Cambodia Rehabilitation of Urban Water Sector

Even in Cambodia, water is a problem and an issue. The great rivers that feed Cambodia, have seen reduced levels, as nations "up river" are using more and more water for agriculture and industrial purposes.

So Cambodia is working hard to increase supply, and better manage water. It has been my pleasure to visit Cambodia several times as a consultant for the World Bank, in areas of economic development.

I have personally inspected the great waterways of Cambodia, and personally seen the results of polluted water, corruption, and poor management of water systems there. But Cambodia is making progress, developing water systems for the great masses of the poor, and the emerging middle class.

In Cambodia, no one would even dream of using water resources to benefit business development projects or to decorate the cities. There, they recognize that water is to important a resource to make a "decoration" for the rich.

Between 1998 and 2004, the Urban Water Supply Project supported the turnaround of two water utilities of Cambodia. The Phnom Penh Water Supply Authority (PPWSA) became a financially viable public enterprise operation under commercial law. 750,000 people gained access to water supply services in Phnom Penh. The Sihanoukville Water Supply Authority (SWSA) became more autonomous in its operations and extended water supply services to 18,000 people in its poor service area. By 2004, both utilities improved their operational and financial performance substantially. The project also assisted in developing a national water supply and sanitation policy to foster sustainable well performing and autonomous public utilities.

Starting the Institutional reform

Cambodia realized that it needed physical rehabilitation of infrastructure, technical assistance, and capacity building.

Boosting water supply in Phnom Penh

In 1997, they introduced and implemented fully automated systems for accounting, management and billing. The new billing system replaced often corrupt bill collectors and introduced public offices where customers would pay their bills instead. PPSWA incorporated a profit sharing system that monitors corruption practices by all the employees. PPSW installed meters for all connections, enforced heavy fines for illegal connections and built in innovative technology to reduce leakage in the distribution system. Moreover, PPWSA established a revolving fund to finance domestic connections to help the poor connect to the network.

By 2004, PPSWA's number of connections had increased almost 9-fold from 10,777 to more 105,777. This translates into approximately 750,000 people gaining access to piped water 24 hours a day. Water quality meets international standards. The utility itself was transformed into a financially viable and strong organization. Unaccounted for water declined from 57% in 1998 to 17% in 2003.

The revolving fund financed 6,708 water connections targeted to the poor. The program has proved popular among the low-income groups and has not resulted in a deterioration of the overall financial health of the utility.

An alternative approach in Sihanoukville

Sihanoukville is a provincial city with many low income residents. Reforming the Sihanoukville Water Supply Authority (SWSA) took into account these specific circumstances. The reform did take a different approach than that in Phnom Penh.

The IDA credit was channelled through the Ministry of Industry, Mines and Energy (MIME). However, SWSA started to maintain its own 'ringfenced' accounts separately from those of MIME. This gave the authority more autonomy and made it accountable for the appropriate costs of rehabilitation and expansion of its system.

During the project period, SWSA increased the number of connections from 886 in 1997 to 1,318 in 2003. This meant an addition 18,000 people got access to water supply services. Water sales have increased correspondingly during the same period from 550 thousand m3 to over one million m3. The operating capacity increased as a result of the training provided to the staff. Collection efficiency remained well over 90%. Unaccounted for water kept fluctuating between 25 and 30 percent, due to technical losses in the ancient distribution system.

Technical Assistance

Throughout the reform process, PPSWA, SWSA and other relevant governmental agencies benefited from significant technical assistance (TA) and capacity building. This included training, workshops and funded post graduate studies for the utilities' staff.

The World Bank's assistance was complemented by a US$250,000 grant from the Australian Government that financed a twinning arrangement between two Australian water utilities and PPWSA. The experience improved the institutional effectiveness.

National Accomplishments

The TA component of the Urban Water Supply Project also supported the Coordinating Committee for the Water and Sanitation Sector in drafting and approving a long-term national strategy for the sustainable and cost effective urban water supply and sanitation sector as well as a new policy framework of the sector. This framework consisted of two national policies: The National Policy on Water Supply and the National Policy for Urban Sanitation. Both policies fostered demand based approaches to system planning and investment, private sector participation and cost recovery tariffs.

Going Forward

In continuation to this project, the World Bank approved another IDA fund of 19.9 million in assistance of the Government of Cambodia and PPWSA. The Provincial and Peri-Urban Water and Sanitation Project started in 2003. It supports water supply and sanitation investments targeting provincial towns and peri-urban communities. The project is assisting the government to extend innovative financing mechanisms through which low income communities can participate as full-fledged paying customers of piped water supply systems – building on the success of the PPWSA revolving fund.

The government is seeking ways to bring the benefits of privately run water services to unserved areas and especially to poor people in secondary towns across the country. Expected service providers are local, private, small-scale operators. In six pilot towns, Output Based Approach (OBA) contracts have been awarded to expand access of basic water and sanitation services. An additional two contracts are under evaluation and eight new contracts are to bid out by March 2006. The first system will start to operate by May 2006. The second phase of the pilot projects will scale-up the program to new towns, and then possible nation wide.