Improving water supply through privatization

In: WEDC Conference

Abstract

This is a conference paper. ; In most developing countries, Government policies on water supply, if any, fail to take cognisance of the role of Private Water Vendors (PWVs). Often, political or social considerations constrain most public water corporations from charging appropriate water rates that will enable them to recover even operating costs. Thus, despite huge government investments over the years in the water sector, Public Water Corporations in Nigeria due mainly to low water tariffs that they charge, experience difficulty in maintaining and operating their systems. This situation has resulted in continued deterioration of treatment plants and distribution networks, leading to inadequate and poor service as enough funds could not be generated to replace broken down parts or expand existing systems. The current world wide economic recession has caused most developing countries particularly to experience, in differing degrees, deteriorating per capita income growth, stagnating if not declining government revenues and seri­ous balance of payments and debt servicing difficulties. These have led to drastic cut backs in investments and slow down in on-going projects. To deal with the problems of broken down plants and expansion of existing services, both Federal and State Governments in Nigeria resorted to external loans to finance water projects. Water tariff is too low in all State Water Agencies (SWAs) in Nigeria when compared with the high production costs of water. Water rate in metered residential areas has been found to vary widely from one state to another. It is as low as NO.44/m3 in Barno and Yobe States, slightly up to N2.6/ m3 in Kwara State, averaging NI.35/m3 for the whole country. In the case of unmetered residential areas, the change varies appreciably from N2.00/month in Edo State to NI52.4/month in Anambra and Enugu States, averaging N32.5/month for the whole country. The production cost of water on the other hand is estimated at N20.00/m3. In a recent study conducted by the author, private water vendors operating in towns and cities in the northern part of the country were found to charge an average of N45/m3, more than 33 time the tariff charged by SWAs for metered residential areas. The paper examines the poor state of water supply in most towns and cities in Nigeria which can be traced to inad­equate funding resulting from inability of SWAs to charge higher tariffs to maintain their services. Private water vendors who on the other hand are not licensed but free to fix their rates, make profits and expand their services to all towns and cities in the country. Other than the exorbitant rates charged by Private Water Vendors (PWVs), and that they sometimes obtain their supplies from unhy­gienic sources, nevertheless, their services go a long way towards supplementing government effort. If the services rendered by the water vendors can be taken into consideration, there will be greater participation by the private sector in water resources development includ­ing their eventual involvement in the manufacturing of water equipment, plants and chemicals.