1. Urban water supply The privatization process in Mozambique
Christophe Nothomb
Barcelona,

2. Mozambique Population : about 20 million Urban population : 36%
GNI per capita : ~310 USD
Aid per capita : ~77 USD
Population below poverty line : 54%
Life expectancy at birth : ~42 years
Mobile phone users : 15 per 100 hab.
Inflation : ~8 to 10%
Improved sanitation access : ~31%

3. INVESTMENTS + OPERATIONS + TARIFFS
RATIONALE OF DELEGATED MANAGEMENT FRAMEWORK
INVESTMENTS OPERATIONS TARIFFS
SUSTAINABLE
WATER SERVICES

4. Principles of the Delegated Management Framework
Private Sector Participation (PSP):
Increase efficiency
Technical (reduction of water losses, of chemical consumption, energy, etc.)
Commercial (improve customer relations, billing and collection, etc.)
Training and development of HR
Training
Responsibilities
Perspectives

5. Principles of the Delegated Management Framework
Benefits for the consumers
Service levels
Cost of water
Increase coverage
GoM objectives and MDGs,
via increase in n° of connections
Sustainability of the sector reforms
Debt service
Capacity of attracting funding for investments

6. Institutional Framework
Ministry of Public Works and Housing
Council of Ministers
DNA
(National Water Directorate)
Sets water and sanitation policy
Supervises sector and draft investment plans
Support to semi-urban and rural schemes
ARA-Sul
Issue water permits
Monitor water resources
Ministry of Health
Set drinking water standards
Monitor quality
Performance contract
FIPAG (Assets holding and investment company)
Full investment responsibilities
Local Authorities (Municipalities)
Review investment plans
Lease, Management or Technical Assistance contracts
CRA
Economic regulation
Approval of tariffs
Protection of customers
Águas de Moçambique
Vitens (NL)
???
Subscription contracts
Customers (14 urban centres)

7. Urban Water Supply Reform Process
Civil war up to 92 : very limited investment
1991 : Water law
1995 (revised 2007) : National water policy
Principle of PSP
1998 : Tariff policy
Water as a social but also economic good
1998 : Delegated Management Framework
1999 : Lease contract award to Águas de Moçambique (AdeM) for Maputo
2000 : Major floods
2001 : SAUR quits AdeM
2004 : Revised Lease Contract
2008 : Periodic Review Process

8. Urban Water Service Coverage
MWSP TARGET
73%
DELEGATED
MANAGEMENT
FRAMEWORK
GOVERNMENT TARGET
STATE OWNED UTILITIES
70%
MDG
60%
40%
48%
35%
32%

9. Maputo case Total population: 1.8 Million Peri-urban area
Expansion started in the year 2000
Population:
Growth rate: 6% to 10%
Cement city
Population:
Growth rate: 1%
Peri-urban area
Expansion started in the 80´s
Population:
Growth rate: 2%

10. Official Maputo Water Supply System
Maputo/Matola :
inhabitants,
( in peri-urban areas)
Conventional system in a delegated management framework :
15 years lease to private operator (Águas de Moçambique - AdeM, since 1999)
from public asset holding company (FIPAG)
with an independent regulator : CRA
Main characteristics (2008):
~1000 km network,
~ connections,
350 functioning standpipes,
average distribution time : 12 hrs/day,
38% population coverage
High level of UFW (55% losses) and low collection rate (~80%)

11. Water quality and quantity
Quality improved
Quantity

12. Key performance standards
Non-revenue water
2000 : 44%
2002 : 53%
2004 : 58%
2008 : 55%

13. Collection rates
2000 : ~62%
2002 : ~68%
2004 : ~60%
2008 : ~85%

14. Nr of Customers
2000 : ~78 500
2002 : ~80 000
2004 : ~85 000
2008 : ~

15. Tariffs

16. Cumulative Investment (Maputo)
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
USD (Millions)

17. Results – Evolution of key performance standards
Quality of water
Quantity of water
Nr of connections
Tariffs
Investment
Level of Service
Customer Satisfaction

18. Maputo Water Supply

19. Maputo case- Water Supply
SERVICE PROVIDERS
Formal: AdeM -15 years lease contract
Informal- 427 SSIP
ADEM
Manage the conventional network :
All the historical centre
Most part of the first expansion area
FIPAG´s Investment
SMALL SCALE INDEPENDENT PROVIDERS- SSIP
Serves the two expansion areas with own networks (purely private investment)
Operators
N° of private connection
N° of operational standpipes
Access to water
AdeM
100,000
300
38%
SSIP´s
38000
20%
Domestic water resale
26%

22. Maputo case- SSIP
Water service: metered private connection, standpipes
Water tariffs: 1$/m3, 100$ connection fee (all included)
Water available for the consumers 20h/day (average)

23. Maputo case- SSIP Biggest SSIP´s Mr. Luís Faquene: 7 systems
with 2100 PC
Mr. Calmo Nualane:
2 systems with 2000PC, one with
1500 PC
Mr. Arlindo Xavana:
2 systems with 1900 PC

24. Maputo case- Integration of SSIP
PRINCIPLES
Recognition of SSIP role
Making profit of SSIP know how
SSIP as potential partners in urban water sector
CONSTRAINTS
SSIP´s Low technical capacities
Weak organization: 2 associations covering 50% of the SSIP
Higher Number of different types of SSIP: Network overlaps
VISION
Build on the existing capacities to develop reliable Mozambican water distribution companies

25. Maputo case- Integration of SSIP
CHALLENGES
Enabling environment
Security through licensing
Opportunities for partnerships with water sector institutions and financial entities
Capacity building through partnership
On the job training to create national water companies
FIPAG/SSIP contractual arrangement conducive to building capacity
Maputo water market structuring
Concentration of market : fewer and bigger SSIP
Integration of SSIP´s infrastructure

27. Conclusions Privatization process
Mixed evaluation – private operator
Positive for consumers on water quality, quantity and reliability
Negative for efficiency and customer services
Negative for time spent in contract negotiations
Neutral for tariffs
Positive evaluation – government attitude
Stability and strenghtening of institutions, open attitude
Financiers confidence
Negative for speed of investment implementation
Specific context of small providers services
Move towards « hybrid system »
Challenges
Regulation

28. Thank you