Water supply in Phnom Penh
Encyclopedia
Water supply in Phnom Penh is characterized by significant improvements in access, service quality, efficiency, cost recovery and governance since reforms were undertaken in 1993. The number of customers was multiplied by nine, service quality improved from intermittent to continuous supply, water losses were cut dramatically and the city’s water utility went from being bankrupt to making a modest profit. These achievements were recognized through numerous international awards for the city's water utility and its general director.
, the capital of Cambodia, is located on the Mekong River. It has a tropical climate, the hottest month being April. A monsoon occurs between June and October. Both groundwater
and surface water
are used as drinking water sources. Groundwater is accessed via wells and surface water is sourced from the Mekong River. The flow of the Mekong River during the dry season depends heavily on the Tonlé Sap
Lake located about 100km to the Northwest of the city. The lake stores water during the wet season and releases it during the dry season, acting as an important buffer. The Tonlé Sap River between Phnom Penh and the lake reverses its flow twice a year, first filling and then draining the lake.
). External donors started to engage in the country, providing funding for public investments. The newly appointed General Director of the Phnom Penh Water Supply Authority (PPWSA), Ek Sonn Chan, came at a propitious time, but faced major challenges: Only 20-25% of the population were served by piped water and even those received water only 10 hours per day; the workers were underpaid, demoralized and corrupt, helping customers get illegal connections and avoid paying bills; and, due to this state of affairs, combined with very low tariffs and overstaffing, not even a fraction of operating costs were recovered from water users making the utility effectively bankrupt.
In 1996 PPWSA was established by decree as an autonomous public utility with its own separate finances, as opposed to being a department of the municipality as it had been the case previously. The utility's 7-member Board comprises the General Director, representatives of the Ministry of Industry, Mines and Energy (chair), the Ministry of Economy and Finance, the Ministry of Interior, Phnom Penh’s municipal government and PPWSA employees. Its newly gained autonomy allowed the utility to retain any revenues in excess of operating costs to improve services.
Improved water quality. Drinking water quality has improved and the director says he is drinking the tap water without boiling and challenged his customers: “If you get stomachache after drinking the tap water, I will pay you compensation”.
Reaching the poorest. PPWSA established a revolving fund to finance domestic connections to help the poorest connect to the network. The utility serves more than 15,000 families in 123 urban poor communities at subsidized tariffs and connection fees, which can be paid in installments. Poor households are entitled to receive subsidies of 30%, 50%, 70% or 100% of the connection fee, depending upon their financial conditions. These conditions are jointly evaluated by a committee of the utility and local communities. This approach to reach the poor was found after several years of experimentation with unsuccessful approaches. For example, the reselling of water to the poor through "community representatives", an approach that works well in Manila, had failed in Phnom Penh because the "community representatives" resold water at much higher prices than agreed.
Engaging with communities. The utility developed a close relationship with its customers. For example, it provided incentives to members of the public who reported illegal connections and it has set up an effective system to register and resolve complaints. This, together with the fight against small-scale corruption and improvements in service quality, helped to gain broad public acceptance for tariff increases.
Improved finances. Meters were installed for all water connections, the billing system was computerized and non-payment penalties were introduced. As a result, collection efficiency for residential customers increased from 48% to 99.9%. Tariffs were increased in 1994, 1997 and 2001, every time with the required approval of the Prime Minister. In 1995 the utility began to make small profits, which increased substantially after 2000. Is operating
revenue for the 2008 financial year was US$21.9m, out of which it made a profit of US$7.3m on which it paid corporate income tax. In 1996 the utility had proposed a three-step tariff increase over seven years to reach the government's policy goal of full cost recovery. The third step proved to be unnecessary given the substantial efficiency improvements achieved by PPWSA.
Affordability. Although the average water bill increased from US$1 before 1994 to US$5 per month after 2001, tariffs remain low by regional comparison. In 2001 the lowest block of the residential water tariff up to a consumption of 7m3 per month was 550 Cambodian riel
(US$0.14) per m3, followed by a second block up to 15m3 at 770 Riel (US$0.19) per m3. These tariffs are much lower than in some other Southeast Asian cities such as East Manila (US$0.33/m3 in 2008), Kuala Lumpur (US$0.45/m3 in 2007) or Jakarta (US$0.70/m3 in 2005). This can in part be explained by the proximity of Phnom Penh to the abundant water resource of the Mekong River, but also by the efficiency of the utility's operations.
Improved efficiency. Non-revenue water
, an indicator of operational efficiency, was reduced from 72% in 1996 to 6% in 2006. The number of staff per 1000 connections was reduced from 22 to 4, indicating substantially increased labor productivity. Since the number of connections increased more than fivefold, the actual number of staff remained about the same, while they were much more productively employed.
Motivated and qualified staff. Staff salalaries were increased substantially during the reform process. For example, a staff member at a managerial position who was paid 20 USD in 1993 received 200 USD in 2008. Profits are shared with employees. The utility has created a retirement system for its employees which is the first of its kind in Cambodia. It evaluates its employees four times a year and can provide financial incentives as well as disciplinary actions such as delays in salary increases or even salary deductions. The utility also provides substantial training, followed by exams.
(US$29m in loans), the Asian Development Bank
(US$13m in loans) and UNEP provided financial and technical assistance to PPWSA. The external financial assistance totalled approximately USD 165 million between 1993 and 2009. PPWSA also established twinning arrangements between two Australian water utilities and PPWSA.
, indicating a very high level of perceived corruption (see Corruption Perceptions Index
). Hun Sen
, the current Prime Minister and strong man of Cambodia since 1985, and other senior officials in the Cambodian government have been accused by Global Witness
and others of being involved in large-scale corruption. At the same time, PPWSA's efforts to combat small-scale corruption have been well recognized. It thus seems that large-scale corruption at the highest political level and eradicating small-scale corruption at the utility level can coexist. Ek Son Chan, General Director of PPWSA, has thanked Prime Minister Hun Sen for his support in achieving the turnaround of the utility by calling on customers to pay their bills, approving tariff increases and not interfering in managerial decisions.
Role of public and private sector. Concerning The debate about the role of the public and private sector in water supply, Ek Sonn Chan commented that, “it doesn’t matter whether water distribution is done by the private sector or a public agency, as long as these institutions are transparent, independent from political pressures, and accountable.”
Water Prize for dramatically overhauling Phnom Penh's water supply system and demonstrating leadership and innovation in project financing and governance. In 2006 Ek Sonn Chan was awarded the Ramon Magsaysay Award
– the Asian equivalent of the Nobel prize - for Government Service. In 2010 PPWSA receives the Stockholm Industry Water Award
.
Climate and water resources
Phnom PenhPhnom Penh
Phnom Penh is the capital and largest city of Cambodia. Located on the banks of the Mekong River, Phnom Penh has been the national capital since the French colonized Cambodia, and has grown to become the nation's center of economic and industrial activities, as well as the center of security,...
, the capital of Cambodia, is located on the Mekong River. It has a tropical climate, the hottest month being April. A monsoon occurs between June and October. Both groundwater
Groundwater
Groundwater is water located beneath the ground surface in soil pore spaces and in the fractures of rock formations. A unit of rock or an unconsolidated deposit is called an aquifer when it can yield a usable quantity of water. The depth at which soil pore spaces or fractures and voids in rock...
and surface water
Surface water
Surface water is water collecting on the ground or in a stream, river, lake, wetland, or ocean; it is related to water collecting as groundwater or atmospheric water....
are used as drinking water sources. Groundwater is accessed via wells and surface water is sourced from the Mekong River. The flow of the Mekong River during the dry season depends heavily on the Tonlé Sap
Tonlé Sap
The Tonlé Sap is a combined lake and river system of major importance to Cambodia.The Tonlé Sap is the largest freshwater lake in South East Asia and is an ecological hot spot that was designated as a UNESCO biosphere in 1997....
Lake located about 100km to the Northwest of the city. The lake stores water during the wet season and releases it during the dry season, acting as an important buffer. The Tonlé Sap River between Phnom Penh and the lake reverses its flow twice a year, first filling and then draining the lake.
The situation in 1993
A landmark election brought peace to Cambodia in 1993 after more than two decades of war and conflict (for more details see Modern CambodiaModern Cambodia
After the fall of the Pol Pot regime of Democratic Kampuchea, Cambodia was under Vietnamese occupation and a pro-Hanoi government, the People's Republic of Kampuchea was established...
). External donors started to engage in the country, providing funding for public investments. The newly appointed General Director of the Phnom Penh Water Supply Authority (PPWSA), Ek Sonn Chan, came at a propitious time, but faced major challenges: Only 20-25% of the population were served by piped water and even those received water only 10 hours per day; the workers were underpaid, demoralized and corrupt, helping customers get illegal connections and avoid paying bills; and, due to this state of affairs, combined with very low tariffs and overstaffing, not even a fraction of operating costs were recovered from water users making the utility effectively bankrupt.
The turnaround 1993-2006
The General Director began by firing corrupt and incompetent staff, apparently at great personal risk. He said about PPWSA when he took over that “It was bureaucratic and it was full of incompetent staffers. I fired many staff and my friends told me that I would be assassinated”. The remaining staff was encouraged to provide information about illegal connections and received incentive payments. Promotions were based on merit. This created a culture of loyalty and pride among water management employees. Then the utility began a campaign to convince customers that they had to pay their bills if they wanted quality service and slapped heavy fines on illegal connections. PPSWA also introduced an automated billing system, which reduced the opportunities for small-scale corruption by bill collectors.In 1996 PPWSA was established by decree as an autonomous public utility with its own separate finances, as opposed to being a department of the municipality as it had been the case previously. The utility's 7-member Board comprises the General Director, representatives of the Ministry of Industry, Mines and Energy (chair), the Ministry of Economy and Finance, the Ministry of Interior, Phnom Penh’s municipal government and PPWSA employees. Its newly gained autonomy allowed the utility to retain any revenues in excess of operating costs to improve services.
Results
Increased access. The number of customers increased more than fivefold, leading to an increase in the served population from 25% (1993) to 90% (2006). The capacity of the distribution network was increased from 65,000 m³/day to 235,000 m³/day. Water vendors which charged up to five times more for water than what consumers pay to the utility now have all but disappeared from the PPWSA service area.Improved water quality. Drinking water quality has improved and the director says he is drinking the tap water without boiling and challenged his customers: “If you get stomachache after drinking the tap water, I will pay you compensation”.
Reaching the poorest. PPWSA established a revolving fund to finance domestic connections to help the poorest connect to the network. The utility serves more than 15,000 families in 123 urban poor communities at subsidized tariffs and connection fees, which can be paid in installments. Poor households are entitled to receive subsidies of 30%, 50%, 70% or 100% of the connection fee, depending upon their financial conditions. These conditions are jointly evaluated by a committee of the utility and local communities. This approach to reach the poor was found after several years of experimentation with unsuccessful approaches. For example, the reselling of water to the poor through "community representatives", an approach that works well in Manila, had failed in Phnom Penh because the "community representatives" resold water at much higher prices than agreed.
Engaging with communities. The utility developed a close relationship with its customers. For example, it provided incentives to members of the public who reported illegal connections and it has set up an effective system to register and resolve complaints. This, together with the fight against small-scale corruption and improvements in service quality, helped to gain broad public acceptance for tariff increases.
Improved finances. Meters were installed for all water connections, the billing system was computerized and non-payment penalties were introduced. As a result, collection efficiency for residential customers increased from 48% to 99.9%. Tariffs were increased in 1994, 1997 and 2001, every time with the required approval of the Prime Minister. In 1995 the utility began to make small profits, which increased substantially after 2000. Is operating
revenue for the 2008 financial year was US$21.9m, out of which it made a profit of US$7.3m on which it paid corporate income tax. In 1996 the utility had proposed a three-step tariff increase over seven years to reach the government's policy goal of full cost recovery. The third step proved to be unnecessary given the substantial efficiency improvements achieved by PPWSA.
Affordability. Although the average water bill increased from US$1 before 1994 to US$5 per month after 2001, tariffs remain low by regional comparison. In 2001 the lowest block of the residential water tariff up to a consumption of 7m3 per month was 550 Cambodian riel
Cambodian riel
For earlier Cambodian currencies, see Cambodian tical and Cambodian franc.The riel is the currency of Cambodia. There have been two distinct riel, the first issued between 1953 and May 1975. Between 1975 and 1980, the country had no monetary system. A second currency, also named "riel", has been...
(US$0.14) per m3, followed by a second block up to 15m3 at 770 Riel (US$0.19) per m3. These tariffs are much lower than in some other Southeast Asian cities such as East Manila (US$0.33/m3 in 2008), Kuala Lumpur (US$0.45/m3 in 2007) or Jakarta (US$0.70/m3 in 2005). This can in part be explained by the proximity of Phnom Penh to the abundant water resource of the Mekong River, but also by the efficiency of the utility's operations.
Improved efficiency. Non-revenue water
Non-revenue water
Non revenue water is water that has been produced and is “lost” before it reaches the customer. Losses can be real losses or apparent losses . High levels of NRW are detrimental to the financial viability of water utilities, as well to the quality of water itself...
, an indicator of operational efficiency, was reduced from 72% in 1996 to 6% in 2006. The number of staff per 1000 connections was reduced from 22 to 4, indicating substantially increased labor productivity. Since the number of connections increased more than fivefold, the actual number of staff remained about the same, while they were much more productively employed.
Motivated and qualified staff. Staff salalaries were increased substantially during the reform process. For example, a staff member at a managerial position who was paid 20 USD in 1993 received 200 USD in 2008. Profits are shared with employees. The utility has created a retirement system for its employees which is the first of its kind in Cambodia. It evaluates its employees four times a year and can provide financial incentives as well as disciplinary actions such as delays in salary increases or even salary deductions. The utility also provides substantial training, followed by exams.
External cooperation
External cooperation played a major role in bringing about the turnaround of the Phnom Penh water utility. During the first years the utility relied on grants, while after its financial situation improved and it became an administratively and financially separate entity it also took up loans. Japan (US$85m in grants), France (US$21m in grants and US$14m in loans), the World BankWorld Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
(US$29m in loans), the Asian Development Bank
Asian Development Bank
The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...
(US$13m in loans) and UNEP provided financial and technical assistance to PPWSA. The external financial assistance totalled approximately USD 165 million between 1993 and 2009. PPWSA also established twinning arrangements between two Australian water utilities and PPWSA.
Governance context
Corruption. In 2010 Cambodia was ranked 154th out of 178 countries in the world in terms of corruption perception in a ranking published by Transparency InternationalTransparency International
Transparency International is a non-governmental organization that monitors and publicizes corporate and political corruption in international development. It publishes an annual Corruption Perceptions Index, a comparative listing of corruption worldwide...
, indicating a very high level of perceived corruption (see Corruption Perceptions Index
Corruption Perceptions Index
Since 1995, Transparency International publishes the Corruption Perceptions Index annually ranking countries "by their perceived levels of corruption, as determined by expert assessments and opinion surveys." The CPI generally defines corruption as "the misuse of public power for private...
). Hun Sen
Hun Sen
Hun Sen is the current Prime Minister of Cambodia.He has been the sole leader of the Cambodian People's Party , which has governed Cambodia since the Vietnamese-backed overthrow of the Khmer Rouge in 1979...
, the current Prime Minister and strong man of Cambodia since 1985, and other senior officials in the Cambodian government have been accused by Global Witness
Global Witness
Global Witness is an international NGO established in 1993 that works to break the links between natural resource exploitation, conflict, poverty, corruption, and human rights abuses worldwide. The organisation has offices in London and Washington, D.C.. Global Witness states that it does not have...
and others of being involved in large-scale corruption. At the same time, PPWSA's efforts to combat small-scale corruption have been well recognized. It thus seems that large-scale corruption at the highest political level and eradicating small-scale corruption at the utility level can coexist. Ek Son Chan, General Director of PPWSA, has thanked Prime Minister Hun Sen for his support in achieving the turnaround of the utility by calling on customers to pay their bills, approving tariff increases and not interfering in managerial decisions.
Role of public and private sector. Concerning The debate about the role of the public and private sector in water supply, Ek Sonn Chan commented that, “it doesn’t matter whether water distribution is done by the private sector or a public agency, as long as these institutions are transparent, independent from political pressures, and accountable.”
Awards
PPWSA received the 2004 Asian Development BankAsian Development Bank
The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...
Water Prize for dramatically overhauling Phnom Penh's water supply system and demonstrating leadership and innovation in project financing and governance. In 2006 Ek Sonn Chan was awarded the Ramon Magsaysay Award
Ramon Magsaysay Award
The Ramon Magsaysay Award is an annual award established to perpetuate former Philippine President Ramon Magsaysay's example of integrity in government, courageous service to the people, and pragmatic idealism within a democratic society. The Ramon Magsaysay Award is often considered Asia's Nobel...
– the Asian equivalent of the Nobel prize - for Government Service. In 2010 PPWSA receives the Stockholm Industry Water Award
Stockholm Industry Water Award
The Stockholm Industry Water Award recognizes impressive contributions made by businesses and industries to improve the world water situation. The honorary prize has been awarded annually since its inception in 2000 with an aim to encourage and reward improved business performance, production and...
.