Impact
The management contract achieved some of its objectives, but failed to reach others.
Improving the reliability (pressure and flow rate) and quality of potable water: This objective was not reached in terms of pressure and flow rate, but was reached in terms of quality. Water pressure had originally been a contractual target, but the target was removed in common agreement with the government, because constant power cuts beyond the control of the private operator would not allow this target to be reached. It is unclear if a target for the flow rate was defined. Increasing the continuity of supply proved to be a challenge, since water production was insufficient to meet demand and could not be increased with the investment funds available. Water quality was not systematically monitored at the beginning of the contract. Water from wells was often not chlorinated or only in a very rudimentary manner. Water produced by treatment plants was not properly treated, with some of the treatment steps simplified or simply avoided. The operator introduced a systematic monitoring for five parameters - pH, colour, turbidity, residual chlorine and e-coli - and, in the last contract year, complied with the target for all these parameters despite pollution of raw water sources.
Ensuring the company’s financial sustainability: Improvements were made. The annual revenue increased from GHC 57 million to GHC 143 million, with the operating surplus growing from GHC 9 million to GHC 36 million per annum. The increase in revenue was to a large extent due to an 80% increase in tariffs. However, without efficiency increases the increase in tariffs would have had to be even higher to achieve the same financial results. Examples of improved efficiency are a decrease in specific electricity consumption from more than 0.8 to less than 0.7 kWh per cubic meter of water and the fact that the number of staff incrased by less than the increase in customers. Over the five-year period, the prices of chemicals and energy almost trebled and the average salary increased by 225%. Collection efficiency increased from an estimated level of less than 80% before the management contract to 97% in 2009. However, after a tariff increase collection efficiency declined again to 90% in 2010.
Improving customer service: A call centre was established and - according to the operator - training "improved the staff attitude towards the consumers".
Providing access to potable water at affordable prices to low income consumers: The number of connections increased from 364,000 to 438,000. However, water tariffs increased by 80%. There was no specific target concerning access of the poor to water included in the management contract. Nevertheless, with the help of the Dutch foundation "Water for Life" the operator improved the water supply for around 75,000 people in 15 peri-urban areas throughout Ghana.
Furthermore, the private operator provided 25,000 training days. Customer data were entered into a Geographical Information System (GIS), 70,000 meters were installed and meter workshops were established to repair faulty meters. Non-revenue water was only reduced marginally from an estimated 53% in 2006 to 50% in 2010, compared to a target of 26%. An accurate measurement of non-revenue water was not possible, because the installation of bulk water meters started only in 2008 and the separation of the network into district metered areas - a prerequisite to accurately locate leaks - was undertaken only during the period of the management contract. Intermittent supply also made it more difficult to locate leaks.
Read more about this topic: Water Privatization In Ghana
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