision of water supply and sanitation services can not be over stressed. Sewage ponds - the cost of providing sewerage services needs to be determined Service quality is perceived through water quality 16

25 3 SERVICE PROVISION TO THE LOW INCOME AREAS

26 Service Provision to Low Income Areas WSS Sector Report THE DEVOLUTION TRUST FUND (DTF) The Devolution Trust Fund (DTF) was established by the National Water Supply and Sanitation Council (NWASCO) in 2001 under the provision of the Water Supply and Sanitation (WSS) Act No. 28 of Thus, the DTF has operated as a basket fund since 2003, assisting CUs to improve and extend WSS services especially to low-income urban areas SUPPORT TO THE COMMERCIAL UTILITIES The DTF implements projects under three main portfolios of: General fund water supply -aimed at increasing access to safe and adequate water supply; General fund sanitation -targeted at increasing access to appropriate sanitation; and Performance Enhancement Fund (PEF) - to contribute to the operational efficiency. water supply project under EWSC. The three (3) projects funded, brought the number of water projects funded to Seventy-Nine (79) since inception. The individual portfolio details are given hereunder: General Fund - Water Supply Nine projects were under implementation in the reporting year, out of which only four were completed namely Kashikishi under LPWSC, Malole( Mungwi) under CHWSC, Malembeka (Kitwe) under NWSC and Kamuchanga(Luanshya) under KWSC as shown in Table 7. This brings the total number of completed projects to seventy-four (74) to-date. The DTF did not receive any funding for projects in the year under review. As a result, no new projects were financed under the Sanitation and PEF portfolios. Instead, much of DTF support to the CUs was focused on completing the ongoing projects. Further, the DTF working with NWASCO and MLGH contributed to the establishment of the National Technical Task Force (NTTF) for Non-Revenue Water. Given the reduced financing into the DTF Basket, of the six approved projects under the 8 th Call only three were financed. These were Kabanana water supply under LWSC, Chandamali water supply under SWSC and Chipata Newly constructed water kiosks handed over to vendors 18

27 WSS Sector Report 2015 Service Provision to Low Income Areas Table 7: Water Supply Projects General Fund -Sanitation No. CU Project Area Scope of work Cost (K) Beneficiaries The DTF commenced preparations for the implementation of the 2nd phase of the Libuyu sanitation project in Livingstone. This included sourcing a 1 Kashikishi (LPWSC) 12km of water supply network installed 10 water kiosks constructed 100m 3 elevated water tank installed 120 connections metered Installation of three pump sets (i.e. low lift, backwash and high lift). 2,327,333 17,500 Consultant to undertake detailed design for the second phase, conducting the Community Participatory Assessment (CPA) to determine and agree on contribution plans with the community and preparation for bidding documents. The project concept was concluded and three lots were proposed for implementation in 2016 to complete sanitation service delivery in Libuyu. DTF hired another consultant during the year to conduct an evaluation of 2 Malembeka (NWSC) 22.1km of water supply network installed 8 bulk meters installed 725,700 12,600 the sanitation projects implemented under the 1st Call for Proposal. The Consultant is expected to disseminate the results of the evaluation in Malole (CHWSC) 4 Kamuchanga (KWSC) 1.1km of water supply network installed Two 12m 3 water tanks and stand installed Two solar powered submersible pumps installed Solar panel power source installed. Online chlorinator and fencing installed. 12 water kiosks constructed 13.2km of network installed 200 connections metered 252, ,654,302 18, Performance Enhancement Fund In the period under review, the DTF contributed to the financing of the activities of the National Technical Task Force (NTTF) for Non- Revenue Water, under the auspices of MLGH. The NTTF completed preparation of a three-year National Strategic Plan on Non-Revenue Water for the period 2016 to The Strategic Plan was anchored on five objectives, among them the development of strategic plans for reduction and management of NRW in CU operations and to assist the WSS sector in monitoring and evaluation of NRW. It is envisaged that the NTTF shall contribute to the establishment of national standards for NRW management. TOTAL 4,959,335 48,600 The DTF commissioned a study of energy usage efficiency at SWSC, targeting Livingstone town. 19

28 Service Provision to Low Income Areas WSS Sector Report IMPACT ON THE GROUND The additional infrastructure to the sector from the four completed projects comprised 22 water kiosks, 320 domestic customer meters, 47.3km of additional water supply network and a combined reservoir capacity of 124m 3. Therefore, the DTF support cumulatively has resulted in value addition to the sector with total outputs to-date comprising 539 water Kiosks, 47,505 domestic customer meters, 356.4km of water supply network and 832m 3 of reservoir capacity. In 2015, an additional 48,600 persons were provided with access to safe, adequate water. This brought the total number of beneficiaries to 1,064,556 persons in low-income urban areas across the country since inception as indicated in Table 8. Table 8: Progress in Meeting Water Supply Targets 3.4 FUTURE OUTLOOK Mobilised as at 31 st December 2015 (K 000) Expenditure as at 31 st December 2015 (K 000) Funding 207, ,812 Cumulative Target Population by December 2015 Actual Cumulative Population Covered as at December 2015 Population 1,118,249 1,064,556 The operations of the DTF would significantly be reduced owing to reduced funding. Much more effort will be dedicated to the future institutional framework for the DTF in particular and sector financing mechanism being developed in consultation with stakeholders in the water sector. DTF increasing beneficiaries of potable water 20

29 4 THE NATIONAL WATER SUPPLY AND SANITATION COUNCIL (NWASCO)

30 NWASCO WSS Sector Report INTRODUCTION The National Water Supply and Sanitation Council (NWASCO) is a statutory body established by the Water Supply and Sanitation Act Number 28 of 1997 to regulate water supply and sanitation service provision in Zambia. The year 2015 stands out for the water and sanitation regulator as it marks its Quindecennial (15th) anniversary. NWASCO has continued to grow progressively over the years, along with the water and sanitation sector, amidst various challenges. The various activities undertaken during the year are highlighted below: 4.2 IMPLEMENTATION OF THE THIRD STRATEGIC PLAN NWASCO concluded the implementation of its third Strategic Plan for the period The overall assessed achievement of the entire Plan was 78%. In the 2015 reporting period, the following were the key achievements under the four major objectives of the Strategic Plan: To Improve Information Dissemination and OBJECTIVE 1 Engagement of the Public Two brochures (on Complaints Handling and Service Level Guarantees) were both translated and produced in Nyanja and Bemba languages. Continuous marketing of the NWASCO rebrand. Workshops on WSS legislation held for selected senior police officers in Livingstone and media houses in Lusaka. Web-based Complaints Platform (mywatsan.co.zm) launched on pilot for three CUs (Lusaka WSC, Nkana WSC and Kafubu WSC). The platform enables customers to report complaints through a single interface with automatic escalation of unresolved complaints to the regulator. OBJECTIVE 2 Strengthen and Enhance Enforcement of Regulation Draft Regulations coupled with proposed revisions to the WSS Act submitted to Cabinet for enactment process. Draft Water Supply Systems Code of Practice developed in collaboration with the Zambia Bureau of Standards. Recruitment of an additional 5 PTIs to improve monitoring on the ground. OBJECTIVE 3 To Enhance Performance in WSS Service Delivery Sanitation coverage improved to 60.5% against a target of 68%. Household connections increased by 58,750 against a target of 60,000. NRW worsened to 52.3% against a target reduction of 5% from a base of 42%. Hours of water supply reduced to 16 (from 18 hours in 2014) against a target average of 20 hours. A booklet of good practices published and disseminated to CUs for use. To Improve Operations and Sustainability for OBJECTIVE 4 NWASCO and Providers Training and knowledge-sharing fora facilitated for CUs in business acumen, technical issues (ISO 17025, water quality, asset management) and COBIT5 framework. NWASCO staff trained in various regulatory aspects. 22

31 WSS Sector Report 2015 NWASCO With the impending expiry of the third Strategic Plan, NWASCO formulated its fourth Strategic Plan which has encompassed a longer period of five years compared to the previous plans that only spanned three years. This change was based on the need to align to key national and international targets for water supply and sanitation. The fourth Strategic Plan therefore covers the period 2016 to 2020 and outlines four key strategic objectives as follows: Strategic Objective 1: To Undertake Continuous Regulatory Enhancement Strategic Objective 2: To Ensure Enhanced Efficiency and Financial Viability of Commercial Water Utilities Strategic Objective 3: To Ensure Improved Service Delivery and Sustained Sector Progression Strategic Objective 4: To Improve Operational Efficiency and Effectiveness of NWASCO The objectives have been developed under the rebrand of NWASCO to meet its new commitment of Ensuring Better Services and Fair Value. Therefore, by 2020, NWASCO intends to have more efficient and financially sustainable water utilities evidenced by marked improvement in service delivery and consumer care. The implementation of the Strategic Plan will require about ZMW11,280,765 to execute. 4.3 MONITORING SERVICE PROVIDERS Amendment of Operating Licenses Part IV section 19 of the Water Supply and Sanitation Act No. 28 of 1997 stipulates provisions for NWASCO to consider amendment of the operating licences of providers by application. In the period under review, three utilities applied for amendment of their operating licenses to either incorporate or remove new and/ or re-aligned districts. NWASCO approved the amendment of operating licences for: Eastern WSC to incorporate the newly created districts of Sinda and Vubwi Lukanga WSC to incorporate Itezhi Tezhi District. The district was previously under the administrative boundary of Southern Province. Southern WSC to remove Itezhi Tezhi District, include the newly created district of Chikankata and also to remove Lisitu Centre that was now part of Chirundu District and re-assigned to Lusaka Province Renewal of Service Level Guarantees and Service Level Agreements It is a licence condition that all licenced water and sanitation providers sign an agreement with NWASCO, called a Service Level Guarantee (SLG), regarding the service that they can assure their customers. Where the guarantee is below the stipulated benchmark or minimum service level set by the regulator in the Minimum Service Level Guidelines, the service providers sign a Service Level Agreement (SLA) which outlines improvements they will make towards achieving the benchmark in three year periods. 23

32 NWASCO WSS Sector Report 2015 The fourth SLGs and SLAs for Eastern, Kafubu, Lusaka, Nkana, North Western and Southern Water and Sewerage Companies expired on 31 st March NWASCO approved the 5 th SLGs and SLAs proposed by the CUs for the period up to 31 st March Inspections Part VI of the WSS Act provides for NWASCO to appoint Inspectors to conduct inspections on any utility or service provider in order to monitor compliance and enforce the provisions of the Act. Inspections take the form of both comprehensive and spot checks. All eleven CUs were inspected and the major findings were: All CUs were generally affected by the ongoing country-wide power load shedding that resulted in reduced hours of water supply. Mansa town in Luapula Province in particular could only supply 7 hours due to reduced pumping hours from 20 to about eight hours. LWSC lost 10% of their production owing to load shedding and low voltage which resulted in reduction of hours and subsequently, revenue. Nearly all CU laboratories had no documented standard operating procedures and working instructions. Maintenance Management Systems had not been fully implemented in CUs hence raising the risk of increased downtime of equipment. Further, plant operators were, in most cases, not availed or trained on usage of plant manuals. Most CUs had misapplied the approved new connection charges leading to overcharges on prospective customers. A number of CUs had numerous cases of stuck meters that led to estimated billings. The focus of inspections for all six Private Schemes is primarily water quality monitoring and the main findings were as follows: Zambia Sugar, Nampundwe KCM and Kafue Sugar had put in commendable effort to improve water treatment and quality monitoring. ZESCO Kafue Gorge and Lafarge Cement PLC had struggled with poor water quality results. Following stakeholder concerns on the quality of water, unlicensed Lusaka based institutions with own water supply were inspected to ascertain the efficacy of their water treatment and quality monitoring systems. These included the University of Zambia, Intercontinental Hotel, Evelyn Hone College and David Kaunda High School. The main finding was that there was inadequate disinfection of water with manual dosing techniques of chemicals being usually utilised, thus putting the lives of many consumers at risk of consuming contaminated water. Further, water quality monitoring was either irregular or non-existent. All service providers were issued with directives to address the non-compliance issues within specified timeframes. 24

33 WSS Sector Report 2015 NWASCO Table 9: Projects undertaken using Sanitation Surcharge Field inspections reveal the quality of service delivery 4.4 SANITATION SURCHARGE The sanitation surcharge is a charge on water consumption calculated as a proportion of the monthly water bill (up to 3%) for every customer apart from those serviced by public water points such as kiosks. The surcharge was introduced in 2007 to assist CUs improve and extend sanitation services, with LWSC being the first to implement the surcharge. Since then, five more CUs have implemented the surcharge. Approved sanitation projects have been undertaken by some CUs while others are still accumulating funds to implement approved projects starting Table 9 gives details of the utilisation of the surcharge by the six CUs. CU Lusaka WSC Nkana WSC Mulonga WSC Kafubu WSC Southern WSC Lukanga WSC Year Introduced Collected (K million) Utilised (K million) Project Areas and Scope Replacement of portions of collapsed water and sewer network in Kaunda square Construction of 350 flush toilets in Kalingalinga ( counterpart funds) Replacement of collapsed sewer network in Matero Maiteneke for about 700 connections Drilling of emergency borehole to improve water supply in Chelstone Construction of 200 toilets in Kanyama and construction of water kiosks in Kanyama, Misisi and John Laing. Various collapsed sewer lines replaced in Kitwe 3km of collapsed sewer lines replaced in Kalulushi. Old and collapsed sewer lines replaced in Chambishi 300 water borne toilets constructed in Wusakile, Kitwe. Funds used as counterpart funding to AfDB project. Commenced a project to extend service to 150 households of Riverside in Chingola which is expected to be completed in Nil Yet to embark on any projects Nil Yet to embark on any projects Nil Yet to embark on any projects. 25

34 NWASCO WSS Sector Report TARIFF APPROVALS NWASCO has a mandate to approve water and sanitation tariff adjustments. Comprehensive tariff adjustment applications are approved for a minimum period of one year and maximum period of three years. To implement multiyear approved tariffs, a CU must seek a No Objection from NWASCO annually subject to meeting at least 75% of prior given tariff conditions. Approval of tariff adjustments is done after detailed analyses of costs to remove unjustified costs. In the latter half of 2015, the Zambian economy suffered a significant downturn spurring a rapid increase in the cost of doing business. This situation was further aggravated by extensive [daily] load shedding by the national power utility company, ZESCO, which reduced the CUs capacity to pump water, thus producing less water than projected and ultimately reducing actual revenue. In order to cushion the CUs from the negative impact of some economic factors such as rising inflation, exchange rate, interest rates and increased cost of inputs and energy costs, the NWASCO Council approved upward tariff increments for the year During the reporting period, five comprehensive tariff adjustment applications were approved as outlined in Table 10. Sanitation funds are dedicated towards improving and extending sewerage services Six applications for no objection to implement approved tariffs for 2016 were granted during the reporting period as shown in Table 11. Following applications by the six CUs, citing erosion of their cost coverages as a result of declining economic indicators, NWASCO approved a revision of the preapproved tariffs under the multi-year tariff approvals. 26

35 WSS Sector Report 2015 NWASCO Table 10: 2016 Approved Tariffs - Comprehensive CU Average % Approved Eastern WSC 18.5% Lukanga WSC 42% Selected Tariff Conditions for 2016 Increase number of connections by 1,400 (from base of 18,300) by end of August Meter 1,000 connections; including all non- domestic customers (from base of 9,910) by 31 st August Increase metering ratio to 76% by 31 st August 2016 (from base of 69%). Increase number of connections by 2,000 (from base of 23,800) by end of August Projected O&M Cost Coverage for % 80% Chambeshi WSC 35% Western WSC 32.5% Luapula WSC 32% Ensure billing accuracy is not less than 95% during the tariff period Improve water quality compliance to at least 95% (from 90%) by 31 st August Adhere to Service Level Guarantee for service hours throughout the tariff period. Complete all outstanding projects in Kaoma, Sichili, Mwandi and Muoyo by end of August Resuscitate the sewerage system for Suburbs Township of Mansa by 31st August 2016 resulting in at least 500 sewerage connections Improve average service hours for Kawambwa from 6 to 9 hours by 31st August % 88% 50% Table 11: 2016 Approved Tariffs- No Objection CU Average % Approved Lusaka WSC 30% Nkana WSC 33% Selected Tariff Conditions for 2016 Install at least 15,000 meters in Lusaka town by 31st August 2016 and maintain 100% in the rest of districts Increase number of connections by 5,000 by 30th August Ensure that total personnel costs do not exceed the approved limit for Ensure full cost coverage does not fall below 90% for the year Projected Cost Coverage for % (FC) 102% (FC) Mulonga WSC 34.5% Kafubu WSC 35% Southern WSC 30% Achieve full cost coverage of at least 100% (from base 89%) by 31st August Increase number of connections by at least 2,500 (from base as at December 2015) by 31st August Improve service to Mushili area of Ndola to Service Level Guarantee standards by May Attain 85% average collection efficiency by 31st March 2016 and maintain throughout the tariff period. Ensure that actual costs do not exceed an adverse variance of 10% of the approved limit throughout the tariff period. Install at least 15,000 customer meters by 31st August % (FC) 97% FC) 108% (FC) North Western WSC 18.5% Increase number of connections by 2,000 (from base as at December 2015) by end of August Ensure that no meter remains stuck or in a malfunctioning state for longer than three months. 78% (O&M) *Full Costs (FC) = O&M cost + Depreciation + Finance charges+ Allowable Provisions 27

36 NWASCO WSS Sector Report INCREASING AWARENESS AND ENGAGEMENT OF CONSUMERS Increasing visibility of NWASCO remains cardinal as water and sewerage services are key in economic development. A number of activities were undertaken in the reporting period to enhance and strengthen public awareness of WSS aspects as outlined hereunder Water Watch Groups In order to better engage consumers, NWASCO reaches out to communities through Water Watch Groups (WWGs) - voluntary groups made of community representatives that act as intermediaries between consumers and service providers. The WWGs facilitate feedback by monitoring services of the water and sewerage companies and undertaking sensitization meetings. The WWGs provide consumers with a complaints resolution mechanism by ensuring that unresolved complaints can be effectively taken up and addressed by the utility or escalated to the regulator. There are currently 12 WWGs in different parts of the country namely Lusaka, Ndola, Kitwe, Kabwe, Kapiri Mposhi, Chipata, Livingstone, Solwezi, Mongu, Kalulushi, Mpika and Kasama. All the WWGs undertook various sensitization activities which included, radio programmes, drama, one-on-one interactions and school outreach. A total of 207 complaints were handled by Water Watch Groups, with the bulk of the complaints from Mpika Roadshow -Livingstone NWASCO undertook a road show to sensitize consumers and promote its brand in Maramba Township of Livingstone. This was the first time that the roving forum used a road show to market NWASCO s services to reinforce its role of protecting consumers. The road show was aimed at marketing the NWASCO brand and spreading awareness to consumers who, more often than not, are not reached via radio, television and newspapers. The road show used music, dance and corporate gifts to attract the crowds. Over two hundred people visited the show. During the road show, NWASCO collaborated with Southern Water and Sewerage Company by pitching information desks to disseminate literature and pick up unresolved complaints. The Livingstone WWG also participated in the Maramba road show where they distributed their fliers with contact details. Road shows enable face-to-face interaction with consumers, to demonstrate NWASCO s value and benefit. This can work to evoke a sense of trust in consumers by being able to put a face to an institution Sensitisation of the Police NWASCO held a stakeholder training workshop for Zambia Police alongside the Livingstone Consumer Roadshows in September The meeting was held with the overall aim of equipping officers in charge of various police stations in Livingstone with information on the Water Supply and Sanitation (WSS) Act No. 28 of 1997 and to create awareness of the WSS legislation. The meeting emphasised the challenges of vandalism, illegal connections and encroachment in WSS facilities raising awareness on the need for the 28

37 WSS Sector Report 2015 NWASCO Police to enforce provisions of the WSS Act to curb these illegal practices. The meeting further encouraged partnership between the Police Service and the WSS service provider to resolve challenges of service provision in Police Camps such as leakages ZAWAFE The Zambia Water Forum and Exhibition (ZAWAFE) is the biggest water forum in Zambia that brings together international and local experts to interact with stakeholders in the sector and consumers, and highlight achievements and future plans for water and sanitation management in Zambia. The 2015 ZAWAFE was held on 2nd and 3rd November at Government complex under the theme, the critical role of water in sustainable development. The Forum was graced by the Minister of Local Government and Housing, Hon. Stephen Kampyongo, on behalf of the Republican President. 5th Zambia Water Forum and Exhibition (ZAWAFE) The Southern African Development Community (SADC) was also represented and observed that the water forum (ZAWAFE) was timely in ensuring distillation of different ideas on resolving a number of water related issues not only in Zambia but also in the entire SADC region, through the sharing of research papers and providing a better understanding of possible solutions. ZAWAFE presented an opportunity for participants to discuss measures that could resolve the energy crisis which is not only faced in Zambia, but also in the region. The forum attracted 35 exhibitors and 380 participants, both foreign and local. 29

38 NWASCO WSS Sector Report CROSS-CUTTING ISSUES HIV and AIDS NWASCO has been mainstreaming HIV and AIDS internally and externally in the CUs to manage the impact on service delivery due to illnesses and deaths related with the virus. Equal opportunity is given to both male and females at recruitment. Additionally, NWASCO worked with IWA to develop performance indicators for gender mainstreaming in the CUs some of which have been adopted as part of the performance assessment in Chapter 7. CUs continued to undertake activities such as information dissemination and providing free counselling and testing on VCT and World AIDS days Gender Mainstreaming In order to ensure the attainment of gender equality in the provision of WSS, all CUs formed gender committees to spearhead the formulation of gender policies. Out of the 11 CUs, only three namely LWSC, EWSC and LPWSC had approved gender policies. A workshop was held in Ndola funded by GIZ aimed at building capacity of gender focal persons to formulate gender policies and agree on the check list for mainstreaming gender. A check list was adopted as a guide to mainstream gender which would ensure; Attainment of gender equality in the provision of water supply and sanitation by addressing the existing gender imbalances in line with the revised National Gender Policy. Making available gender friendly sanitation facilities. Project designs consider the specific needs of women and men. All data reported are disaggregated by sex. Specific budget line for gender activities highlighted in the CU budget. Both male and female employees have equal opportunities for promotion and career advancement International Women s day theme Gender is my Agenda; Make it happen 30

39 WSS Sector Report 2015 NWASCO 4.8 REGULATORY ENHANCEMENT Eastern and Southern Africa Water and Sanitation (ESAWAS) Regulators Association NWASCO is the seat of Secretariat of a regional association of water supply and sanitation regulators called the Eastern and Southern Africa Water and Sanitation (ESAWAS) Regulators Association ( The major objective of the association is to promote effective regulation through regulatory cooperation and capacity building. In 2015, NWASCO underwent a peer review of its regulatory systems and practices under the auspices of ESAWAS. This was the third peer review to be undertaken by ESAWAS after EWURA of Tanzania and WASREB of Kenya. The peer review is conducted in a collegial learning environment with hands-on interrogation of the regulatory framework by the Chief Executive Officers and senior management staff of the member regulators. The peer review recommended areas of improvement for NWASCO that included more focus on rural and sanitation regulation, as well as further enhancing the transparency of the tariff determination process. for the period that will see ESAWAS expand activities to place more focus on supporting newly formed and formation of autonomous WSS regulators, capacity building for members and undertaking annual regional benchmarking of WSS providers. ESAWAS Peer Review Team hearing from both the regulated and regulator. In the same year, ESAWAS introduced and published a regional benchmarking report of the performance of the largest WSS utilities in each member s country in ten key performance indicators. Details of the benchmarking are presented in Chapter 9. The 9 th Annual General Meeting (AGM) of ESAWAS was held from 6 th 8 th October 2015 in Nairobi, Kenya. The meeting saw the recently formed electricity and water regulator for Burundi, AREEM, become the 7 th member of ESAWAS. The 9 th AGM also saw a change of Chairperson from WASREB of Kenya to CRA of Mozambique following the expiry of the term for the former. The AGM also rolled out the second Strategic Plan for the association 31

40 NWASCO WSS Sector Report Knowledge Management The NWASCO Resource and Knowledge Centre supports knowledge management for the WSS sector in Zambia through provision of information on WSS to the sector and various stakeholders. Other beneficiaries include; student researchers, consultants and members of the general public. The Centre also conducts capacity building trainings on demand for CUs and other providers and coordinates industrial attachments for students to the water utilities as a way of developing potential human resource for the sector. The Centre is also the focal point for external visitors that come to NWASCO for learning visits. Windows for paid learning visits are advertised at the beginning of each year. During the period under review, the Resource Centre coordinated attachments to the CUs for 49 students, of which 16 were from Copperbelt University, 32 from UNZA and one from NORTEC. This experience gave the students an opportunity for hands-on training. The Resource Centre further held two guest lectures at the University of Zambia and Evelyn Hone College, to build awareness on the operations and institutional set-up in the water sector. The Resource Centre further provided support to Water Aid through its activities of external training and capacity building for the board, management and operators of the new piped water scheme in Lubwe District of Luapula Province. Water Aid financed the development of the water scheme for Lubwe, among other areas in the province, and the investment targeted at benefiting about 4,800 people. The focus of the training was on corporate governance, maintenance management, water quality, commercial and financial aspects, tariff setting, service charters and regulatory requirements. A Geographic Information System (GIS) desk was introduced in the Resource Centre with the aim of assisting CUs in the implementation and operation of Geographic Information Systems. In 2015, the Resource Centre undertook a survey in order to assess the current status of GIS activities in the CUs. Based on this survey, the main areas for applying GIS were identified as mapping and managing company assets and NRW reduction management. Through the Resource Centre, individual GIS support sessions and trainings were organised with the aim of promoting networking between the CUs, and defining standards for mapping-related activities Water Safety Plans In its quest to ensure that CUs improve WSS service provision, NWASCO has continued to promote best practices in CUs which eventually lead to effective regulation. One such area is Water Safety Plans (WSP) for water quality monitoring. A WSP is generally defined as an improved risk management tool designed to ensure the delivery of safe drinking water by identifying the hazards that the water supply is exposed to and the level of risk associated with each hazard. Not only does the WSP address how each of the identified hazards will be controlled, but also how the means of control will be monitored. Therefore, NWASCO revised its Water Quality Monitoring Guidelines in 2015 to incorporate WSPs. NWASCO conducted training workshops on WSPs for CUs which have since been implementing their action plans developed from the workshop. Further, the ISO standard on the management of laboratories was incorporated in the revised Water Quality Monitoring Guidelines and training on the implementation of the standard was conducted in July This is to ensure that there is integrity in the water quality results from CU laboratories. 32

41 5 ASSET MANAGEMENT EVERY PART HAS A VALUE

42 Asset Management WSS Sector Report INTRODUCTION Prior to water sector reforms, different Government institutions such as Local Authorities (LAs), Department of Water Affairs (DWA), Ministry of Health (MoH), Zambia Revenue Authority (ZRA), ZESCO and Non-Governmental Organisations (NGOs) provided Water Supply and Sanitation (WSS) services to the Zambian people. The services were provided on a non-cost recovery basis and no attention was paid to the quality of service provided. Most of the WSS infrastructure were built between Zambia s independence in 1964 and mid-1970s. Maintenance and expansion of WSS infrastructure was almost non-existent, resulting in deterioration and breakdowns which continued until the Government decided to commercialise the WSS subsector. Presently, CUs to some extent have managed to put asset management systems in place to arrest deterioration, but more needs to be done considering the poor state of assets. In view of the current situation, NWASCO has introduced selected indicators on asset management in the 2015 Sector Report in order to compel CUs to put sound asset management systems in place to ensure old and new assets do not deteriorate. Further, in order to enhance Asset Management in the WSS sub-sector, NWASCO through its Resource Centre with financial and technical support from GIZ, has engaged a GIS expert to support CUs in the use of GIS, which is one of the key systems used in asset management. Already, the Resource Centre has established a baseline on the use of GIS in CUs, and some CUs, namely CHWSC and SWSC, were visited to assess their readiness to implement the system. 5.2 IMPLEMENTATION OF ASSET MANAGEMENT Asset management is a coordinated activity of an organisation to realise value from assets. Asset management involves the balancing of costs, opportunities and risks against the desired performance of assets, to achieve the organisational objectives. Water and sewer networks are complex systems to manage especially that most of them are in the ground. These systems undergo constant changes; on one hand an ever-growing customer base demands for an increase and expansion of water supply and sanitation services while on the other hand, parts of the network need to be replaced as a result of aging and malfunctioning. Modifying and renewing the network in a sustainable and cost-effective manner is the primary goal of asset management. In CUs, assets include all parts of the water production, treatment and distribution chain, as well as all components of the wastewater cycle. Pumps, pipes, valves and water meters are assets with a specific value and lifespan and thus the need for good management. As opposed to many other sectors assets, these constituents work as a system with high inter-dependencies, which make their management even more difficult. Even with professional installation and regular maintenance, all assets need to be replaced at some point. Different materials and technologies have different lifespans and estimations can be made about the right time of replacement. Still, unexpected material defects or damages due to external impacts can always render these estimations void. 34

43 WSS Sector Report 2015 Asset Management Due to the complexity of asset management in CUs, it has to be a joint effort involving all departments; technical considerations are as important as budgetary decision-making. Funds need to be available and replacement measures need to be reflected in the strategic plan. Looking at all measures taken to manage assets, safeguarding water quality needs to be the main focus. Asset management usually requires the following steps (see EPA (2003): Asset Management - A Handbook for Small Water Systems): 1. Compiling an inventory of the assets: What is there and what condition is it in? 2. Making decisions about the most important assets in the system (set priorities). 3. Developing an Asset Management Plan: Which assets need to be replaced or rehabilitated at what point in the future? How much will it cost? How much money should be set aside every year? What are the sources for financing? 4. Implementing the actions laid down in the Asset Management Plan. 5. Periodically reviewing the Asset Management Plan and adjust it whenever need arises. Deduced from the process steps above, the following four components are usually considered the key components of an asset management strategy: Asset register Condition assessment Valuation Risk assessment and determination If asset management is not implemented well, a vicious cycle as reflected in Figure 1 will be created. Figure 1: Asset Management Vicious Cycle lack of maintenance of assets Low Revenues Customer Discontent Insufficient Finance Water Services Provider Poor Service Lack of Maintenance Deterioration of Assets 35

44 Asset Management WSS Sector Report APPLICATIONS OF GIS IN ASSET MANAGEMENT Asset management can be done using simple tables. But then there are highly specialized software solutions which can assist in this task. Usually these systems incorporate components like work order management and all the components listed section 5.2. Combining it or making it a part of a GIS further extends the capabilities by utilising spatial aspects. Depending on the concepts and approach, GIS is placed right in the centre of the asset management system as a hub. As opposed to other databases, a GIS stores the object attributes (e.g. pipe diameter, water meter type) along with the location of assets. This allows an advanced look at the data and makes it possible to detect spatial patterns and interdependencies. Most CUs have a GIS in place but it is not being used fully for the intended purpose, except for a few such as NWSC and LWSC. 5.5 BENEFITS OF ASSET MANAGEMENT The importance of managing assets has been realised by the CUs in Zambia. Currently, much work is being done to build up databases with information about the water and wastewater networks in the country. Supporting these efforts with the goal of putting price tags on each and every component in the network enables the CUs to reach financial stability and gain attractiveness towards funding institutions. It is due to these immense benefits that NWASCO will not only ensure that each CU has a well elaborated Maintenance Management System (MMS) in place, but will monitor and report the implementation of the same. 5.4 MANAGEMENT OF NRW THROUGH ASSET MANAGEMENT Making the right decisions and developing proper asset management plans is based on having complete, detailed and credible data. The effort of data collection in order to achieve this, can be quite huge, but yields invaluable results. Since asset management is not a once-off task, it needs to be ensured to establish data update routines anchored firmly in the work processes of the CU. After all, asset management does not stand separated; close links can be established to water demand and non-revenue water management, hydraulic modelling and other systems. When network assets are maintained properly, NRW through physical losses is reduced. GIS is the hub of an asset management system 36

45 6 progress on meeting service level agreements and adherence to service level guarantees

46 Progress on Meeting SLA/Gs WSS Sector Report INTRODUCTION In order to ensure that the water and sanitation service providers give a progressively better service to its customers, NWASCO has formulated guidelines on Minimum Service Level (MSL). MSLs are simply standards which define the acceptable minimum level of service which providers must achieve over a specified timeframe. The guidelines have eleven indicators used to set Service Level Guarantees (SLGs) and Service Level Agreements (SLAs). SLGs compel CUs to provide a certain agreed-upon minimum level of service to their customers at any given time while SLAs set-out stepwise interventions that a CU will undertake to attain the desirable sector benchmarks of service provision. It is a requirement that SLGs are displayed at all customer service points for the information of the public. As a license condition issued under the WSS Act No. 28 of 1997, all water and sanitation service providers are required to formulate and maintain SLGs and SLAs which NWASCO monitors. Ten Service Level Indicators (SIs) have timeframes (measured from commencement of operations of a particular utility) within which they are to be attained and it is thus important to determine the progress made by the CUs towards attaining the acceptable benchmarks. The eleventh indicator is included for activities to help curb wastage among public institutions. The Service Level Indicators and how they are measured are shown in Table 12. Table 12: Service Level Indicators (SI) Service Indicator Measurement SI 1 Coverage of the Service Area % of population served with drinking water. SI 2 SI 3 SI 4 SI 5 SI 6 SI 7 SI 8 SI 9 SI 10 SI 11 Drinking Water Quality Service Hours Billing for Services Client Contacts Interruption of Water Supply and Blockage of Sewer Pressure in the Network and Minimum Flow Rate at the Customer Point for Water Supply Unjustified Disconnections Sewage Flooding Quality of Discharged Sewer Support to Public Institutions to Curb Wastage and Settle Bills Promptly No. of tests carried out and test results within the national standards for drinking water. Water supply hours per day and hours to attend to customers per week. Billing, meter reading sequences, conditions for payment of bills by the customer. Complaints from clients, the response time on any other contacts with customers. Unplanned interruption of supply or sewer evacuation due to maintenance and repair work Minimum flow rate of 7 litres/min required at customer connection No. of unjustified disconnections and the compensation to be paid by the provider to the customer The number of times sewage floods a connection per year < 5 In terms of BOD 5, COD, Nitrates, Phosphorous, etc Activities put in place by the water providers 38

47 WSS Sector Report 2015 Progress on meeting SLA/Gs 6.2 Progress made in achieving Service Level Agreements and Adherence to SERVICE LEVEL Guarantees SLA/Gs are signed for specific towns under each CU. Every town has its own target for the three-year period in the SLA that enables the CU progress towards the acceptable benchmark. The analysis therefore considers achievement of individual targets such that failure in one town translates into overall non-achievement of the Service Indicator (SI). Key: Achieved x Not achieved SI 1 Service Coverage Proportion of population serviced with water Lwsc Nwsc KWSC MWSC LGWSC SWSC CHWSC NWWSC WWSC EWSC LPWSC SLG x x x x x x SLA x x x x x x All the CUs increased the number of domestic connections but only NWSC, KWSC, MWSC, CHWSC and NWWSC met their targets as enshrined in the SLGS and SLAs. SI 2 Drinking Water Quality Assessment through number of tests conducted and compliance to national drinking water standards Due to its impact on the health of consumers, CUs are required to guarantee their customers an overall compliance of 95%. Lwsc Nwsc KWSC MWSC LGWSC SWSC CHWSC NWWSC WWSC EWSC LPWSC SLG x x x x SLA x x x x Most of the utilities met the acceptable benchmark for water quality except for MWSC, CHWSC, WWSC and LPWSC. MWSC did not meet the target owing to poor raw water quality which affected the physio-chemical parameters such as turbidity and colour. CHWSC, WWSC and LPWSC did not conduct sufficient numbers of tests in some parameters, in addition to failures to meet the drinking national standards. 39

48 Progress on Meeting SLA/Gs WSS Sector Report 2015 SI 3 Service Hours- water supply hours per day and hours to attend to customers per week This service indicator depicts the average duration of water supply at the customer connection and is specific to an area. In addition, CUs are also expected to have offices accessible to customers for a minimum number of hours per week. Lwsc Nwsc KWSC MWSC LGWSC SWSC CHWSC NWWSC WWSC EWSC LPWSC SLG x x x x x x x x x x x SLA x x x x x x x x x x x All CUs did not adhere to the SLGs or achieve the SLAs because of extensive power load shedding which disrupted water supply. Some CUs also experienced drying-up of water sources such as Chongwe dam in Chongwe town under LWSC and B.Williams dam in Kalomo town under SWSC. SI 4 Billing for Services Billing, meter reading sequences, conditions for payment of bills by the customer, metering ratio The billing for services indicator specifies the frequency at which CUs should read customer meters and distribute bills, the conditions related to payments of bills by customers and the number of customers with water meters. Lwsc Nwsc KWSC MWSC LGWSC SWSC CHWSC NWWSC WWSC EWSC LPWSC SLG x x x x x x x SLA x x x x x x x x All CUs have already met the indicators related to billing and payment conditions, therefore the analysis in this section focuses on metering. LWSC, KWSC, LGWSC, SWSC, CHWSC, WWSC and LPWSC did not meet their metering ratio targets both in the SLG and SLA. NWSC on the other hand, met the targets enshrined its SLG but not those in the SLA. SI 5 Client Contacts - Complaints from clients, the response time on any other contacts with customers This service indicator specifies the timeframes CUs are expected to take to respond to customer complaints or any other contacts with customers. Lwsc Nwsc KWSC MWSC LGWSC SWSC CHWSC NWWSC WWSC EWSC LPWSC SLG x x x SLA x x x All the CUs met the indicators pertaining to client contacts except for LWSC, KWSC and WWSC. LWSC and KWSC particularly had increasing numbers of complaints escalated to NWASCO because of delayed redress. 40

49 WSS Sector Report 2015 Progress on meeting SLA/Gs SI 6 Interruption of Water Supply & Blockage of Sewer - Unplanned interruption of water supply or sewer evacuation The service indicator reflects the proportion of the population in the CUs service area that is subjected to interruptions in water supply or blockage of sewer for a specified duration. Lwsc Nwsc KWSC MWSC LGWSC SWSC CHWSC NWWSC WWSC EWSC LPWSC SLG x x x x x x x x SLA x x x x x x x x x Most CUs experienced unplanned interruptions of water supply lasting more than 20 hours, the details of which are in section SWSC had unplanned interruption of sewerage services due to sewer blockages in Livingstone. SI 7 Pressure & Flow in the Network for Water Minimum flow rate of 7 litres/min required at customer connection Pressure and flow in the network for water service indicator specifies the maximum acceptable proportion (<5%) of connections in a service area with water flow rate of less than 7 litres per minute. Lwsc Nwsc KWSC MWSC LGWSC SWSC CHWSC NWWSC WWSC EWSC LPWSC SLG SLA All CUs were within the required targets for water pressure and flow rate for both the SLGs and SLAs SI 8 Unjustified Disconnections No. of unjustified disconnections and the compensation paid by the provider to the customer This service indicator specifies the maximum acceptable proportion of the total connections for a CU that should be subjected to unjustifiable disconnections which is less than 0.2% of the customer base. Lwsc Nwsc KWSC MWSC LGWSC SWSC CHWSC NWWSC WWSC EWSC LPWSC SLG SLA Consumers who are unjustifiably disconnected from their water and sanitation services are entitled to a written apology and/ or compensation equivalent to one month s billing. Consumers have the right to be heard and explained to in case they have misunderstandings with their billing. From the complaints escalated to NWASCO, all the CUs had less than 0.2% of the customer base subjected to unjustified disconnections and therefore, met the requirements in their SLGs and SLAs. 41

50 Progress on Meeting SLA/Gs WSS Sector Report 2015 SI 9 Sewage Flooding The number of times sewage floods a connection per year < 5 The Sewage Flooding service indicator specifies the maximum acceptable proportion of connections that can be flooded with sewage in a year which is less than 0.5% of the total connections. Lwsc Nwsc KWSC MWSC LGWSC SWSC CHWSC NWWSC WWSC EWSC LPWSC SLG x x x SLA x x x Under LWSC, Chunga, Kaunda Square and Matero had pronounced sewage flooding throughout the year. SWSC and MWSC had sewage flooding in Police Camp, Livingstone and Chabanyama Township of Chingola, respectively. SI 10 Quality of Discharged Sewage In terms of BOD 5, COD, Nitrates, phosphorus, and others. Lwsc Nwsc KWSC MWSC LGWSC SWSC CHWSC NWWSC WWSC EWSC LPWSC SLG x N.R x x N.R SLA x N.R x x N.R LWSC, NWWSC and WWSC failed to meet the standards for sewage effluent discharges as required by ZEMA. CHWSC and LPWSC did not submit returns for their discharge points. 6.3 CONCLUSION Though progress was made towards achieving most subcomponents of SIs, there has been a general delay in achieving all targets set out in the SLGs and SLAs within the required timeframes of the MSL guidelines. The only Service Indicators that have been met in full are Pressure & Flow in the Network for Water (SI7) and Unjustified disconnections (SI8). The SIs that have proved challenging to attain are those related to coverage, hours of supply and unplanned interruptions. 42

51 7 COMPARATIVE PERFORMANCE OF commercial utilities (CUs)

52 Comparative Performance of CUs WSS Sector Report OVERVIEW This Chapter illustrates the comparative performance of CUs during the period, 1st January, 2015 to 31st December, The performance of a CU is measured against its previous performance, the sector benchmarks and averages, as well as, against other utilities. Comparative performance is necessary to induce competition as CUs operate as monopolies in their respective areas. Each CU is thus motivated to improve its previous performance, as well as, outperform others. The comparative data can be used by consumers to appreciate the performance and challenges of their respective providers and by various stakeholders to plan appropriate interventions Total Population in Service Areas of the CUs Each CU is licensed to operate within the boundaries of a specific area. In Zambia, a CU is licensed to operate in the urban and peri-urban areas of one province, except the Copperbelt Province which has three CUs operating in three towns each, and Northern and Muchinga Provinces serviced by CHWSC. In the reporting period, the total population in the service areas of the CUs was estimated at 6.27 million. This may differ from that reported by the Central Statistical Office (CSO) because of the difference in the delineation of rural and urban areas. Some of the CUs licensed operating areas overlap with what is defined as rural by CSO. For example, CSO classifies as almost entirely rural, districts such as Manyinga in North-Western Province, Masaiti on the Copperbelt Province and Mwense in Luapula Province, yet these are part of the CUs serviced areas. Out of the estimated 6.27million total urban population, about 0.8% resides in areas serviced by private schemes which are business entities that provide WSS services as a fringe benefit to their employees Clustering of Commercial Utilities CUs are clustered according to size, based on the water production volumes and number of connections in the licensed areas, as shown in Table 13. Clustering allows the performance of a CU to be compared in the context of similar sized utilities. CUs with more than 50,000 connections and water production above 50million m 3 per year are placed in Cluster 1. CUs with connections between 20,000 50,000 and water production between 10million-50million m 3 per year are in Cluster 2. CUs with connections less than 20,000 and production less than 15million m 3 per year are in Cluster 3. As the CUs grow in size, the limits set for the cluster could be revised. Table 13: Clustering of CUs Cluster CU Total Population in Service Area 1 2 No. of Connections Water Production (million m 3 ) LWSC 2,246,825 94, NWSC 753,782 58, KWSC 690,530 60, MWSC 489,160 51, LGWSC 419,081 23, SWSC 396,335 45, CHWSC 331,308 19, NWWSC 255,979 12, EWSC 276,840 17, WWSC 204,185 12, LPWSC 206,400 5, TOTAL 11 CUs 6,270, ,

53 WSS Sector Report 2015 Comparative Performance of CUs 7.2 PERFORMANCE ANALYSIS CU performance is measured in the following five broad categories of indicators: Operational; Financial; Staff Efficiency; Service Level; and Corporate Governance and Management OPERATIONAL INDICATORS The effectiveness and efficiency of a CU in providing water and sanitation services is assessed using operational indicators. These comprise Water and Sanitation Coverage, Non-Revenue Water (NRW), Metering Ratio, Energy Efficiency and Maintenance Efficiency. The primary data used in calculating operational indicators include number of connections, population, water production figures, energy usage and maintenance works Total Connections The total number of connections increased by 25,952 from the previous reporting period. Domestic connections increased by 21,308 while the nondomestic connections increased by 4,644. NWSC, KWSC and SWSC recorded increases of over 4,000 connections each, the bulk of which were domestic connections. WWSC recorded the least increase of about 299 new connections. The details on connections are in Table 14. Table 14: Total Connections CU Total Domestic 2015 Total Non- Domestic 2015 Total Connections 2015 Total Connections 2014 LWSC 85,280 8,904 94,184 92,440 NWSC 55,600 3,101 58,701 53,499 KWSC 57,917 2,545 60,462 56,141 MWSC 49,619 1,810 51,429 49,535 LGWSC 21,984 1,5 23,550 22,146 SWSC 42,979 2,647 45,626 41,061 CHWSC 18,142 1,152 19,294 16,438 NWWSC 11,419 1,549 12,968 11,655 WWSC 11,209 1,105 12,314 12,015 EWSC 15,737 1,564 17,301 15,534 LPWSC 5, ,899 5,312 Total 375,227 26, , ,776 Maintenance works are essential for continued service provision 45

54 Comparative Performance of CUs WSS Sector Report Water Supply Coverage The ratio of urban population with access to safe and reliable water Chart 3: Water Supply Service Coverage Very Good 100% Benchmark for service Good >90% coverage (water supply and sanitation) Acceptable % Unacceptable <80% Water coverage is the population serviced by domestic connections through individual household connections, kiosks, public standposts and shared/ yard taps. Although the water coverage dropped, in absolute figures the total number of people serviced increased by 100,165 as shown in Table % 80% 60% 40% 20% 82.9% 95.8% 87.5% 97.1% 90.3% 72.5% 73.8% 85.4% 82.0% 82.6% 83.0% 50.2% 30.0% Chart 3 shows that seven CUs met the acceptable coverage benchmark of 80%. CHWSC made the most positive difference, of 8%, by capturing more connections on the database through an ongoing database verification. LPWSC commissioned six more kiosks in Kaole Township of Mansa town. 0% % Average in 2014 % Average in 2015 For some CUs, part of their service areas are covered by Private Schemes or Water Trusts as follows: under LWSC- 107,400 people were serviced by Water Trusts in 10 peri-urban areas (Chibolya, Kanyama, Freedom, Kalikiliki, Garden, Ng ombe, Mtendere East, Chazanga, Chipata and Chaisa) and 20,225 people were serviced by four Private Schemes; under SWSC- about 26,853 people were serviced by three Private Schemes; under LGWSC- 5,342 persons were serviced by one Private Scheme; and under NWWSC- Kansanshi and Lumwana mines serviced around 500 and 6,000 people, respectively. Water kiosks can serve up to 600 persons per tap 46

55 WSS Sector Report 2015 Comparative Performance of CUs It is important to note that due to fluctuations in population figures, the coverage in percentage terms may not give an appreciation of the actual increase in people serviced. Therefore, the absolute figures in terms of total population serviced with water per CU are shown in Table 15. Table 15: Population Served with Water Supply CU Total Population 2014 Population Served 2014 Proportion of Population Serviced by Household Connections 2014 Proportion of Population Serviced by Public Standposts & Kiosks 2014 Total Population 2015 Population Served 2015 Proportion of Population Serviced by Household Connections 2015 Proportion of Population Serviced by Public Standposts & Kiosks 2015 LWSC 2,184,637 1,882, % 58.1% 2,246,825 1,862, % 51.5% NWSC 738, ,143.9% 33.1% 753, , % 32.8% KWSC 682, , % 20.2% 690, , % 19.8% MWSC 477, , % 18.4% 489, , % 22.1% LGWSC 408, , % 62.0% 419, , % 50.1% SWSC 387, , % 21.6% 396, , % 17.6% CHWSC 321, , % 57.6% 331, , % 45.4% NWWSC 253, , % 62.4% 255, , % 68.7% WWSC 197,157 99, % 27.8% 204, , % 24.0% EWSC 269, , % 53.7% 276, , % 49.9% LPWSC 201,430 49, % 13.3% 206,400 61, % 21.4% Total 6,122,284 5,080, % 43.3% 6,270,425 5,180, % 39.5% The number of persons served by individual household connections continued to increase from the 2014 period, accounting for just about 60% of the served population. A key driver was the preference of customers to be served by household connections, which resulted in some CUs decommissioning kiosks which were no longer in use. A case in point was SWSC, which decommissioned all the 38 kiosks in Livingstone, while most CUs did not construct new kiosks in the reporting period. For LWSC, LGWSC, NWWSC and EWSC, about 50% or more of the population serviced were still served through public standposts and kiosks. The ideal situation would be to have the majority of the population served by household connections. 47

56 Comparative Performance of CUs WSS Sector Report Sanitation Coverage The ratio of urban population with access to adequate sanitation Sanitation coverage consists of the population serviced by offsite (centralised system) and septic tanks only. Other onsite facilities such as pit latrines are not considered as acceptable for urban sanitation. 100% 80% 60% 40% 20% 0% Chart 4: Sanitation Service Coverage 73.7% 70.6% 69.6% 82.1% 34.2% 58.6% 21.0% 17.8% 29.2% 52.8% 60.5% 59.7% 14.0% % Average in 2014 % Average in 2015 As shown in Chart 4, there was a marginal increase in the average sanitation coverage with five CUs recording drops in the coverage figures. Collecting data on the number of households on septic tanks continued to be a challenge with the most reliable figures being the sewerage connections on the billing database as shown in Table 16. The total connections on the sewer network increased by 1,470. Table 16: Total Sewer Connections CU Total Sewer Connections 2014 Total Sewer Connections 2015 LWSC 31,210 31,388 NWSC 45,248 48,370 KWSC 45,868 44,8 MWSC 50,487 51,430 LGWSC 10,349 8,456 SWSC 12,612 12,612 CHWSC 1,155 1,155 NWWSC 1, WWSC EWSC 1,774 2,081 LPWSC Total 200, ,939 The increase in coverage for SWSC and LGWSC was attributed to the capturing of data on septic tanks. NWWSC removed over 400 sewer connections from their database, under Kabitaka housing scheme which was still being operated by First Quantum Minerals, pending takeover by the CU. Further, following a sanitation baseline survey, it was established that the average household size was less than the figure previously used by the CU, and was therefore adjusted for the 2015 reporting period. These factors resulted in the significant drop in coverage for NWWSC. The reduction in sewer connections for LGWSC was as a result of a database clean-up for BNC Township of Kabwe town, to isolate the water connections without sewerage services for purposes of billing. For WWSC and LPWSC, system collapses, due to age, contributed to the drop in coverage figures. 48

57 WSS Sector Report 2015 Comparative Performance of CUs Nevertheless, CUs implemented various sanitation projects to improve or extend services. NWSC rehabilitated the Nkana East wastewater treatment plant, constructed new sewer lines in Ndeke Township, rehabilitated sewer ponds and constructed individual toilets in Mindolo BB Township of Kitwe town and resuscitated the sewer trunk main in Chambishi. EWSC, continued to resuscitate part of the system in Kapata Township of Chipata town. Table 17 shows the proportions of people serviced by septic tanks and those on the network from the total population provided with sanitation services. About 55% of the population was serviced through septic tanks. The Copperbelt CUs have the highest proportion of population served on the sewer network of more than 75%. LPWSC and WWSC had the lowest proportion of reticulated sewerage. It is worth noting that the capturing of data for persons using septic tanks is an ongoing exercise for the CUs. Table 17: Population Serviced with Sanitation CU Total Population 2014 Population Served 2014 Proportion of Population Served on Sewer Network 2014 Proportion of Population Served by Septic Tanks 2014 Total Population 2015 Population Served 2015 Proportion of Population Served on Sewer Network 2015 Proportion of Population Served by Septic Tanks 2015 LWSC 2,184,637 1,631, % 73.1% 2,246,825 1,655, % 82.8% NWSC 738, , % 6.9% 753, , % 9.1% KWSC 682, , % 12.4% 690, , % 22.0% MWSC 477, , % 0.3% 489, , % 1.0% LGWSC 408, , % 42.2% 419, , % 65.1% SWSC 387, ,9 44.1% 55.9% 396, , % 63.6% CHWSC 321,104 64, % 99.2% 331,308 69, % 86.7% NWWSC 253,847 86, % 89.5% 255,979 45, % 89.6% WWSC 197,157 77, % 89.5% 204,185 59, % 94.4% EWSC 269, , % 88.7% 276, , % 89.4% LPWSC 201,430 33, % 98.9% 206,400 28, % 97.9% Total 6,122,284 3,652, % 49.0% 6,270,425 3,795, % 55.0% 49

58 Comparative Performance of CUs WSS Sector Report Water Production Chart 5 reflects the volume of water treated and distributed into a network. Water production figures are looked at in relation to the water losses depicted in Chart 7. With good operational efficiency, an increase in water production should only be necessitated by an increase in customer base and/ or improved Chart 5: Water Production 67.4 hours of supply. CUs should therefore aim at reducing NRW first before considering to increase production. There was an overall reduction in water production of 4%. The power utility million m company, ZESCO, introduced extensive load shedding countrywide which resulted in reduced pumping hours for the CUs. This was further compounded by poor voltage in some CUs Only KWSC, NWSC and SWSC increased production. NWSC commissioned a new water treatment plant, which at full capacity would produce 30,000m 3 of water a day. SWSC completed the Livingstone water supply project which resulted in increased volumes of both raw and treated water Metering Ratio Metered connections compared to the total connections Chart 6 shows the metering ratio which is the proportion of the metered connections compared to the total connections. Metering is required in order to measure the amount of water consumed, as well as, charge consumers according to their consumption. It is one of the important tools for controlling NRW. Benchmark for Metering Ratio Acceptable 100% Water production can be hampered by power outages 50

59 WSS Sector Report 2015 Comparative Performance of CUs 100% 80% 60% 40% Chart 6: Metering Ratio 72% 71% 69% 71% 71% 70% 48% 100% 86% 100% 99.8% 73% 70% Table 18 shows the proportions of water sold as metered and unmetered. The metered volumes are derived from meter readings while the unmetered sold volumes are estimated from the applicable flat-rate tariffs for each CU. The percentage of water sold which was unmetered increased by 15.6% from the previous year, despite CUs increasing their metering ratio. The scenario was mainly attributed to restrictions in water supply to customers because of extensive load-shedding. Since the unmetered volume was estimated from flat tariffs, consumption is assumed to be the same even in times of water restrictions. Further, this could imply that metered customers were more conservative in water usage. 20% Table 18: Proportions of Water Sold- Metered and Unmetered 0% CU Total Water Sold 2014 Proportion of Sold Water Metered 2014 Proportion of Sold Water Unmetered 2014 Total Water Sold 2015 Proportion of Sold Water Metered 2015 Proportion of Sold Water Unmetered Average 2014 Average 2015 Most CUs made efforts to increase metering. The average metering ratio increased to 73%. NWSC dedicated resources towards metering, in addition to the meters provided under the AfDB project. WWSC metered customers using stock procured under the DANIDA water supply project. SWSC procured meters using the ring-fenced meter charge, in addition to the meters that were provided by Government (GRZ) under the Livingstone water supply project. CHWSC metered customers as part of the ongoing GRZ water supply projects in most districts. The metering ratio for LPWSC dropped because the CU did not meter the new connections. LWSC % 34.2% % 54% NWSC % 25.1% % 29% KWSC % 31.2% % 36% MWSC % 16.4% % 51% LGWSC % 28.6% % 24% SWSC % 34.8% % 45% CHWSC % 56.6% % 25% NWWSC % 0.0% % 0% WWSC % 11.7% % 25% EWSC % 0.0% % 0% LPWSC % 3.7% % 2% Total % 27.0% % 42.6% 51

60 Comparative Performance of CUs WSS Sector Report Water Loss Performance Indicators Water losses have principally been reported as Non-Revenue Water (NRW) in percentage (%) terms. While this is undoubtedly better than setting no targets at all, it discriminates against utilities with low consumption (low system loading), higher than average operating pressures (due to topography), and NRW calculations which include leakage on customers private pipes. The use of the percentage has been shown to be unhelpful when quantifying leakage or NRW to a technical audience. NRW, when compared with the 80% 70% 60% 50% 40% 30% 47% 59% Chart 7: Non-Revenue Water (NRW) 71% 55% 50% 44% 40% 35% 32% 39% 61% 52% 51% total quantity of water put into supply, fluctuates widely in time and cannot, 20% therefore, be expressed in a single fixed figure such as percentage, without extensive qualification. To be truly meaningful, the water lost, expressed as a percentage (Chart 7), should always be related either to the distribution 10% 0% system (length of water network) or to service points (customer connections) shown in Table 20 and supported by at least the Infrastructure Leakage Index (ILI), Table 19 for technical reporting Average 2014 Average Non-Revenue Water (NRW) Non-Revenue Water is the difference between the quantity of treated water distributed in the network and the quantity of water billed. NRW consists of technical (leakages) and commercial losses (illegal connections, unbilled customers, wastage on un-metered customers premises). In the absence of metering, the volumes could be unreliable estimates. Good <20% Benchmark for NRW Acceptable % Unacceptable >25% Generally, the average NRW increased by 1% as shown in Chart 7. The NRW increased significantly for LWSC, KWSC and NWWSC. KWSC had a lot of unattended-to leakages particularly in Mushili and Ndeke areas. The increase for NWWSC was due to poor meter management and a prolonged leakage on the main line in Mufumbwe District as a result of poor workmanship by the contractor. LWSC experienced numerous pipe damages mainly caused by road construction works. For WWSC, the reduction in NRW was attributed to an increase in the metering ratio. 52

61 WSS Sector Report 2015 Comparative Performance of CUs Water loss per connection and length of water network in litres/day The International Water Association (IWA) has developed the ILI as a method of performance comparison which can be used by a water utility to measure its own success. The index is calculated from the ratio of current annual real losses to unavoidable annual real losses (UARL), the basis for developing a leakage management strategy. According to IWA classification, the lower the ILI, the better is the utility s performance. It also allows inter-company and inter-country comparisons. Table 19: IWA Infrastructure Leakage Index Categeories Technical Performance Category Developing Country Situation ILI Litres/connection/day (when the system is pressurised) at an average pressure of: 10m 20 m 30 m 40 m 50 m A 1-4 < 50 < 100 < 150 < 200 < 250 B C D > 16 > 200 > 400 > 600 > 800 > 1000 Category Comments/Recommendations Further loss reduction may be uneconomic unless there are A shortages; careful analysis needed to identify cost effective improvement Potential for marked improvements; consider pressure B management; better active leakage control practices, and better network maintenance Poor leakage record; tolerable only if water is plentiful and cheap; C even then, analyse level and nature of leakage and intensify leakage reduction efforts Horrifically inefficient use of resources; leakage reduction D programs imperative and high priority IWA Infrastructure Leakage Index classification and comments on categories Table 20 shows the ILI for CUs. The technical performance of CUs is compared to the IWA Guidelines in Table 19. Table 20: CU Infrastructure Leakage Index CU LWSC NWSC KWSC MWSC LGWSC SWSC CHWSC NWWSC WWSC EWSC LPWSC EWSC fell in category A, NWWSC in B, SWSC in C and the rest in D. The low ILI for EWSC and NWWSC could largely be attributed to 100% metering ratio and having relatively good water networks. However, the estimated total network length for EWSC was too long for the size of the CU and hence the need for all the CUs to get accurate measurements. 53

62 Comparative Performance of CUs WSS Sector Report 2015 Table 21 is used to check whether CUs are conforming to the litres/day/ connection standard within the categories that they fell in. A loss of greater than 1,000 litres/day/connection is unacceptably high. LWSC, NWSC, KWSC and MWSC were above the 1,000 litres/day/connection whereas they should have been below 400 litres/day/connection. EWSC should have been below 100 litres/day/connection considering it being in category A as per its ILI. Table 21: Water loss per connection and length of water network in litres/day CU Water Loss per length of network per day 2014 (L/km/day) Water Loss per length of network per day 2015 (L/km/day) Water Loss per Connection per Day 2014 (L/con/day) Water Loss per Connection per Day 2015 (L/con/day) LWSC 63,321 61,895 1,100 1,096 NWSC 122, ,696 1,642 1,549 KWSC 109, ,252 2,135 2,155 MWSC 104,604 99,787 1,225 1,125 LGWSC 29,023 21,241 1, SWSC 9,963 9, CHWSC 13,178 9,107 1, NWWSC 3,539 4, WWSC 91,3 35,889 1, EWSC 1,878 1, LPWSC 19,478 10,2 1, Lost Revenues due to NRW in 2015 Any loss of revenue in business is unacceptable. However, in the water sector, a benchmark of 25% has been set as acceptable loss. To appreciate the magnitude of water losses, the NRW figures were translated into monetary terms, as shown in Table 22. This should serve as an incentive for each CU to come up with strategies of realising some of this revenue. Table 22: Estimated Revenue Lost due to NRW in 2015 Metering Ratio Total Billing (ZMW) NRW (in %) NRW (ZMW) 2015 NRW (ZMW) 2014 LWSC 71.5% 215,179,139 47% 188,916, ,986,984 NWSC 71.0% 117,482,028 59% 169,270, ,572,167 KWSC 69.0% 84,852,136 71% 203,760, ,852,174 MWSC 70.8% 117,219,251 40% 78,107,943 72,929,771 LGWSC 70.8% 23,718,906 50% 24,055,997 27,475,141 SWSC 69.7% 44,419,109 35% 23,989,930 30,226,393 CHWSC 48.5% 11,488,675 55% 14,084,442 12,482,528 NWWSC 100% 19,547,342 32% 9,185,571 5,672,445 WWSC 86.4% 10,898,947 44% 8,629,482 16,803,567 EWSC 100% 16,606,964 39% 10,560,903 11,333,992 LPWSC 99.8% 3,625,506 61% 5,761,826 8,917,3 Total 5,038, ,322, ,252,825 The revenue lost increased by about K83 million from the previous period. 30% of the revenue lost was attributed to KWSC alone. At the benchmark of 25% NRW, the acceptable loss would have been about K221.7 million against the actual of K736.3 million. If NRW is not reduced to the acceptable benchmark, the magnitude of loss becomes even greater as the business expands. 54

63 WSS Sector Report 2015 Comparative Performance of CUs Production and Consumption in Litre per Capita per Day Charts 8 and 9 show the average amounts of water produced and consumed per person per day, respectively. An analysis of the two charts reveals the degree to which CUs are able to meet the required water consumption standards. According to the World Health Organisation (WHO) guidelines, 50 litres is the acceptable minimum water consumption required per person per day for basic hygienic considerations. However, this is a bare minimum and poses health risks Chart 8: Per Capita Production Five CUs namely KWSC, SWSC, NWSC, WWSC and MWSC met the minimum recommended consumption volume of 50 litres per day. MWSC and SWSC recorded the highest per capita consumption. Where production per capita is much higher than the consumption per capita, the difference can be attributed to industrial/ commercial activities (e.g MWSC and NWSC) and/or high non-revenue water (e.g LPWSC, CHWSC and KWSC). The low production and consumption per l/c/d for EWSC, LPWSC and NWWSC could be attributed to their high metering and low sewerage coverage which may result in low water usage. When metered, customers generally become more cautious with water usage. Where sewerage coverage by network is low, people use onsite facilities which use little or no water production per person served (l/c/d) 2014 production per person served (l/c/d) 2015 Average 2014 Average 2015 Chart 9: Consumption: Litre/Capita/Day Average 2014 Average

64 Comparative Performance of CUs WSS Sector Report Specific Energy Energy consumption has traditionally been reported as a monetary figure which also includes costs related to fuel used in the running of vehicles and other machinery, not directly related to water production or waste water treatment. The main contributor to the energy cost however, is energy used in pumping operations. It has become important for utilities to single out this part and report it separately, so as to help utilities monitor their energy usage and therefore develop energy efficiency strategies aimed at using energy more sustainably and efficiently. kwh/m Chart 10: kw-hr per cubic metre It should be noted that kwh/m 3 specific energy in Chart 10 cannot be used to compare one utility to another because of the different operating environments and technologies used in treatment processes. Operating environments include type of source used i.e. surface, groundwater or both, distribution Average 2014 Average 2015 method used i.e. gravity or pumping, and length of distribution system. It is however possible for utilities to benchmark their individual treatment plants with those employing similar technologies in other utilities Chart 11: ZMW per kw-hr 1.62 A downward trend for specific energy is desirable. Chart 10 shows that all CUs except KWSC and NWWSC experienced increases in their specific energy. The reduction in specific energy in KWSC may be attributed to the detailed energy audit done with the support of the DTF in 2013 and subsequent implementation of energy saving measures while for NWWSC, the CU ZMW/ kwh replaced a number of pumps that were identified as inefficient in Solwezi Chart 11 shows the average unit cost paid by CUs per KW-hr of electricity in line with the applicable tariff categories set by the electricity supply company. The apparent high unit cost for LPWSC could be attributed to poor capturing Average 2014 Average 2015 of energy consumption figures. 56

65 WSS Sector Report 2015 Comparative Performance of CUs Maintenance Ratio A good Maintenance Management System (MMS) is required for a CU to reduce downtime thereby operating effectively. In order to ensure that CUs have developed and are implementing MMSs, an indicator that compares the number of planned maintenance works with those that were actually carried out was introduced. Chart 12 shows the comparison of the number of maintenance works that CUs planned to undertake against those actually undertaken. All CUs were able to carry out at least 85% of their planned maintenance works except for WWSC, LGWSC and KWSC. The overall accomplishment of plans was also above 85% increasing from 83% to 88%. CUs should ensure that they have robust maintenance management systems and adhere to them. Chart 12: Maintenance Ratio- Planned Maintenance % 88% 79% 96% 92% 91% 96% 85% 94% 88% 83% % % Average 2014 Average 2015 Downtime can be reduced through regular maintenance 57

66 Comparative Performance of CUs WSS Sector Report SERVICE LEVEL INDICATORS of manganese as well as residual chlorine failures in Chingola and Mufulira. CHWSC Service level indicators portray the quality of service a company is rendering to its customers. Three major indicators used are water quality, hours of supply and resolution of customer complaints. did not conduct the required number of tests in most of their networks. Further, the CU experienced failures in physio-chemical parameters (ph, turbidity and colour) in all their networks and generally had shortcomings in their water quality monitoring system. LPWSC did not conduct the required number of tests especially for physiochemical Water quality parameters coupled with poor record keeping of water quality results. In addition, low ph results were recorded for Kawambwa District. WWSC was not Water quality is very important due to the health impact it has on the consistent in conducting the tests required during the reporting period in a number consumers. Water quality compliance takes into account the number of districts. Further, the CU also recorded some failures for the tests conducted. of tests conducted and the percentage of results meeting the national water quality standard. Therefore, it is important to note that a low compliance might imply deficiency in the required number of tests and/ or non-adherence to quality standards. The two types of parameters considered are bacteriological Benchmark for Water Quality Table 23: Water Quality Analysis Quality Compliance Acceptable Overall 95% Overall Water Quality Water Quality (total and faecal coliforms) and physiochemical (Chlorine CU Chlorine Physio-chemical Bacteriological Compliance Compliance residue, ph, turbidity and colour). Chlorine residue test is Residual Turbidity ph Colour given prominence under physiochemical because of its relation to the bacteriological aspect of water. LWSC NWSC 97% 95% 99% 98% 87% 97% 86% 100% 85% 100% 95% 97% 98% 98% Generally, most CUs had challenges of availability, state and/ or calibration of water testing equipment coupled with personnel and infrastructure treatment capacity, which affected full compliance with the Water Quality Monitoring Guidelines. The water quality results are shown in Table 23. Four CUs namely MWSC, CHWSC, WWSC and LPWSC did not meet the acceptable benchmark of 95%. MWSC experienced high levels of turbidity and colour because of the poor raw water quality. Test results showed high levels KWSC 93% 96% 97% 99% 95% 95% 94% MWSC 89% 100% 81% 100% 86% 93% 95% LGWSC 97% 99% 91% 88% 91% 96% 94% SWSC 97% 99% 95% 97% 96% 98% 99% CHWSC 96% 99% 86% 87% 84% 94% 91% NWWSC 98% 96% 97% 100% 97% 97% 98% WWSC 92% 92% 82% 94% 68% 89% 95% EWSC 94% 100% 98% 99% 85% 96% 97% LPWSC 89% 99% 96% 89% 95% 94% 94% 58

67 WSS Sector Report 2015 Comparative Performance of CUs Hours of Supply Chart 13 shows the range of supply hours by the CUs per day. Benchmark for hours of supply (Cluster 1 & 2) Benchmark for hours of supply (Cluster 3) Good hours Acceptable hours Unacceptable <18 hours Good >18 hours Acceptable hours Unacceptable <16 hours Chart 13: Hours of Supply Apart from KWSC and CHWSC all the CUs recorded a general decrease in hours of supply as a result of extensive load-shedding and poor voltages as earlier alluded to in section The increase for CHWSC was attributed to the completion of the Luwingu water supply improvement project and the installation of a 500KVA transformer at the water treatment plant by ZESCO, which increased the pump running time. Yet again, Chongwe dam in Chongwe town completely dried up in the second half of the year which led to a shutdown of the treatment plant. This caused LWSC to transport water in bowsers to the district. In LPWSC, the Mwense River dried up, hence significantly affected the hours of supply Minimum Supply Hours The least number of hours were supplied in areas such as: Chelstone, George, Avondale and parts of PHI and Salama Park under LWSC; 10 parts of Twatasha, Maiteneke and Lulamba of Chingola under MWSC; parts of Wusakile and Chamboli of Kitwe and Makobo of Chambishi under NWSC; parts of Mushili of Ndola under KWSC; most parts of Chipata and Katete Stores of Katete under EWSC; 0 St. Johns, Boma and North Park of Mongu under WWSC; Rentals and Phiri & Sons of Mumbwa under LGWSC; Cheshire Homes of Solwezi under NWWSC; Mundolobelwe of Livingstone, parts of Chandamali, Kamunza and Min Supply Hours Max Supply Hours Av Av Showgrounds of Choma and Changachanga of Mazabuka all under SWSC; 59

68 Comparative Performance of CUs WSS Sector Report 2015 Lupili of Kawambwa and most parts of Nchelenge under LPWSC; and Mpulungu and Tazara of Mpika under CHWSC. Interruption of Service Major interruptions in water supply lasting for more than 24 hours continuously were experienced in: Mwense under LPWSC due to drying up of the Mwense River which is the only source of water for the district; Chongwe under LWSC which went for weeks without water due to the drying up of the Chongwe Dam; most parts of Lusaka serviced by Iolanda treatment plant due to power interruptions and/or scheduled maintenance works; parts of Nyumba Yanga and Woodlands under LWSC due to damaged lines from road works; parts of Mpika, Luwingu, Mporokoso and Kaputa under CHWSC due to equipment failure and drying up of the Chowa River (for Mporokoso); Chambishi Town under NWSC due to equipment failure; Garneton of Kitwe under NWSC owing to pollution of the water source; the whole of Kabwe under LGWSC which went for days without water due to power failure; Serenje district under LGWSC owing to turbidity challenges which caused the CU to shut down the treatment plant; parts of Solwezi under NWWSC which went for days without water in September due to damaged lines from road works; and parts of Fairview and Eastlea of Mufulira under MWSC which went for three days without water Customer Complaints Complaints are critical in measuring customer satisfaction. Customers have the right to complain when they are not receiving the service guaranteed by the provider. Providers are required to keep a record of customer complaints and resolve them within a stipulated timeframe. Customer awareness plays a very important role in ensuring that complaints are reported and resolved. A reduction in the number of complaints could indicate improvement in service and/or that customers are losing confidence in providers not attending to their complaints. As shown in Table 24, the number of complaints recorded increased by 9,100 from the 2014 period. The overall complaint resolution improved to 92% from 90% with all CUs apart from SWSC, WWSC and EWSC resolving over 90% of the reported complaints. WWSC had the highest increase in the number of complaints (3,000), mainly related to no/erratic water supply. The majority of complaints reported among the CUs were related to operational - interruptions, pressure and leakages (KWSC), metering (EWSC, LWSC), billing (CHWSC and NWWSC), sanitation (NWSC, MWSC) and others related to water supply (WWSC, CHWSC, LPWSC and LGWSC). LPWSC, LGWSC and WWSC had the highest number of complaints per 100 connections. 60

69 WSS Sector Report 2015 Comparative Performance of CUs Table 24: CU Customer Complaints Total Customer Complaints 2014 Total Customer Complaints 2015 Total Complaints Resolved 2015 Total Complaints % Resolution 2015 Complaints per 100 Connections 2014 Complaints per 100 Connections 2015 LWSC 24,713 27,572 25,3 92% NWSC 7,335 7,828 7,045 90% KWSC 9,654 9,222 9, % MWSC 12,280 12,311 11,819 96% LGWSC 6,204 9,136 9,033 99% SWSC 4,111 4,299 3,750 87% 10 9 CHWSC 1,273 1,653 1, % 8 9 NWWSC 1,437 1,174 1,167 99% 12 9 WWSC 1,456 5,489 3,533 64% EWSC 4,303 3,540 2,920 82% LPWSC 3,897 3,539 3,278 93% TOTAL COMPLAINTS 76,3 85,763 78,786 92% Blocked sewer line resulting in sewage flooding Illegal connections cause service degradation for authentic customers Low water pressure can frustrate customers 61

70 Comparative Performance of CUs WSS Sector Report FINANCIAL INDICATORS Financial indicators illustrate the viability and sustainability of CUs by analysing revenues and costs Billing and Revenue Billing for water and sewerage services shown in Table 25, is the revenue that the CUs get for providing water supply and sanitation services and excludes other charges such as reconnection fees, penalties and meter charges. Table 25: Billing for Water and Sewerage CU Total Billing Water and Sewer (ZMW) 2014 Total Billing Water and Sewer (ZMW) 2015 LWSC 216,244, ,179, NWSC 95,903, ,482, KWSC 82,631, ,852, MWSC 113,507, ,219, LGWSC 22,842, ,718, SWSC 40,092, ,419, CHWSC 9,070, ,488, NWWSC 16,616, ,547, WWSC 12,235, ,898,946. EWSC 15,599, ,606, LPWSC 3,810, ,625, Total 628,553, ,038, The total billing in the sector increased by K36.5million. CHWSC s billing increased the most, by 27%, while LWSC, WWSC and LPWSC recorded reductions. The revenue projected under the approved tariffs effected in the year, was partly eroded by the low billed volumes from supply restrictions culminating from increased power load shedding Collection Efficiency The collection efficiency is the proportion of billed amounts (shown in Table 25) that are collected (including arrears and advance payments made in the period). The calculation considers collections and billing for water supply and sewerage only. Other charges are not included. Benchmark for Collection Efficiency 120% 100% 80% 60% 40% 20% 0% 96% 72% 63% Very Good >95% Good 90-95% Acceptable % Unacceptable <85% Chart 14: Collection Efficiency 82% 87% 106% 82% 95% 96% 96% 102% 92% 85% Average 2014 Average

71 WSS Sector Report 2015 Comparative Performance of CUs Chart 14 shows that the average collection efficiency dropped from 92% to 85% with NWSC, KWSC, MWSC and CHWSC below the acceptable benchmark of 85%. KWSC had the biggest drop from 96% to 63% as a result of poor collections from Government institutions. CHWSC and WWSC increased collection interventions by strengthening the internal control environment and increasing the number of pay points. It must be noted that the figure for collection efficiency spikes upwards when outstanding amounts and/or advance payments made are added to current collections. Therefore, by calculating collection efficiency over a three-year period, distortions are evened-out to give a more reflective picture of the collection efficiency as shown in Chart 15. The average collection efficiency for KWSC, NWSC, MWSC, LGWSC and CHWSC remained below the acceptable benchmark of 85% over a three-year period. 120% 100% 80% 60% 40% 20% 0% 99% Chart 15: Collection Efficiency over three years ( ) 73% 74% 84% 82% 101% 78% 94% 91% 95% 98% Trade Receivables and Payables Trade receivable is a legally enforceable claim for payment held by a business against its customer/clients for goods supplied and/or services rendered. Trade receivable is shown in a Statement of Financial Position as an asset. Trade payable is money owed by a business to its suppliers shown as a liability on a company s Statement of Financial Position. Failure to manage Trade Receivables and Payables (Table 26) may affect the business s working capital in terms of poor liquidity which may result in its inability to meet operational obligations when they fall due, thereby straining supplier relationships. The desired trend is that both trade receivables and payables should be reducing. Table 26: Trade Receivables and Payables CU Trade Recievables (ZMW) 2014 Trade Payables (ZMW) 2014 Trade Recievables (ZMW) 2015 Trade Payables (ZMW) 2015 LWSC 63,009,000 63,306,000 87,6,000 84,422,000 NWSC 93,421, ,872,225 76,723, ,329,000 KWSC 94,212, ,528,415 87,946, ,286,127 MWSC 63,061,738,460,901 70,435,000 75,737,000 LGWSC 22,685,346 16,635,693 25,417,103 18,555,174 SWSC 13,599,034 20,677,623 15,603,885 18,268,081 CHWSC 9,853,781 23,444,043 13,157,895 28,589,899 NWWSC 18,404,762 9,595,796 20,170,4 11,608,221 WWSC 10,168,631 11,592,839 9,791,467 11,558,909 EWSC 8,182,464 3,291,738 7,564,964 4,571,796 LPWSC 1,985,520 4,211,677 2,054,208 3,391,071 Total 398,584, ,616, ,530, ,317,279 63

72 Comparative Performance of CUs WSS Sector Report 2015 Trade receivables increased by 4.5%. All CUs recorded increases except for NWSC, KWSC, WWSC and EWSC. This was despite most CUs having increased collection efficiencies. The overall trade payables reduced marginally by 1% with NWSC, KWSC, SWSC and LPWSC recording reductions in the trade payables. For financial viability, the average tariff (billing/m 3 ) should be equal to or higher than the unit operation cost. The unit operation cost includes the cost related to sewerage whereas the average tariff does not incorporate the revenue from the sewerage service. For CUs that are not 100% metered, the average tariff is arrived at by converting an assessed consumption of water using the rising block tariff. From Chart 16, for six CUs, the average tariff was able to cover their O&M costs. These were NWSC, MWSC, SWSC, CHWSC, NWWSC and WWSC. 12 Chart 16: Unit Operation Cost and Average Tariff 10 8 Price of chemicals rose with the depreciation of the Kwacha Average Tariff and Unit Operation Cost Water and sewerage tariffs are raised periodically to move the CUs towards full cost recovery through user charges in line with the National Water Policy of NWASCO approves all tariff adjustments and has the responsibility of ensuring that only justified costs are passed on to the customer. Thus, the justified operational costs of providing water and sanitation services have a direct bearing on the price of water Unit Operation Cost 2014 Unit Operation Cost 2015 Average Tariff 2015 Sector Average tariff Sector Average O&M cost 64

73 WSS Sector Report 2015 Comparative Performance of CUs Computation of Water Bill The cost drivers of CU activities in the cost structure, are specific to their operating environments, hence the tariffs differ. It must be noted that, consumption of up to 6m 3 is considered a lifeline, therefore the tariff per cubic meter is pricead at, or below, the rate of cost recovery. Cross-subsidisation in the tariff structure compensates for the lifeline band. Table 27 shows computation of a water bill for a metered domestic customer using the rising block tariff at different consumption volumes. This does not include fixed meter charge (range from K5 to K8) or sewer charges (range 20% to 30% of water bill). The tariff for WWSC and KWSC remained unchanged from the 2014 period. Overall, there was marginal change in the price for consumption of 6m 3. LGWSC had the lowest priced water for all consumption volumes in the 2015 period. Table 27: CU Computation of Bill using Rising Block Tariffs for Domestic Customer Water Consumption only Water Bill of 6 m 3 (Low consumption) (in K) Water Bill of 30 m 3 (Medium consumption) (in K) Water Bill of 60 m 3 (High consumption) (in K) Water Bill of 6 m 3 (Low consumption) (in K) Water Bill of 30 m 3 (Medium consumption) (in K) Water Bill of 60 m 3 (High consumption) (in K) LWSC NWSC KWSC MWSC LGWSC SWSC CHWSC NWWSC WWSC EWSC LPWSC Average

74 Comparative Performance of CUs WSS Sector Report Cost Analysis Operation and Maintenance Costs Cost containment is very critical in service provision. The major operation costs (personnel, chemical, maintenance and energy) have an impact on the viability of a CU. The Other Cost component includes administrative costs and other direct costs such as operational consumables, services by sub-contractors and vehicle running. Operational costs are normally analysed during tariff adjustments in order to remove unjustified costs that may otherwise be passed on to the consumers. CUs operate under varying socio-economic conditions hence the differences in their costs. That notwithstanding, the proportion of the various cost elements to the overall costs and the trends are of essence. For certain cost categories such as chemicals, a reduction may not necessarily be desirable as this may mean a compromise in the quality of water rather than cost containment. Energy costs include electricity and fuel. Table 28: Costs of Operation and Maintenance Personnel Cost (in '000 K) Chemicals Cost (in '000 K) Energy Cost (in '000 K) Maintenance Cost (in '000 K) Other Cost (in '000 K) Total O&M Cost (in '000 K) CU % change % change % change % change % change % change LWSC 123, , % 3,988 4,445 11% 22,993 19,255-16% 10,453 20,000 91% 69,895 59,272-15% 220, ,285 7% NWSC 36,753 36, % 7,139 11,295 58% 12,009 15,057 25% 2,571 3,081 20% 16,560 20,743 25% 72,462 86,878 20% KWSC 35,463 39, % 5,373 5,404 1% 14,013 14,094 1% 2,486 2,865 15% 11,270 8,000-29%,119 69,378 5% MWSC 35,390 38, % 4,736 5,247 11% 11,482 11,653 1% 11,285 11,926 6% 28,465 20,173-29% 80,073 87,556 9% LGWSC 13,075 16, % % 3,698 4,161 13% 1,306 1,267-3% 4,751 2,967-38% 21,985 25,858 18% SWSC 17,711 22, % 2,653 3,169 19% 5,495 5,901 7% 1,118 1,685 51% 8,484 5,514-35% 34,343 38,2 13% CHWSC 8,307 9, % % 1,183 1,463 24% % 2,583 2,240-13% 12,447 13,925 12% NWWSC 12,338 14, % % 1,251 1,003-20% % 4,109 4,379 7% 17,863 20,351 14% WWSC 7,518 8, % % 3,088 1,243-60% % 1, % 12,598 10,458-17% EWSC 13,109 15, % % 1,358 1,406 4% 1,592 1,7 5% 5,591 3,384-39% 20,591 22,159 8% LPWSC 6,585 8, % % % % % 8,246 10,420 26% Red- negative trend, Green- positive trend ( major shifts only)

75 WSS Sector Report 2015 Comparative Performance of CUs Table 28 shows the actual cost of operation in the reporting year. Personnel Costs Personnel costs include wages and salaries, training and other staff-related costs such as medicals, recruitment, provision for retirement benefits etc. LPWSC, LGWSC and SWSC recorded significant increases in personnel costs. LPWSC added 21 staff on permanent contracts in addition to salary increments across the board. LGWSC created an engineering directorate which necessitated the recruitment of a director and upgrading of some staff positions. SWSC effected salary increments for all staff, increased number of staff and paid terminal benefits. Chemical Costs The cost of chemicals generally doubled from the third quarter of 2015 owing to the depreciation of the Kwacha. However, chemical costs increased significantly for NWSC, LGWSC, NWWSC, CHWSC and LPWSC. NWSC increased production after commissioning a new plant, hence increased chemical usage. Energy Costs Increases in energy costs were recorded by NWSC and CHWSC. For NWSC the increase was attributed to the commissioning of a new water treatment plant while for CHWSC the increase was as a result of installation of new pumps. LWSC, NWWSC and WWSC recorded a reduction in energy costs as a result of lower production as a consequence of extensive load shedding. Maintenance Costs Maintenance costs for LWSC, SWSC and LPWSC increased significantly. LWSC experienced a number of pipe bursts and burnt borehole pumps which required replacements. The increase for SWSC and LPWSC was as a result of the general increase in the cost of spares. WWSC and NWWSC recorded a drop in the cost of maintenance which was attributed to reduction in plant and machinery costs. Other Costs There was a general reduction in the other costs largely as a result of lower administrative costs. LWSC incurred an additional cost of K104million as exchange loss, though not reflected in the O&M costs for 2015 due to its significant level. Cost Proportions The cost proportions in Table 28 are shown in Chart 17. It is desirable that the proportion of costs attributed to personnel is not more than 40% of the total O&M costs. None of the CUs were within the threshold of 40%. LPWSC and WWSC had highest proportion of costs attributed to personnel at more than 70%. 100% 80% 60% 40% 20% 0% Chart 17: O&M Cost Proportions Personnel Costs Cost of Chemicals Cost of Energy Maintenance Costs Other Costs 67

76 Comparative Performance of CUs WSS Sector Report Operation and Maintenance Cost Coverage by Collection This indicates the extent to which the level of collection is able to cover all the operational costs. Benchmark for coverage of O&M Cost Good >150% Acceptable % Unacceptable <100% The analysis in Chart 18 does not include income from other fees (such as penalties, meter charges, surcharges), Government and Cooperating Partners. 140% 120% 100% 80% 60% 40% 20% 0% 88% 97% Chart 18: O&M Cost Coverage by Collection 77% 110% 79% 122% 68% 91% 100% 72% 102% 91% 35% recorded by SWSC, CHWSC, NWWSC and WWSC. For WWSC, this was attributed to a significant reduction in the energy costs from lower electricity use as a result of load shedding. For CHWSC and SWSC, both the billing and collections increased. LWSC recorded a decrease in the revenue due to a drop in the quantity of water billed. The collections for KWSC dropped significantly against a marginal increase in costs Full Cost Coverage by Collection Full costs includes all O&M costs plus depreciation, finance charges and allowable provisions such as pension. 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% 87% Chart 19: Full Cost Coverage by Collection. 65% 59% 83% 61% 101% 52% 88% 76% 61% 35% 80% 76% Average 2014 Average 2015 The sector average for operation and maintenance (O&M) cost coverage by collection dropped from 102% to 91% mainly as a result of the general increase in the costs of inputs. An increase in the O&M cost coverage was Average 2014 Average

77 WSS Sector Report 2015 Comparative Performance of CUs The full cost covered by collection dropped further to 76% with only SWSC covering 100% of full costs as depicted in Chart 19. However, it must be noted that all the CUs in Cluster 1 (LWSC, NWSC, KWSC and MWSC) had an approved tariff set to begin to cover beyond O&M costs. CHWSC and WWSC made improvements which were attributed to an increase in both billing and collection figures and a reduction in costs, respectively Operation and Maintenance Cost Coverage at 85% Collection Chart 20 shows the cost coverage assuming an acceptable benchmark collection efficiency of 85% of the billed amount. NWASCO uses the benchmark collection efficiency to arrive at a tariff that will cover O&M costs at a certain level. NWASCO desires an upward trend to ensure sustainability of the CUs. The ability to meet the approved cost coverage levels is driven by good cost containment versus generated revenue. CUs and their Boards must adhere to the approved tariff revenue and cost structures. At the acceptable collection efficiency benchmark, only NWSC, KWSC, and MWSC would have covered the O&M costs. 160% 140% 120% 100% 80% 60% 40% 20% 0% 78% Chart 20: O&M Cost Coverage at 85% Collection. 115% 104% 114% Cost Coverage at 85% Collection 2014 Average % 98% 70% 82% 89% 64% 94% 91% 30% Cost Coverage at 85% Collection 2015 Average 2015 Poor water quality can deter customers from paying for the service therefore CUs must strive to meet acceptable water quality standards 69

78 Comparative Performance of CUs WSS Sector Report 2015 Table 29 shows the performance of CUs in achieving the projected cost coverage as per the approved costs and tariff for the period. Only MWSC and CHWSC achieved the projected cost coverage for The rest of the CUs had cost coverage lower than their projections for 2015 due to reduced revenue and increased costs which were a consequence of the extensive load shedding and adverse economic conditions, combined. Table 29: CU 2015 Projected O&M Cost Coverage under Approved Tariff Projected O&M Cost Coverage Cost Coverage Achieved (at Actual O&M Costs and Actual Revenue at 85%) LWSC 119% 78% NWSC 121% 115% KWSC 106% 104% MWSC 107% 114% LGWSC 108% 78% SWSC 113% 98% CHWSC 62% 70% NWWSC 95% 82% WWSC 98% 89% EWSC 95% 64% LPWSC 51% 30% Operational and Maintenance Cost Coverage by Total Revenue Charts 21 and 22 depict the financial performance of the CUs. Total revenue includes net billed amounts, other income such as penalty fees, interest, subsidies and recurrent (income) grants. 160% 140% 120% 100% 80% 60% 40% 20% 0% 88% Chart 21: O&M Cost Coverage by Total Revenue 135% 119% 135% 102% 122% 95% 117% 114% 91% 38% Average 2014 Average % 108% Seven CUs were above 100% O&M costs by Total Revenue. LPWSC needs urgent intervention with cost coverage below 50% and showing a downward trend. Chart 22 shows the full cost coverage by total revenue. The full costs include depreciation and finance charges and the revenues include net billed amounts, other income such as other fees (meters charges, connection/ reconnection and security deposits), interest, subsidies and recurrent (income) grants. 70

79 WSS Sector Report 2015 Comparative Performance of CUs Chart 22: Full Cost Coverage by Total Revenue 120% 100% 80% 87% 90% 92% 102% 78% 101% 73% 98% 101% 77% 90% 90% 60% 38% 40% 20% 0% Average 2014 Average 2015 MWSC, SWSC and WWSC achieved over 100% full cost coverage. The full and O&M costs for LPWSC were the same because the company had not developed a statement of financial position, hence the depreciation value of the company had not yet been established. Asset valuation must be undertaken periodically in order to obtain the depreciation value 71

80 Comparative Performance of CUs WSS Sector Report Financial Ratio Analysis This section presents Profitability, Liquidity and Activity ratios to provide more information on whether each CU is applying its assets in an efficient and profitable manner. One major ratio from each of the above classes appropriate to WSS sector were analysed as highlighted in Table 30. Table 30: Financial Ratios Current Ratio Net Profit Margin Non-Current Asset Turnover LWSC % % NWSC % % KWSC % -5.29% MWSC % 2.31% LGWSC % % SWSC % 13.51% CHWSC % % NWWSC % -1.84% WWSC % 3.09% EWSC % -26.% LPWSC N/A % % N/A N/A i) Liquidity Ratios The Current Ratio is the ratio of current assets to current liabilities: it indicates a company s ability to satisfy its current liabilities with its current assets (Current ratio = Current assets/ current liabilities). For current ratio, a range of 1 to 3 is acceptable for the water sector and indicates that a company is able to meet its financial obligations partially or in full as they fall due. LWSC, MWSC, NWWSC and LPWSC were within the acceptable range of current ratio. ii) Profitability Ratios The Net Profit Margin is the ratio of net Income to Turnover and indicates how much of each Kwacha of Turnover is left over after all expenses. (Net Profit Margin = Net Income/ Turnover). Only MWSC and WWSC operated profitably in the period under review. iii) Activity Ratios Non-current Asset Turnover is the ratio of turnover to fixed (non-current) assets. The ratio indicates the ability of the company s management to put the fixed assets to work to generate sales. (Fixed Asset Turnover= Turnover/ Fixed assets). MWSC and WWSC had higher ratios than in the previous year, unlike the others, a trend that is desirable. 72

81 WSS Sector Report 2015 Comparative Performance of CUs STAFF EFFICIENCY INDICATORS Staff efficiency indicators measure the output of personnel in relation to various aspects of operations such as billing, collections, connections and personnel costs Human Resource Development Chart 23 shows the personnel qualifications in the sector. The proportion of staff that had basic education remained unchanged at 40%. The proportion of staff that were degree and diploma holders reduced to 19% from 22% while Certificate holders increased to 41% from 40%. MWSC employed an average of 105 casuals per month in addition to its staff complement. The total number of staff in the sector increased from 3,455 to 3,933. Of the total personnel in the sector, 744 employees were degree and diploma holders, 1,600 were certificate holders while the rest had basic education. Chart 23: Personnel Qualifications 100% % 60% 40% 20% 0% The regulator plays a role in developing human resource in the sector Basic Education Certificate level Degree/Dip. Level 73

82 Comparative Performance of CUs WSS Sector Report Gender Mainstreaming The number of personnel working in the sector was disaggregated by gender to show the extent of participation of women and men. Chart 24 shows the proportion of male to female at the various organisation levels. Of the total staff in the sector, 83% were men. At managerial level, 24% were women while at supervisory level, 26% were women and about 16% women were working in lower levels. This scenario demonstrated that the sector was still below the 30% threshold of female participation. NWSC had the highest number of female participation at managerial level and was the only CU headed by a woman. LPWSC had the highest proportion of females but with none at managerial level. Chart 24: Gender Proportions at Organisation Levels 800 Female participation in the sector is low M F M F M F M F M F M F M F M F M F M F M F LWSC NWSC KWSC MWSC LGWSC SWSC CHWSC NWWSC WWSC EWSC LPWSC Managerial Supervisory Other 74

83 WSS Sector Report 2015 Comparative Performance of CUs Staff per 1,000 Connections This indicates the number of employees servicing 1,000 connections. The computation also includes staff on one-year contracts. 15 Chart 25: Staff per 1,000 Water Connections Staff efficiency can be measured as staff per 1,000 water connections as well as staff per 1,000 water and sewer connections (Chart 25 and 26). CUs must endeavour to keep the staff per 1,000 water connections within the acceptable benchmark to be efficient Benchmark for staff per 1,000 water connections (Cluster 1) Benchmark for staff per 1,000 water connections (Cluster 2 and 3) Good 5 Acceptable 6-8 Unacceptable >8 Good 9 Acceptable Unacceptable >14 The combined staff efficiency for water and sanitation is derived from the total number of staff divided by the total number of water and sewer connections, assuming that the time spent on a water connection is the same as that on a sewer connection. All the CUs in Clusters 2&3 and MWSC in Cluster 1 met the respective acceptable benchmark for staff/1,000 water connections. The staff efficiency for CHWSC and LPWSC deteriorated as a result of an increase in staff without a matching increase in connections Chart 26: Staff per 1,000 Water and Sewer Connections For staff/1,000 water and sewer connections, the CUs in Cluster 1 had better staff efficiency because of their large sewerage networks

84 Comparative Performance of CUs WSS Sector Report Billing and Average Personnel Cost per Staff per Month Billing per staff per month is the billing attributable to one member of staff per month. A higher figure indicates better staff efficiency. On the other hand, average personnel cost per staff per month reflects the cost attributed to each staff. Charts 27 and 28 must therefore be analysed together. Ideally, the billing per staff per month must be higher than the average personnel cost per staff per month meaning that what the CU pays each staff, must be lower than what revenue that staff is bringing into the company. The desirable trend in the sector is for billing to cover at least three times the personnel costs in order to cover other cost categories. Chart 27: Billing/Staff/Month Chart 28: Average Personnel Cost/ Staff /Month '000 ZMW '000 ZMW Av./staff/month 2014 Av./staff/month 2015 Average 2014 Average 2015 Six CUs showed a reduction in billing/staff/month. The decrease in NWSC, SWSC and CHWSC was attributed to an increase in the number of staff despite an increase in billing. LWSC, LPWSC and WWSC experienced a drop in billing figures as a result of lower consumption volumes. Additionally, there was an increase in staff for LWSC and LPWSC. All CUs were able to cover their personal costs from the billing except for LPWSC. However, only NWSC and MWSC were able to cover more than thrice the personnel costs from their billing. 76

85 WSS Sector Report 2015 Comparative Performance of CUs Summary of Staff Efficiency Table 31 gives a consolidated view of staff efficiency. Table 31: Overview of Staff Efficiency CU No. of Staff Staff/1000 water connections Av. Personnel Cost/Staff/Month (K) Billing/ Staff / Month (K) Collection/ Staff /Month (K) Staff Cost in relation to Billing and Collection LWSC ,403 20,171 19, NWSC ,097 16,317 11, KWSC ,964 10,795 6, MWSC ,933 24,119 19, LGWSC ,903 8,340 7, SWSC ,529 8,984 9, CHWSC ,045 3,754 3, NWWSC ,810 12,248 11, WWSC ,383 7,325 7, EWSC ,724 9,479 9, LPWSC ,089 3,924 3, Average 0.65 Staffing considerations involve the requirements of the nature of the job For staff cost in relation to billing and collection, the desirable target for the sector is 0.4 (or 40%) or less. Only NWSC and MWSC met the target at 0.39 and 0.37 respectively while the sector average was

86 Comparative Performance of CUs WSS Sector Report CORPORATE GOVERNANCE and Management INDICATORS Adherence to good corporate governance enhances performance of the CU. It is the role of the Board and management to steer the utility in the strategic direction of the company and thus achieve its objectives. iii). Status on Corporate Documents It is the role of the Board of Directors to ensure that the CUs have the corporate documents and ensure they monitor their implementation. CHWSC and WWSC operated without strategic plans. In order to assess the performance of the Board and Management, it is important to focus on corporate decisions and expenditure on the Boards of Directors Performance of the Boards The performance of the Boards was based on the number of Board meetings held, the key decisions made during the meetings and budgetary control as shown in Table 32. i). Budgetary Control Budgetary control is one of the key functions of the Board. A budget variance of ±10% is acceptable. Only LWSC, CHWSC, NWSC and LPWSC were within the acceptable variance. Boards should ensure that CUs operate within the budget limits. ii). Board Meetings Board Meetings should be held once a quarter and costs maintained within 1% of the total O&M cost for big CUs ( Cluster 1) and 1.5% for the smaller ones (Cluster 2 and 3). All CUs were within the recommended thresholds for Board expenses. The performance of a CU is driven by the strategic direction provided by its Board and Management 78

87 WSS Sector Report 2015 Comparative Performance of CUs Table 32: Corporate Governance Indicators CU Strategic Plan Approved Corporate Documents Approved Budget Annual Report with Audited Accounts Investment Plan Attendance Full Board Meetings Meetings Held Meetings Planned Total Board Expenditure as a % of O&M Costs Budget Variance against Approved LWSC 98% % 2% NWSC x 100% % 4% KWSC x 100% % 26% MWSC 85% % -52% LGWSC 90% % 20% SWSC 100% % 35% CHWSC x x 60% % -4% NWWSC 80% % 26% WWSC x x 50% % 22% EWSC 100% % 28% LPWSC x 100% % 4% 79

88 Comparative Performance of CUs WSS Sector Report Quality of Submitted Information As part of the license conditions, all service providers are required to submit an annual report by 30 th January, with accurate data, via an information system developed by NWASCO. As shown in Table 33, the quality of the submitted data in the NWASCO Information System (NIS) was generally good, and all CUs submitted their reports on time. Table 33: Quality of Submitted Information Utility Lusaka WSC Nkana WSC Good Timely. Quality of submitted information in the NWASCO Information System The Annual Remark Report Timely. Fair Minor clarifications required. Kafubu WSC Good Timely. Minor clarifications required. Mulonga WSC Good Timely. Lukanga WSC Good Timely. Southern WSC Good Timely. Chambeshi WSC Good Timely. North Western WSC Good Timely. Western WSC Eastern WSC Fair Good Luapula WSC Good Timely. Timely. Major clarifications required. Timely. Minor clarifications required. Good record keeping enhances the quality of data submitted in the annual report Note: All submitted data is checked for accuracy and completeness. Where data is found to be otherwise, verifications are done with the CU, as well as with data collected during inspections. The data presented in this report are therefore complete and accurate. 80

89 8 PERFORMANCE OF private schemes

90 Comparative Performance of Private Schemes WSS Sector Report Introduction The Private Schemes are companies that provide WSS services primarily to their employees. The WSS services are run as an auxiliary function but not on a commercial basis. There are currently six licensed private schemes: 1. Lafarge Cement 2. Kaleya Small Holding 3. KCM Nampundwe 4. ZESCO 5. Zambia Sugar; and 6. Kafue Sugar ZESCO continued to operate in three Schemes at Itezhi Tezhi (Central Province), Kafue Gorge (Lusaka Province) and Victoria Falls (Southern Province). The regulatory performance requirements for Private Schemes are minimal, relating mainly to service level issues of coverage, hours of supply and water quality. The performance of the Private Schemes is shown in Table 34. Table 34: Performance of Private Schemes Private Scheme 8.2 Coverage Population in Service Area The overall coverage for WSS for Private Schemes serviced areas was 100%. 8.3 Hours of Supply Coverage % The hours of supply for KCM Nampundwe decreased even further in the reporting period due to increased consumption from the surrounding villages which put pressure on the system. The drop in hours of supply in Lafarge was attributed to load shedding. Hours of supply increased under Kaleya Small Holders due to increased production. 8.4 Water Quality Compliance Hours of Supply 2014 Hours of Supply 2015 Water Quality Compliance 2014 Water Quality Compliance 2015 Lafarge Cement 3, % 85% Kaleya Small Holders 3, % 98% KCM - Nampundwe 5, % 97% ZESCO 21, % 91% Zambia Sugar Plc 17, % 85% Kafue Sugar % 35% Total 52,420 Only Kaleya Small Holders and KCM-Nampundwe met the acceptable benchmark of 95% compliance to water quality requirements. Kafue Sugar did not conduct any tests for chlorine residue and colour. Lafarge did not meet the compliance levels for residue chlorine and did not conduct any tests for colour. ZESCO were below the compliance levels in all parameters. Zambia Sugar achieved compliance in turbidity and ph only. 82

91 9 REGIONAL BENCHMARKING OF LARGE WSS UTILITIES

92 Regional Benchmarking of Large WSS Utilities WSS Sector Report INTRODUCTION NWASCO is a member of a regional association of water regulators called the Eastern and Southern Africa Water and Sanitation (ESAWAS) Regulators Association. The other members are the Water Services Regulatory Board (WASREB) of Kenya; the Water Regulatory Council (CRA) of Mozambique; the Rwanda Utilities Regulatory Authority (RURA) of Rwanda; the Energy and Water Utilities Regulatory Authority (EWURA) of Tanzania; the National Water Supply and Sanitation Council (NWASCO) of Zambia and Lesotho Electricity and Water Authority (LEWA) of Lesotho. In 2015, the Agency for Electricity and Water (ACR) of Burundi, became the seventh member. The indicators were grouped into three main components namely, (i) Quality of Service, (ii) Economic Efficiency and, (iii) Operational Sustainability. The benchmarks were converted into performance boundaries by considering the minimum average performance as well as the minimum for the acceptable benchmark among the countries. The weights were arrived at, by a process of normalisation of the various weights defined by the different regulators. The output of the harmonisation process is given in Table 35. Table 35: Benchmarking Performance Boundaries Component KPI Good Acceptable Poor In August 2014, ESAWAS established a Technical Task Team (3T) to develop a framework for regional benchmarking of large WSS utilities. This was as a result of an initiative started by CRA to benchmark the performance of the water utility for Maputo against similar sized utilities among ESAWAS countries, in order to have a fair comparison of performance for large utilities. ESAWAS thus developed a regional benchmarking framework and published the first benchmarking report for the period 2013/2014 encompassing six utilities in the region. Among the utilities included, was Lusaka WSC. The summary of the ESAWAS benchmarking exercise is presented below. 9.2 REGIONAL BENCHMARKING PERFORMANCE BOUNDARIES ESAWAS selected ten Key Performance Indicators (KPIs) to use for regional benchmarking. Due to the differences in definition of sanitation services among the regulators, regional benchmarking considered Sewerage Coverage by network only, as data regarding septic tanks has tended to be unreliable. Quality of Service Economic Efficiency Operational Sustainability Water Coverage > < 75 Sewerage Coverage > < 40 Water Quality > < 90 Hours of Supply > < 16 O&M Coverage > < 1.0 Collection Efficiency > < 0.85 Staff Cost < >35 Staff/1,000 Water and Sewerage Connections < >8.0 NRW < >35 Metering Ratio > < 85 84

93 WSS Sector Report 2015 Regional Benchmarking of Large WSS Utilities 9.3 REGIONAL PERFORMANCE OF UTILITIES Being the first regional benchmarking exercise among ESAWAS countries, only the largest utilities in each ESAWAS member country were selected for benchmarking. These were: Nairobi City Water and Sewerage Company (NCW&SC) of Kenya; Dar Es Salaam Water and Sewerage Corporation (DAWASCO) of Tanzania; Lusaka Water and Sewerage Company (LWSC) of Zambia; Águas da Região de Maputo (AdeM) of Mozambique; Water and Sanitation Corporation Ltd (WASAC) of Rwanda; and Water and Sewerage Company (WASCO) of Lesotho General Data on Utilities The general data about the Utilities is shown in Table 36. All the utilities are publicly owned companies. Table 36: Overview of Benchmarked Utilities Utility Lusaka Water and Sewerage Company (LWSC), Zambia Areas of Operation Lusaka city + 5 other towns in Lusaka Province Year Established Population in the Service Area 2014 No. of Water Connections 2014 Annual Water Production (m3/yr) Million 92, Águas da Região de Maputo (AdeM), Mozambique Greater Maputo City Million 206, Nairobi City Water and Sewerage Company (NCW&SC), Kenya City of Nairobi Million 284, Dar Es Salaam Water and Sewerage Corporation (DAWASCO), Tanzania Water and Sewerage Company (WASCO), Lesotho Water and Sanitation Corporation (WASAC), Rwanda Dar Es Salaam city; Kibaha; Bagamoyo; Maseru + 15 urban centres Kigali + all urban centres in the country Million 138, Million 78, Million 149,

94 Regional Benchmarking of Large WSS Utilities WSS Sector Report Utilities Performance Comparison The summary of the Utilities performance is shown in Table 37. The detail of performance is available on the ESAWAS website ( Table 37: Summary of Utility Performance Component KPI LWSC AdeM NCW&SC DAWASCO WASCO WASAC Water Coverage 86.2% 64.0% 79.6% 57.0% 60.0% 80.2% Quality of Service Sewerage Coverage 20.1% % 7.8% 5.5% - Water Quality 98.3% 90.4% 89.2% 72.0% 92.0% 94.5% Hours of Supply Economic Efficiency Operational Sustainability O&M Coverage Collection Efficiency Staff Cost 56.7% 32.2% 50.5% 16.5% 46.67% 29.6% Staff/1,000 Water and Sewerage Connections NRW 42.2% 45.8% 38.9% 55.5% 28.8% 41% Metering Ratio 71.8% 74% 94.3% 98.0% 100% 100% Overall, more than half the utilities met the minimum acceptable benchmark in each KPI except in Water Coverage, Sewerage Coverage, Staff Cost, O&M Cost Coverage and NRW. The worst performing KPI was NRW while the best was Staff/1,000 Connections. In general, the indicators linked with the quality of services need massive investments in the water and sewerage infrastructure. The picture further indicates that the utilities need to strive to improve on all the economic efficiency and operational sustainability indicators with special focus on O&M Cost Coverage and NRW. The NRW is a wide spread problem for African utilities which could be improved by applying innovative and integrated management solutions. 86

95 10 CONCLUSION

96 Conclusion WSS Sector Report PERFORMANCE OF THE SECTOR IN THE LAST 10 YEARS This report has provided insight into the performance of each water and sanitation service provider and the sector in general. As mandated by the Water Supply and Sanitation Act 28 of 1997, one of NWASCO s functions is to disseminate information on the performance of the water sector to the public. In the reporting period, the sector recorded positive progression but only in a few indicators such as Metering Ratio and Sanitation Coverage. In absolute figures, the total number of people serviced with water increased although the water coverage dropped due to increased population in the service areas which did not match with the number of new connections. The sector saw a downward trend in a number of indicators such as Hours of Supply, Non-Revenue Water, Collection Efficiency and O&M Cost Coverage both by collection and total revenue. Increased input costs and power outages adversely affected most of these indicators PROGRESS TOWARDS ATTAINING MDGS The declaration of the United Nations Millennium Development Goals (MDGs) in 2000 renewed Zambia s hope of making strides towards universal coverage for both water supply and sanitation. Goal 7 of the MDGs was to ensure environmental sustainability. Target 10 under goal 7 was Halve, by 2015, the proportion of people without sustainable access to safe drinking water and basic sanitation. This meant that Zambia needed to achieve 74% and 42% for water and sanitation coverage, respectively, by At the end of 2015, the national water and sanitation coverage stood at 74% and 51% respectively. However, the Joint Monitoring Programme (JMP) which is mandated to monitor MDGs at global level had not yet released a report on the performance of Zambia at the time of preparing this report. Commercial Water Utilities have, from inception, demonstrated the will to improve service delivery in various aspects of operation towards targets set in national documents such as the 2015 MDGs, SNDP and the Vision 2030 on urban water supply and sanitation. With the year 2015 coming to an end, Chart 29 shows progression of key performance indicators for the sector namely access to clean water supplies, access to acceptable sanitation, cost coverage by collection, metering and non-revenue water (NRW) from the 2003/04 period to From the graph, it is clear that the sector progression has been a positive trend in all the indicators except NRW. The rate of progression has however been slower than desired. 120% 100% 80% 60% 40% 20% 0% Chart 29: Sector Progression over 13 years Water Service Coverage Sanitation Coverage Cost coverage by Collection NRW Metering 88

97 WSS Sector Report 2015 Conclusion Despite the will from the Utilities and other stakeholders to improve the picture depicted in Chart 29, several factors highlighted below have adversely affected the progress. As already alluded to in chapter 2, investments in the sector have been erratic and not to the magnitude required as stated in the National Urban Water Supply and Sanitation Programme. This has retarded the progress particularly on water and sanitation coverage PROJECTIONS UP TO 2030 Chart 30 demonstrates that if progression is maintained at the same rate, the country is likely to meet its Vision 2030 targets for water supply and sanitation coverage of 100% and 90% respectively. Recent years have seen increased commitment from Government in the form of budgetary allocation in the water sector and as a guarantor for the loans obtained by CUs from bilateral and multi-lateral partners. The average tariffs for some CUs were still below the unit operation cost and thus not able to cover their O&M costs. Chart 30: Projections up to 2030 The lack of adherence to good corporate governance practices in some utilities affected the way utilities were managed. 80% Projected water coverage MDG target on water coverage Vision 2030 Target 40% Projected sanitation coverage 2015 MDG Target for sanitation coverage Vision 2030 Target for sanitation Cost coverage projection Projected NRW reduction Projected Mettering 0% There is will to improve service delivery Though the national urban water coverage was above the weighted average national target for 2015 of 80% coverage as stipulated in the revised Sixth National Development Plan (RSNDP), the national weighted water coverage of 74% was still below the target. It should be noted that 58% of the population is in rural areas of which 67% has access to clean water supply. For sanitation 89

98 Conclusion WSS Sector Report 2015 coverage, the national average of 51% was achieved against the weighted target of 73% in the RSNDP with urban and rural standing at 60.7% and 44% respectively. It is however worth mentioning that the increase in urban sanitation coverage in the reporting period has been majorly attributed to CUs capturing more data of households on septic tanks. A lot of effort has been put in achieving the positive trends seen in the performance indicators over time. However, due to urbanisation in most parts of the country, a lot more effort needs to be exerted to bridge the investment gap and better the performance of the water sector. Therefore this calls for serious investments in the sector to facilitate speedy infrastructural development not only for new areas but also for overhauling of the old and dilapidated infrastructure that most of the CUs currently operate. This will address other indicators such as Non-revenue Water. Further, at the current level of investment in the sector, the country is only likely to have a metering ratio of 100% after By addressing non-revenue water and ensuring universal metering, other efficiency gains will accrue to the CUs, such as increase in hours of water supply, and may result in extra funds that can be used for other demands. 90