Urban ordeals: More ‘unplanned’ areas in city make public utilities lose relevance
Water crisis in city needs to be understood in larger context.
As the area of unplanned settlements in Karachi grows, the water distribution network also becomes skewed, making the KWSB unprofitable. PHOTO COURTESY: WORLD BANK
KARACHI:
As larger parts of Karachi fall under the ‘unplanned’ category, public utilities, such as the water board, lose their mandate and relevance.
Karachi is divided into ‘planned’ and ‘unplanned’ areas. The unplanned areas are mostly in the form of katchi abadis, or urban squatter settlements, which comprise nearly 61 per cent or 1.2 million households, based on Arif Hasan’s 2010 study.
Recently, a new variance - illegal sub-divisions - have developed by ‘land grabbers’ who illegally take public land and develop it for residential purposes. In such settlements, the builders provide services, such as water, through informal means. As a result, public utilities lose their relevance in the expanding urban landscape of Karachi, with huge loss of potential revenues.
Since nearly 90 per cent of Karachi uses water supplied by its sole provider - the Karachi Water and Sewerage Board (KWSB) - the utility is presently struggling to survive as a financially viable water utility, confronted with a growing incapacity to deliver quality and sustainable services.
Institutional and governance arrangements
Under the KWSB Act 1996, the water board is an entity separate from the Karachi Metropolitan Corporation and its annual budget has to be approved by the Sindh government. In reality, the water board enjoys little autonomous freedom as there is a high level of political interference in its day-to-day operations. Key functions, such as budget approvals, regulations and tariff, hiring and postings and provision of locally mobilised funds or foreign loans and grants lie within the purview of the provincial government.
In addition, the federal government stands as the guarantor to the quota of water allocation and distributions, underwriting of loans, technical assistance from various bodies and conflict resolution whenever appropriate. The board itself is practically irrelevant, at an average not even meeting once a year! Instead, the managing director consults with either the chairperson of the board or relevant government and political entities on a regular basis.
The crisis within
Over the recent years, the KWSB has continuously been operating in deficit. On average, the water board is able to recover only about one quarter of potential revenues from its billed customers and two of its largest operational expenditures are electricity and gas charges, and salaries and benefits. This leaves little room for the much-needed investment in infrastructure, operation and maintenance.
In addition to poor billing and collection efficiency, the nature of the tariff structure also inhibits efforts to bridge the gap between the receipts and expenditure. In Karachi, retail level water supply is not metered and consumers are billed on ‘flats rates’ based on the size of plots. Consequently, revenue recovered is not compatible with the amount of water consumed.
Looking ahead
A fundamental requirement is to make the utility a truly ‘autonomous’ body that is run professionally and is free from political interference and manipulations. A likely starting point would be the recommendations coming out of the Jica Master Plan that proposes evaluating options to create an ‘enabling’ legislative space and ‘corporatise’ the KWSB.
The recommendation to set up a special financing vehicle (SFV) is also a relevant consideration. A successful experiment has already been made in the Punjab with the setting up of the Punjab Municipal Development Fund. This will help the KWSB gain a certain level of financial autonomy and credit worthiness.
The Asian Development Bank’s recommendation to develop a reliable and transparent ‘subsidy regime’ can prove attractive for the KWSB. These subsidies can cover the gap between the socially acceptable charges and the full cost of supplying water to the entire city to ensure that KWSB remains financially sustainable as it moves towards achieving full recovery. KWSB needs to be placed, not in the role of a ‘provider’ of services to all, but as an entity that ensures that all are ‘provided for’. This requires a new vision translated in a reforms-based governance framework for the water sector in Karachi.
The writer is an urban planner and runs a non-profit organisation based in Karachi city focusing on urban sustainability issues. He can be reached at fanwar@sustainableinitiatives.org.pk
Published in The Express Tribune, January 6th, 2014.
As larger parts of Karachi fall under the ‘unplanned’ category, public utilities, such as the water board, lose their mandate and relevance.
Karachi is divided into ‘planned’ and ‘unplanned’ areas. The unplanned areas are mostly in the form of katchi abadis, or urban squatter settlements, which comprise nearly 61 per cent or 1.2 million households, based on Arif Hasan’s 2010 study.
Recently, a new variance - illegal sub-divisions - have developed by ‘land grabbers’ who illegally take public land and develop it for residential purposes. In such settlements, the builders provide services, such as water, through informal means. As a result, public utilities lose their relevance in the expanding urban landscape of Karachi, with huge loss of potential revenues.
Since nearly 90 per cent of Karachi uses water supplied by its sole provider - the Karachi Water and Sewerage Board (KWSB) - the utility is presently struggling to survive as a financially viable water utility, confronted with a growing incapacity to deliver quality and sustainable services.
Institutional and governance arrangements
Under the KWSB Act 1996, the water board is an entity separate from the Karachi Metropolitan Corporation and its annual budget has to be approved by the Sindh government. In reality, the water board enjoys little autonomous freedom as there is a high level of political interference in its day-to-day operations. Key functions, such as budget approvals, regulations and tariff, hiring and postings and provision of locally mobilised funds or foreign loans and grants lie within the purview of the provincial government.
In addition, the federal government stands as the guarantor to the quota of water allocation and distributions, underwriting of loans, technical assistance from various bodies and conflict resolution whenever appropriate. The board itself is practically irrelevant, at an average not even meeting once a year! Instead, the managing director consults with either the chairperson of the board or relevant government and political entities on a regular basis.
The crisis within
Over the recent years, the KWSB has continuously been operating in deficit. On average, the water board is able to recover only about one quarter of potential revenues from its billed customers and two of its largest operational expenditures are electricity and gas charges, and salaries and benefits. This leaves little room for the much-needed investment in infrastructure, operation and maintenance.
In addition to poor billing and collection efficiency, the nature of the tariff structure also inhibits efforts to bridge the gap between the receipts and expenditure. In Karachi, retail level water supply is not metered and consumers are billed on ‘flats rates’ based on the size of plots. Consequently, revenue recovered is not compatible with the amount of water consumed.
Looking ahead
A fundamental requirement is to make the utility a truly ‘autonomous’ body that is run professionally and is free from political interference and manipulations. A likely starting point would be the recommendations coming out of the Jica Master Plan that proposes evaluating options to create an ‘enabling’ legislative space and ‘corporatise’ the KWSB.
The recommendation to set up a special financing vehicle (SFV) is also a relevant consideration. A successful experiment has already been made in the Punjab with the setting up of the Punjab Municipal Development Fund. This will help the KWSB gain a certain level of financial autonomy and credit worthiness.
The Asian Development Bank’s recommendation to develop a reliable and transparent ‘subsidy regime’ can prove attractive for the KWSB. These subsidies can cover the gap between the socially acceptable charges and the full cost of supplying water to the entire city to ensure that KWSB remains financially sustainable as it moves towards achieving full recovery. KWSB needs to be placed, not in the role of a ‘provider’ of services to all, but as an entity that ensures that all are ‘provided for’. This requires a new vision translated in a reforms-based governance framework for the water sector in Karachi.
The writer is an urban planner and runs a non-profit organisation based in Karachi city focusing on urban sustainability issues. He can be reached at fanwar@sustainableinitiatives.org.pk
Published in The Express Tribune, January 6th, 2014.