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Component 3 1 Setting Local Block Tariffs helps the affordability of water to the poor case study from Yemeni Water Utilities By Zeyad Shawagfeh Senior.

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Presentation on theme: "Component 3 1 Setting Local Block Tariffs helps the affordability of water to the poor case study from Yemeni Water Utilities By Zeyad Shawagfeh Senior."— Presentation transcript:

1 Component 3 1 Setting Local Block Tariffs helps the affordability of water to the poor case study from Yemeni Water Utilities By Zeyad Shawagfeh Senior Utility Expert Amin Al Mugales DG of Hadjah LC Abdelraqeeb Al hamadi Zabid Utility Manager

2 Component 3 2 Table of Contents Introduction to Yemeni Water and Sanitation Reform PolicyIntroduction to Yemeni Water and Sanitation Reform Policy Legal framework of local tariffsLegal framework of local tariffs Overview of Public UWSSOverview of Public UWSS Example of setting local block tariffs from two Yemeni UtilitiesExample of setting local block tariffs from two Yemeni Utilities Affordability of water to the poorAffordability of water to the poor political unrest in Yemen during year 2011political unrest in Yemen during year 2011 Re-construction phase mid 2012Re-construction phase mid 2012 Looking ForwardLooking Forward

3 Component 3 3 Introduction to Water Policy Cabinet Resolution 237/1997 provides the legal framework of the Yemeni urban water sector reformCabinet Resolution 237/1997 provides the legal framework of the Yemeni urban water sector reform Reform initiated to tackle the water crisesReform initiated to tackle the water crises Main elements of the reform was decentralizationMain elements of the reform was decentralization The main objective under financial viability is local tariffsThe main objective under financial viability is local tariffs Radaa Principles that became a key element of the decentralization process of the UWSSRadaa Principles that became a key element of the decentralization process of the UWSS Republican decree of establishing the Local CorporationRepublican decree of establishing the Local Corporation

4 Component 3 4 Legal Framework of Local Tariffs Dependence in the Central Government in setting tariffs is no more validDependence in the Central Government in setting tariffs is no more valid Increasing block tariffs of not less than 2 but not more than six blocks which is well above the National unified TariffIncreasing block tariffs of not less than 2 but not more than six blocks which is well above the National unified Tariff Increasing block tariff system has established itself as standard in developing countries.Increasing block tariff system has established itself as standard in developing countries. Blocks are calculated according to the amount of water consumption and the type of customersBlocks are calculated according to the amount of water consumption and the type of customers Separate tariffs shall be set for each utility for its service area, subjected to the approval of the Board of Director/Advisory Committee (BoD/AC)Separate tariffs shall be set for each utility for its service area, subjected to the approval of the Board of Director/Advisory Committee (BoD/AC)

5 Component 3 5 Continue Local Tariffs enhance economic efficiency and encourage water conservation in water scares countryLocal Tariffs enhance economic efficiency and encourage water conservation in water scares country Reflection of costs of future expansion of supplyReflection of costs of future expansion of supply Social conditions of customer categories is consideredSocial conditions of customer categories is considered Radaa Principles, utility set its own local cost- recovery tariff, upon approval of the (AC) then the MinsterRadaa Principles, utility set its own local cost- recovery tariff, upon approval of the (AC) then the Minster LC propose water tariff and sanitation service fees and submit them to the Board of Director who act as supreme administrative authority to the (LC) then Minster for final approvalLC propose water tariff and sanitation service fees and submit them to the Board of Director who act as supreme administrative authority to the (LC) then Minster for final approval

6 Component 3 6 Overview of Public UWSS

7 Component 3 7 Example of setting local block tariffs from two Yemeni Utilities Factors taken in consideration while preparing tariff concept and design:Factors taken in consideration while preparing tariff concept and design: economic efficiency, fairness, revenues sufficiency, Stability of cash flow, simplicity, Traditional regulation of water supply, and conservation of resources economic efficiency, fairness, revenues sufficiency, Stability of cash flow, simplicity, Traditional regulation of water supply, and conservation of resources Problems rises during the implementation of new Tariff:Problems rises during the implementation of new Tariff: prices effect, difficulties of implementation and realize suitable revenues. prices effect, difficulties of implementation and realize suitable revenues.

8 Component 3 8

9 9 Costs of 1 m3 of billed water against annual O&M costs for the years 1999, 2010 and 2012

10 Component 3 10 Zabid: development over years1999-2010 of revenues against consumers categories Zabid Utility Categories of (m /month) % of Consumers % of water billed % Revenues Consumptio n 199920101999201019992010 Domestic ( 0 - 5 )362812682 & Mosques ( 6 - 10 )372733212713 ( 11 -20 )193032443236 ( Over 20 )3910221339 Government & Schools Over Zero3210 2154 Commercial Over Zero243556

11 Component 3 11 Hadjah: development over years1999-2010 of revenues against consumers categories Categories of (m /month) % of Consumers % of water billed % Revenues Consumptio n 199920101999201019992010 Domestic ( 0 - 5 )43481019611 & Mosques ( 6 - 10 )282316 129 ( 11 -20 )171520161511 ( Over 20 )661612149 Government & Schools Over Zero3434334754 Commercial Over Zero344466

12 Component 3 12 Water and Sewerage expenses per poor household using 5 m3 IndicatorZabidHadjah Water expenses per poor household income using up to 5 m 3 (%)1.272.50 Expenses for sewerage per poor household income using up to 5 m 3 (%) 0.751.4 Total eexpenses for water and sewerage per poor household income using up to 5 m 3 (%) 2.023.90

13 Component 3 13 Zabid applied tariff 1999 average /m3 = 57 YR Hadjah applied tariff 1999 average/m3 = 104 YR

14 Component 3 14 Zabid applied tariff 2010 average /m3 = 118 YR Hadjah applied tariff 2010 average/m3 = 157 YR

15 Component 3 15 Effect of political unrest in Yemen during year 2011 Severe scarcity of resourcesSevere scarcity of resources Endangers the water supply of the population Endangers the water supply of the population Power cuts Power cuts Shortage of fuelShortage of fuel Irregular payments, many customers boycott in not paying their billsIrregular payments, many customers boycott in not paying their bills All caused a cost increase in the servicesAll caused a cost increase in the services Raising of tariffs or a cross-subsidization from the central government were and still not possibleRaising of tariffs or a cross-subsidization from the central government were and still not possible Water utilities faces increasing difficulties to recover their costsWater utilities faces increasing difficulties to recover their costs

16 Component 3 16 Re-construction phase mid 2012 Re-construction phase mid 2012 MWE - implementation of different emergency programsMWE - implementation of different emergency programs Water crises program – German SupportWater crises program – German Support Support selected water utilities to restore the services through providing materials, equipments and spare partsSupport selected water utilities to restore the services through providing materials, equipments and spare parts Hadjah LC and Zabid Utility are running their businesses with lossesHadjah LC and Zabid Utility are running their businesses with losses New tariffs proposal to the respective Board of Director and Advisory CommitteeNew tariffs proposal to the respective Board of Director and Advisory Committee Not approved yet.Not approved yet.

17 Component 3 17 looking forward Board of Director / Advisory Committee should be courageous in taking decision in approving new tariffs to maintain the financial viability, keep servicesBoard of Director / Advisory Committee should be courageous in taking decision in approving new tariffs to maintain the financial viability, keep services For Verification complete the pro-poor tariff studyFor Verification complete the pro-poor tariff study Introduce general guideline for the LCs and Utilities to move toward full cost recoveryIntroduce general guideline for the LCs and Utilities to move toward full cost recovery Adopt energy efficiency programAdopt energy efficiency program Conduct study on renewable energyConduct study on renewable energy

18 Component 3 18 شكرا لاستماعكم Thank you for listening


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