Service Coverage

In addition to improving the performance of the system, municipalities often seek to develop partnership arrangements that explicitly expand system coverage. This expansion leads to the fulfilment of all types of municipal objectives: physical, political, social, economic, financial and institutional (see Box 7.1). At the simplest level, a partnership framework (and then the tender and contract documents) can include requirements for the partnership to extend the services to specified areas over a specified period of time. This is often referred to as the 'expansion mandate'. For example, the water and sanitation arrangement in Buenos Aires, illustrated in Box 7.3, originally required that water supply connections be increased from 70 to 100 per cent and sewerage connections be increased from 58 to 95 per cent over a 30-year period.

Service expansion can create opportunities. For the private sector, new consumers are added and revenues are increased; for the municipality, customer satisfaction improves, potentially increasing the pool of satisfied voters; for consumers, community involvement in service expansion can reduce costs and increase effectiveness,1 access is improved and development opportunities can build local capacity for other poverty reduction activities. At the city-wide level, improved services and infrastructure may also open up new areas for economic development.

Executing expansion mandates, however, often introduces a host of difficult issues to be resolved within the partnership framework. These include, for instance, that:

•  public or private financing for the expansion may be difficult, time consuming and expensive to obtain;

•  more detailed information on the existing delivery system and alternative solutions for expansion may come to light as the partnership proceeds, requiring the renegotiation of specifications and agreement on revised timetables for construction;

•  the constraints of land tenure may require political and administrative action;

•  water supply upgrade may need to be coordinated with sanitation upgrade, ensuring that large amounts of water are not provided without adequate drainage and sewerage; and

•  the costs of connection may be out of the reach of poorer groups.

Targets for expanding service coverage to poor areas will generally need to be accompanied by agreed (and enforced) timetables and incentives. In some of the first PPPs established the complexities and costs of expansion in poor areas were given a low priority; operators simply met coverage targets by carrying out work in less onerous, less risky and less costly areas first. To avoid this pitfall, expansion mandates over long periods, such as 30 years, should probably be further defined with short- and medium-term targets (e.g., 10 per cent in two years, 30 per cent in four years etc.) and specific identification of areas within the city where expansion should occur. This then needs to be enforced. While this was established in the case of the Buenos Aires' PPP, the lack of clarity and enforcement power on the part of the regulator has now muddied the definition of the expansion mandate (see Box 7.2).

In municipalities where there is a chronic deficiency in network services,2 the framework should also define the interim arrangements for better service provision. A pro-poor arrangement will not leave people without any services for an extended period, but should recognise the need for staged improvements and temporary (short- or medium-term) solutions. In relation to water and sanitation, this may involve ensuring reliable, good quality communal water supplies or toilet facilities, or tanker water and septic tanks in the short- to medium-term. Some poor communities will require incremental upgrading whether or not household connections are going to reach them eventually. This is discussed further in the following section on service options.

As a part of the partnership preparation and strategic planning discussed in Chapter 4, consideration of service coverage requirements will be influenced by an examination of the broad range of ways in which people currently access services. The statement that a neighbourhood 'does not have water supply' is naïve: most households will have devised means to obtain water and dispose of waste, albeit informally or illegally.

Examination of existing delivery mechanisms will help in identifying the local assets to be included in partnership arrangements, such as the water tankers in Lima or the rag-pickers in Hyderabad. It will also help to determine whether existing arrangements are exploitative and could be improved through increased regulation. The critical point is that strategies for service expansion must be developed in such a way as to increase, not decrease, the choices the poor can make and to build on the assets they have already established.

This analysis will include informal providers, and information on these providers should be as detailed as possible in order to understand why the poor have opted for that service (Do they have a choice? Or does that provider offer conditions not available elsewhere?) An analysis should document annual costs and quality, the method of delivery, the details of the way the service is used, and the cost of the current provision.

Existing services may be communal or shared. The increasingly common practice of removing such existing services in efforts to achieve certain universal standards of service might be financially advantageous (to the private operator) and politically acceptable, but it often results in reduced choice or access for the poorest and most vulnerable. Efforts to extend coverage to areas currently serviced by communal supplies need to address the implications and effects of removing the only supply available to poorest households. In particular, incremental improvements can be achieved through phased construction programmes and graduating improvements to the levels of service.

The other primary means by which the poor gain access to basic services is through illegal or unlawful means (e.g., obtaining water and electricity through illegal connections and disposing of waste through illegal dumping). Private operators are generally quick to ascertain how much unaccounted-for water is actually being used in low-income neighbourhoods (often by the non-poor as well). Unlike the government, which might have turned a blind eye to these practices, the private sector is unlikely to tolerate them. In order to achieve cost efficiency these illegal connections may be removed or metered. If the illegal connection is simply destroyed, it will either reappear one night or a community will be left without access to water, until it finds another way. Municipalities should try to broker a deal and create community solutions with neighbourhoods that are illegally tapping into water supplies (for instance, fixing a community contribution that guarantees supply until upgrades are agreed and implemented).3

Service expansion into poor areas will include consideration of the following factors (discussed in greater detail below):

•  the existing infrastructure and service assets;

•  the physical constraints of land;

•  the existing land tenure arrangements;

•  the role of existing, perhaps informal, service providers;

•  the levels of service that poor consumers are demanding and the options for incremental improvements;

•  the cost of improved services; and

•  the impacts of expanded coverage on households in poor communities.

The problems of service expansion are accentuated where partnership arrangements are targeting poor areas. While many of the problems are common to service delivery, irrespective of the operator, many others are created by the complexities of the incentive structures inherent in PPPs. Policy-makers must recognise that municipalities may need support to introduce expansion mandates that meet a pro-poor agenda; municipal leaders should seek specialist support to assist them in achieving municipal objectives.