PUC should regulate water company
-says World Bank
March 30, 2003
The government needs to expand the functions of the Public Utilities Commission to include the regulation of water and sewerage services, says the World Bank.
In the Guyana Public Expenditure Review (GPER) , the World Bank says the regulation of this utility is much more important with private sector involvement in the provision of water services.
"An independent regulator can simultaneously protect the consumer from poor water quality, monopolistic pricing and poor service standards while protecting the investor from politically motivated efforts to deny agreed-up tariff increases or change environmental obligations," the World Bank says.
Guyana Water Inc is now under private management and recently announced hikes in water rates.
The government has had a full cost recovery strategy designed for implementation in the water sector to allow the utility to achieve financial sustainability through higher tariffs and reduced wastage, while directing subsidies to the poorest households. A 'willingness to pay' study found that water consumers were willing to pay more for the yard tap service and for house connections if the service levels were improved.
The World Bank notes that if tariffs were increased, it might be possible to award a long-term private concession which creates sufficient incentives for the private sector to carry out future investments in the water sector and meet the goal of ensuring safe water for all.
This, the World Bank, says would limit government's future expenditures into the sector to ensuring good and effective regulation and having in place a subsidy programme to help poor households connect to the system or pay a portion of their monthly bill.
As part of the modernisation of the water sector, a sector investment programme has been designed to lower operating costs while introducing water treatment along with rehabilitation and expansion of the transmission and distribution network to provide universal access by 2007.
The GPER, dealing with the need to reorient social policies including health, education and water, finds that while the raw water source in Guyana is abundant and generally good, reliability of services and water quality are poor.
It notes that water is only available a few hours a day typically, and the water quality does not meet international standards. Water contamination, the report says, arises mainly through the distribution system with Guyanese suffering from a high frequency of water-related illnesses such as diarrhoea, gastroenteritis, typhoid and malaria.
The GPER points out that the impact of adequate water and sanitation services tends to be on the poor, especially those in marginal and squatter areas as well as in rural and hinterland Amerindian communities.
The World Bank advises the government to ensure that the connection policy and pricing arrangements implemented by the private operator for the water utility do not serve as a barrier to access for the poorest community. It also urges that a poverty map and transparent criteria be used to identify and prioritise communities for selection of rehabilitation works and for investments to increase access to water supply.
The GPER also finds a serious public health risk associated with poor sanitation arrangements such as poorly designed on-site sanitation, uncontrolled dumping of sludge from septic tanks, inadequate solid waste disposal and poor maintenance of surface drains. It notes that while there is limited access to sewerage facilities in parts of the city and New Amsterdam, in much of the country this is left to individual households with the widespread use of pit latrines and septic tanks.
Given the potential adverse impact of this, the World Bank says the government should make efforts to provide complementary assistance or seed money for upgraded facilities to be constructed in rural areas. It says the establishment of standards and the monitoring of this and investments in water and environmental sanitation would go a long way to improving the health of the population.
It also advises the government that it should develop a targeted hygiene promotion campaign, including the integration of hygiene education in primary curricula at the national level.