Pro-poor regulation for small town water supply services WASA experience and lessons learned from water supply projects in Lao PDR Presented by: Noupheuak Virabouth Director of the Water Supply Authority (WASA) Deputy Director of Department of Housing and Urban Planning (DHUP), Ministry of Public Works and Transport

2 Water Supply Authority: WASA Roles –Establish and implement a Tariff Policy –Encourage efficiency through benchmarking –Encourage competition in the sector where appropriate –Protect the standard of service customers receive Experiment new scheme strategies –Manages MIREP Programme together with GRET –Encourages improved access to credit

3 WASA Pro-poor measures Challenges regarding servicing the poor –Identify the poor –Increase access to the service –Secure access to the service Pro-poor regulation tools –Tariff policy –Experimentations (MIREP Programme, etc.) World Water Forum #5 – Istanbul – March 19 th, 2009

4 Social Fairness within Tariff Policy Cross-subsidization in favour of the poor –Higher tariffs for commercial customers –Lower connections fees in exchange for higher consumption tariffs –Lower tariffs for lower levels of service Fixed charge –Reduce as much as possible because it discriminates the poor Subsidised connection –Supports subsidised connection fees –Paid through volumetric tariff Affordability –Less than 5% of poor households’ expenses for water budget

5 Experimentations under process – MIREP Programme MIREP Programme Structural Pro-poor benefits Provision of piped water as alternative to bottled water Reduce costs of meeting basic water needs Design of MIREP network specifications Minimize connection and service costs ($50/connection - $110 for NPSE) Connection fee payable in installments Reduce obstacle to network connection Two-tier tariff policyCross-subsidize poor users Competition in concessionaire bidding process Lower investment costs Advocacy to further develop regulatory and credit access enabling framework Lower ‘hidden’ costs for users

6 Experimentations under process – MIREP Programme MIREP Programme Core Pro-poor policy –Free connection for eligible poor households Households matching criteria, within the service area OBA scheme to give incentives for connection disbursed by Provincial W&S Investment Funds –Minimum monthly bill exemption –Targeting process using following indicators 1. Income criteria (inability to afford 16kg of rice/cap/mth) 82,500 Kip/cap/mth ↔ $10/cap/mth 2. House construction material (bamboo) 3. No ownership of agricultural land or livestock World Water Forum #5 – Istanbul – March 19 th, 2009

7 Difficulties to apply national poverty criteria in small towns Some over-estimate Some under-estimate Raises questions for scaling up Time-consuming process Identification process in 6 steps: setting criteria with local authorities, drawing list by village heads, validation by communities, capacity to pay study, validation by district Need for financing: Provincial Investment Funds to be supplemented ! Missing some of the poorest Remote location Not able to pay monthly bill MIREP Programme – Key findings National poverty line (82,500 Kip/cap/mth ↔ $10/cap/mth) Local authorities estimation MIREP final list Meuang Feuang30%3%17% Hin Heup10%47%5% World Water Forum #5 – Istanbul – March 19 th, 2009

8 All households, including the poor, are willing to pay Revealed water expenses before piped water are high e.g. in Hin Heup: average expense = 74,000 Kip/hh/mth (dry season) ↔ $9 /hh/mth Willingness to pay survey e.g. in Hin Heup: average for all households = 19,000 Kip/hh/mth ↔ $2.2 /hh/mth average for poor households = 15,000 Kip/hh/mth ↔ $1.8 /hh/mth Guidelines for affordability: maximum = 5% of income e.g. in Hin Heup: Willingness to pay versus willingness to charge Monthly income 5% of income Water per household Water per capita Poverty line (/household) 470,000 Kip/mth $55 /mth 23,500 Kip/mth $2.7 /mth 10 m3 / month 60 L / cap.day 1 m3 ↔ 2,200 Kip US$ 1 ↔ 8,500 Kip Willingness to pay Water per household Capita per household Water per capita Poor households 15,000 Kip/mth $1.8 /mth 6 m3 / month L / cap.day World Water Forum #5 – Istanbul – March 19 th, 2009

9 Experimentations under process – Small town project Lifeline block –Free connection for all –But lifeline block to mitigate disconnection risk for the poor Example: NPSE Xieng Khouang Province –Two-part tariff: Fixed charge (maintenance fee) : 2,000 Kip/month Volumetric charge: –Cross-subsidy for tariff (via block tariff) 0 – 7 m37 – 15 m3> 15 m3retail 1,400 Kip/m32,350 Kip/m33,850 Kip/m36,000 Kip/m3 World Water Forum #5 – Istanbul – March 19 th, 2009 US$ 1 ↔ 8,500 Kip

10 Experimentations under process – MIREP Programme Stakeholder-cooperative review –Workshop held in MPWT in February 2009 –Raise awareness and start building consensus on pro-poor approaches in the water sector –Various participants : public authorities (national and provincial level), international donors (WSP, UN-Habitat, AFD...) and water suppliers (State owned enterprises and MIREP concessionaires) Options for continued pro-poor policy –Simplify targeting methodology : uses same list as for free health card –Continue to subsidise connections for the poor –Need for accurate and reliable data on the poor and the demand patterns in general, in order to set appropriate levels of tariffs World Water Forum #5 – Istanbul – March 19 th, 2009

Thank you for your attention Mr. Noupheuak Virabouth Water Supply Authority (WASA) Deputy Director of the Department of Housing and Urban Planning, Ministry of Public Works and Transport Lane Xang Avenue, Vientiane Capital, Lao PDR GRET ‘Access to Essential Services’ Cluster Campus du Jardin Tropical - 45b av. de la Belle Gabrielle Nogent sur Marne Cedex, France