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Toolkit: Approaches to Private Participation in Water Services Module 3 Involving Stakeholders in the design of the Arrangement.

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Presentation on theme: "Toolkit: Approaches to Private Participation in Water Services Module 3 Involving Stakeholders in the design of the Arrangement."— Presentation transcript:

1 Toolkit: Approaches to Private Participation in Water Services Module 3 Involving Stakeholders in the design of the Arrangement.

2 Introduction: Navigating through this E-Learning Module E-learning design: davidstiggers@comcast.net

3 Elements of the Toolkit TOOLKIT 1 Considering Private Participation 2 Planning the Process 5 Standards, Tariffs, Subsidy, Financials 4 Setting Upstream Policy 3 Involving Stakeholders 6 Responsibilities & Risks 7 Developing Institutions 8 Designing Legal Instruments 9 Selecting an Operator Additional Material CD-ROM Appendix B Policy Simulation Model Appendix A Examples of PP Arrangements

4 General Outline of Toolkit TOOLKIT 1 Considering Private Participation 2 Planning the Process 4 Setting Upstream Policy 3 Involving Stakeholders 6 Responsibilities & Risks 7 Developing Institutions 8 Designing Legal Instruments 9 Selecting an Operator Additional Material CD-ROM Appendix B Policy Simulation Model Appendix A Examples of PP Arrangements Module 3 5 Setting Service Standards, Tariffs, Subsidies & Financial Arrangements Module 3 Involving Stakeholders in the Design of the Arrangement

5 Module 3 - What will we learn? How will we identify important Stakeholders? How should we deal with different Stakeholder groups? What is the best strategy for involving Stakeholders? Who will win or lose under the Arrangement?

6 Module 3 Involving Stakeholders in Design THE ARRANGEMENT IDENTIFY Stakeholders DEVELOP Communication Strategy INTERACT with Stakeholders Satisfactory outcome In this Module we look at the issues that Governments need to address in order to involve Stakeholders in Private Particpation Arrangement design. Government needs to consider the interests of the different stakeholders Government will benefit from engaging with the Stakeholders: through better Arrangement design, through the fact that Stakeholders have participated in the design, and their views have been sought and understood.

7 Module 3 Involving Stakeholders in Design In designing the Arrangements the Government needs to consider the interests of different Stakeholders

8 Module 3 Involving Stakeholders in Design In designing the Arrangements the Government needs to consider the interests of different Stakeholders Some Examples: What level of service do people want? How much are people willing to pay for new connections? Given different costs, what type of connections do they want?

9 Module 3 Involving Stakeholders in Design Engaging with Stakeholders offers two additional advantages……… Analysis based on the consultation may show Government better ways to design, with a more equitable distribution of costs and benefits Perhaps too many costs imposed on poorer groups the Government wants to protect Perhaps too many costs imposed on groups that could block the reforms Not all groups will benefit as well as they hope for. Their support is more likely if they feel that the design and implementation of the Arrangement is Legitimate. One way is if they see through the consultation process that all is transparent and fair, and peole understand the objectives of the reform Note: Legitimacy is an issue covered in Modules 7 (Tariff resets) and 9 (Contractor selection)

10 Module 3 Involving Stakeholders in Design THE ARRANGEMENT DEVELOP Communication Strategy INTERACT with Stakeholders Satisfactory outcome THE ARRANGEMENT DEVELOP Communication Strategy INTERACT with Stakeholders IDENTIFY Stakeholders Identifying Stakeholders The first step is to identify important Stakeholders Any group that asserts an interest can be a Stakeholder, but only some groups will do so. Other groups that might be overlooked will need to be sought out, including: Unconnected poor, women, alternative providers ( such as standpipe operators) Womens groups and community organizations may open the path to other consumers with special needs International specialist water operators are obvious contacts, but local financiers, firms and agencies should be considered A communications needs assessment may be required to further identify the stakeholders It may help to extend Government consideration beyond the obvious contacts It can help to identify prevailing concerns about privatization and water services, and possibly offer ideas on potential ways forward Examples of some potential Stakeholders: Consumers NGOs Workers Private Firms and Financiers Alternative Providers Opinion Leaders and other Politicians Media

11 Module 3 Involving Stakeholders in Design DEVELOP Communication Strategy Satisfactory outcome THE ARRANGEMENT DEVELOP Communication Strategy INTERACT with Stakeholders IDENTIFY Stakeholders Identifying Stakeholders The first step is to identify important Stakeholders Any group that asserts an interest can be a Stakeholder, but only some groups will do so. Other groups that might be overlooked will need to be sought out, including: Unconnected poor, women, alternative providers ( such as standpipe operators) Womens groups and community organizations may open the path to other consumers with special needs International specialist water operators are obvious contacts, but local financiers, firms and agencies should be considered A communications needs assessment may be required to further identify the stakeholders It may help to extend Government consideration beyond the obvious contacts It can help to identify prevailing concerns about privatization and water services, and possibly offer ideas on potential ways forward Examples of some potential Stakeholders: Consumers NGOs Workers Private Firms and Financiers Alternative Providers Opinion Leaders and other Politicians Media Examples – more detail La Paz & Cochabamba Can more Consultation help? Stakeholder Identification & Composition

12 Module 3 Involving Stakeholders in Design INTERACT with Stakeholders Satisfactory outcome THE ARRANGEMENT IDENTIFY Stakeholders DEVELOP Communication Strategy Developing Strategy for Involving Stakeholders Consultation may show better ways to design, and get support

13 Acquiring expertise for the engagement Types of Interaction with Stakeholders Many ways to involve stakeholders, depends on objectives, type of Arrangement and other factors 5 main types of interaction: Collecting and providing info, consulting, deciding and acting together Several different ways of communicating with shareholders, according to situation Developing Strategy for Involving Stakeholders Governments need to think about the types of interaction, and expertize needed

14 Acquiring expertise for the engagement Types of Interaction with Stakeholders Many ways to involve stakeholders, depends on objectives, type of Arrangement and other factors 5 main types of interaction: Collecting and providing info, consulting, deciding and acting together Several different ways of communicating with shareholders, according to situation Developing Strategy for Involving Stakeholders Governments need to think about the types of interaction, and expertize needed 4 Ways of Communicating 5 Main Types of Interaction

15 Acquiring expertise for the engagement Types of Interaction with Stakeholders Specific skill sets needed, that may not exist within Government Different kinds of interaction needs depend on type and scale of the project Designating a communications manager as focal point is of advantage Developing Strategy for Involving Stakeholders Governments need to think about the ……………….. expertize needed DIFFERENT SKILLS: Community Development Specialists can help engage poor communities Survey Experts gather facts in a quantifiable way Communications Experts help to publicize and explain proposals Depending on project size, several specialists may be employed COMMUNICATIONS MANAGER: Acts as focal point Needs to be well briefed by the Team Ensures effective communication about objectives and Government policy Alerts Team to potential problems or benefits of the proposed Arrangement Ensures sequence and method of communications

16 INTERACT with Stakeholders INTERACT with Stakeholders Interacting with Stakeholders DEVELOP Communication Strategy Satisfactory outcome THE ARRANGEMENT IDENTIFY Stakeholders DEVELOP Communication Strategy The appropriate approach with each group of Stakeholders depends on a number of variables, including: The Groups capacity Understanding of Private Participation The ways that social, political and economic climate affect Group

17 Interacting with Stakeholders The appropriate approach with each group of Stakeholders must be varied Some potential Stakeholder Interactions: Customers NGOs Workers Private Firms and Financiers Alternative Providers Opinion Leaders and other Politicians Media

18 Interacting with Stakeholders The appropriate approach with each group of Stakeholders must be varied Some potential Stakeholder Interactions: Customers NGOs Workers Private Firms and Financiers Alternative Providers Opinion Leaders and other Politicians Media

19 THE ARRANGEMENT Involving Stakeholders in Design Satisfactory outcome IDENTIFY Stakeholders DEVELOP Communication Strategy INTERACT with Stakeholders THE ARRANGEMENT Satisfactory outcome Government can use the information from Stakeholders to make estimates of the effects of Arrangements on the different groups. Whilst net benefits may be expected, it is necessary to review the effect on each of the different groups, and balance the interests of the winners and losers in the final design It is possible to establish a quantitative policy model approach to help in this task.

20 Winners & Losers under different options Winners & losers can be identified and gains & losses estimated. If necessary the Arrangement can be redesigned to take account of this. Introduction of Private Participation reform is on the basis that there will be net benefits to the community. This means that benefits for the winners outweigh costs borne by the losers. In principle, it may be possible to distribute benefits so that no group loses. In practice, Governments may wish to support one or more groups such as the disadvantaged poor or politically influential groups (water workers, major water users etc.) Example: Unconnected poor expected to gain from service expansion. Existing customers might be expected to pay increased tariff and, unless services improve, they will lose. Government needs to quantify the situation, and use the information to adjust the design as necessary. In this case, the redesign could include a subsidy to the poor. A quantitative approach may be used to evaluate the social and economic impact of the Arrangement, and help to simulate the potential effects

21 Winners & Losers - Policy Simulation Social impact modeling can establish the different stakeholders. The Toolkit Policy Simulation Model quantifies the effects with different scenarios Household Survey Current Service Willingness to pay Income Household Survey Current Service Willingness to pay Income Predicted change in welfare Service Scenarios Tariff Scenarios Typical households/stakeholders Step 1 - Identify current parameters for various Household/Stakeholder types. Might include: Middle class household / registered pipe connection Low income household / registered pipe connection Low income household / illegal connection Unconnected household / water standpipe Workers Taxpayers funding any subsidies Other important groups Step 1 - Identify current parameters for various Household/Stakeholder types. Might include: Middle class household / registered pipe connection Low income household / registered pipe connection Low income household / illegal connection Unconnected household / water standpipe Workers Taxpayers funding any subsidies Other important groups Step 2 – Model Service and Tariff Scenarios. For each Scenario the model predicts net impact on the welfare of each typical Household or Stakeholder types Estimates additional value placed on each service Subtracts any increase in bills from the Scenarios tariff increases Step 2 – Model Service and Tariff Scenarios. For each Scenario the model predicts net impact on the welfare of each typical Household or Stakeholder types Estimates additional value placed on each service Subtracts any increase in bills from the Scenarios tariff increases Step 3 – Evaluate change in welfare across the different Groups The Toolkit Policy Simulation Model uses a simplified and stylized form of this analysis. It considers: The currently connected The currently unconnected Assumes: How much the unconnected have to pay for their water Willingness to pay for better services The model predicts the effects of reform on both Groups Step 3 – Evaluate change in welfare across the different Groups The Toolkit Policy Simulation Model uses a simplified and stylized form of this analysis. It considers: The currently connected The currently unconnected Assumes: How much the unconnected have to pay for their water Willingness to pay for better services The model predicts the effects of reform on both Groups

22 Reviewing Module 3 The Arrangement Identify Stakeholders Develop Communication Strategy Interact with Stakeholders Satisfactory outcome The Module has looked at the whole range of Stakeholder communication issues in Arrangement design………….

23 More Information: Module 3

24 Supporting Material The Toolkit Financial Model Toolkit Case Study material Toolkit Website: http://rru.worldbank.org/Toolkits/WaterSanitation/ For comments or further details contact Cledan Mandri Perrott at cmandriperrott@worldbank.org cmandriperrott@worldbank.org

25 Toolkit: Module 3 End of Module

26 Toolkit: Module 3 Return to Start

27 Toolkit: Module 3 DO NOT MOVE or ERASE THE FOLLOWING SLIDES

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29 THE ARRANGEMENT DEVELOP Communication Strategy INTERACT with Stakeholders Satisfactory outcome THE ARRANGEMENT DEVELOP Communication Strategy INTERACT with Stakeholders IDENTIFY Stakeholders Identifying Stakeholders Could more consultation have helped ? In several cases it has become apparent that more consultation would have resulted in a better and more effective Arrangement design. In some cases the lack of correct information or lack of stakeholder involvement results in the Arrangement not working at all: La Paz – El Alto Concession: Situation: Revenues for the increased expansion were too low, as demand in new areas was not as high as predicted. Result: Government requested cancellation Cochabamba Concession: Situation: In addition to technical problems, several groups with different, and important, concerns did not feel that their interests were being taken into account. There was serious civil unrest. Result: As a result of the political unrest the Arrangement was a failure, and unworkable Back to Module

30 Box 3.1 Could consultation have helped? EXAMPLES: La Paz & Cochabamba Source: Nickson and Vargas 2002. Back to Module

31 STAKEHOLDER IDENTIFICATION & COMPOSITION Back to Module

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33 5 types of Interaction with Stakeholders Back to Module

34 4 ways of Communicating with Stakeholders Back to Module

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36 Interacting with Stakeholders - Customers The most important group are customers or potential customers It is important to realize the diverse nature of this group, and the diversity of views. However, all groups are interested in levels of service and how much they pay. Basic information needed: Where customers are located, including informal settlements. How people get water and waste services (including connections) Typical household sizes and numbers using a connection Household incomes, and stability, including seasonal variation Volume and variations of water consumption What customers pay, as well as additional costs (pumps, tanks or time spent fetching water) Special concerns related to women's roles in water services WHAT IS WANTED? The main issue is to get an understanding of what customers and potential customers want and how much they are prepared to pay for it Which improvements have highest priority How important are different types of improvement? Which are critical and which can wait Which customers value new connections most? Customer surveys are useful to gather this information. Focus groups and community organizations can also be helpful WHAT IS WANTED? The main issue is to get an understanding of what customers and potential customers want and how much they are prepared to pay for it Which improvements have highest priority How important are different types of improvement? Which are critical and which can wait Which customers value new connections most? Customer surveys are useful to gather this information. Focus groups and community organizations can also be helpful Back to Module

37 The most important group are customers or potential customers It is important to realize the diverse nature of this group, and the diversity of views. However, all groups are interested in levels of service and how much they pay. Basic information needed: Where customers are located, including informal settlements. How people get water and waste services (including connections) Typical household sizes and numbers using a connection Household incomes, and stability, including seasonal variation Volume and variations of water consumption What customers pay, as well as additional costs (pumps, tanks or time spent fetching water) Special concerns related to women's roles in water services WILLINGNESS TO PAY There are two commonly used techniques for estimating willingness to pay. Both involve conducting customer surveys. The Revealed Preference method is designed to estimate what customers currently pay for their existing service as an indicator of what they would be prepared to pay for improved services. Stated Preference methods use carefully designed questions to get consumers to reveal what they would be willing to pay for a service. WILLINGNESS TO PAY There are two commonly used techniques for estimating willingness to pay. Both involve conducting customer surveys. The Revealed Preference method is designed to estimate what customers currently pay for their existing service as an indicator of what they would be prepared to pay for improved services. Stated Preference methods use carefully designed questions to get consumers to reveal what they would be willing to pay for a service. Interacting with Stakeholders - Customers Back to Module

38 The most important group are customers or potential customers It is important to realize the diverse nature of this group, and the diversity of views. However, all groups are interested in levels of service and how much they pay. Basic information needed: Where customers are located, including informal settlements. How people get water and waste services (including connections) Typical household sizes and numbers using a connection Household incomes, and stability, including seasonal variation Volume and variations of water consumption What customers pay, as well as additional costs (pumps, tanks or time spent fetching water) Special concerns related to women's roles in water services Willingness to Pay: 2 Techniques Example: Kathmandu Wrong Ideas of Customer Needs Interacting with Stakeholders - Customers Back to Module

39 Willingness to Pay: 2 Techniques The most important group are customers or potential customers Back to Module

40 Involving customers Kathmandu - a case of wrong ideas about what customers wanted Back to Module

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42 Interacting with Stakeholders – NGOs NGOs and other community based organizations should not be treated as a single group. They represent different stakeholders and interests, and should be treated accordingly NGOs and community based associations can have various functions: Act as conduits for effective dialogue with customers Examples: neighborhood organizations; womens rights groups Act as watchdog, or even provide services themselves Example: Cartagena Creation of NGO networks can help interaction between different groups and Government Represent issues, rather than customers. There is a need to show how these issues taken into account in Arrangement design Example: environmental groups. Some NGOs are opposed to private firms. Need to communicate the likely benefits of the Arrangement Back to Module

43 NGOs and other community based organizations should not be treated as a single group. They represent different stakeholders and interests, and should be treated accordingly NGOs and community based associations can have various functions: Act as conduits for effective dialogue with customers Examples: neighborhood organizations; womens rights groups Act as watchdog, or even provide services themselves Example: Cartagena Creation of NGO networks can help interaction between different groups and Government Represent issues, rather than customers. There is a need to show how these issues taken into account in Arrangement design Example: environmental groups. Some NGOs are opposed to private firms. Need to communicate the likely benefits of the Arrangement Example: NGOs in Cartagena, Colombia Interacting with Stakeholders – NGOs Back to Module

44 Involving NGOs Back to Module

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46 Interacting with Stakeholders – Workers Private participation is often seen as a threat to Workers since there is often overstaffing of utilities in developing countries, for reasons of patronage or job creation Options for consulting with workers and unions include: Basic information needed: Sharing information and having frank discussions of the problems the utility is having and the areas in which it is falling short of its mandate to provide good quality services to all the Seeking views from staff and unions about ways in which the utility can be improved, particularly concerning corruption and patronage. Helping staff representatives visit other utilities with private participation and talk to their counterparts there. Consulting, or making joint decisions, on issues affecting staff Consulting, or making joint decisions, on issues affecting staff, including: Pension rights and other entitlements The operators flexibility to reduce staff numbers Ways of increasing labor productivity, such as the introduction of more flexible work practices and performance-based pay Additional training and other resources (such as safety equipment) for workers Help for workers who lose their job to find new jobs or start new businesses Consulting, or making joint decisions, on issues affecting staff, including: Pension rights and other entitlements The operators flexibility to reduce staff numbers Ways of increasing labor productivity, such as the introduction of more flexible work practices and performance-based pay Additional training and other resources (such as safety equipment) for workers Help for workers who lose their job to find new jobs or start new businesses Back to Module

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48 Stakeholders: Private Firms & Financiers Interaction with Private Operators needs to preserve transparency whilst eliciting their input on the attractiveness of the Arrangement design Private Operators: this is dealt with in more detail in Module 9 Example: Dar as Salaam affermage, Tanzania, illustrates the importance of this. Two out of three qualified bidders refused to bid, because of Government insistence on contract detail. This caused major delay to setting up an Arrangement. Lenders & Investors: Useful for Government to open dialogue to ensure financial institutions are involved at an early stage, to reduce later delays Local Consulting and Construction companies: It is desirable to give these firms a chance to participate, and to take account of their views in the design of the Arranements Back to Module

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50 Stakeholders: Alternative Providers Alternative providers need to be involved. They may feel that they will lose their livelihood under new arrangements Alternative providers carry out services not provided by the formal utilities, and these can include water vendors and cesspit emptiers. These providers may fill a significant amount of the existing service needs: Generally demand for services is so extensive that alternative providers will still have to service unfulfilled demand, even after the Private Participation reforms introduced. Consultation with alternative providers can provide a compromise between them and the formal utility Although alternative providers may lose some business, they may benefit from legal recognition, and arrangements to receive wholesale water supplies (e.g. bulk water) on a more economic basis Alternative providers may be used to extend service to other poorly served areas Back to Module

51 Alternative providers need to be involved. They may feel that they will lose their livelihood under new arrangements Alternative providers carry out services not provided by the formal utilities, and these can include water vendors and cesspit emptiers. These providers may fill a significant amount of the existing service needs. Generally demand for services is so extensive that alternative providers will still have to service unfulfilled demand, even after the Private Participation reforms introduced. Consultation with alternative providers can provide a compromise between them and the formal utility Although alternative providers may lose some business, they may benefit from legal recognition, and arrangements to receive wholesale water supplies (e.g. bulk water) on a more economic basis Alternative providers may be used to extend service to other poorly served areas Alternative Providers: Teschie Tankers, Ghana Stakeholders: Alternative Providers Back to Module

52 Stakeholders: Alternative Providers Accra, Ghana provides an example where involvement of alternative providers has provided benefits to customers, utilities and the providers themselves Back to Module

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54 Stakeholders: Other Politicians Government may have to consult with other parts of Government An example of this is when consultation is needed at local Government level, when the Arrangement designed at State level An initial scoping exercise to determine key players (including those who may assume office later) is beneficial Awareness of the Arrangement, and stakeholder buy-in, may reduce potential political challenges to the legitimacy of the Arrangement Back to Module

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56 Stakeholders: The Media Often the media are the primary vehicle through which people obtain information about reform of water services Government information may be suitable for legal purposes, but may need help to present in a form suitable for consumers. The Media may have to work hard to understand, and may get it wrong! Lack of information is often seen as conspiracy or corruption An effective engagement with the Media will help to widen understanding, and Government needs to know: Do the majority of people have access to the Media? Do certain types of Media reach more people (Example: does television or radio have the bigger audience? Which Media are the most trusted and most influential? The Media have little understanding of water services and Private Participation. The Reform Leader needs to ensure that they get adequate, understandable and updated information Back to Module

57 Toolkit: Module 3 DO NOT MOVE or ERASE THE PREVIOUS SLIDES AFTER END OF MODULE


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