Institute of Water Policy Staff Papers 2011

A Ranking Scheme for Asian Water Utilities

43 *฀ Visiting฀ Professor,฀ Lee฀ Kuan฀ Yew฀ School฀ of฀ Public฀ Policy.฀ Research฀ advice฀and฀collaboration฀of฀Prof.฀V.S.฀Chary฀and฀Mr.฀Vaibhav฀Purandare,฀ Research฀Associate,฀both฀of฀ASCI,฀Hyderabad฀are฀gratefully฀acknowledged.฀ The฀project฀was฀the฀brainchild฀of฀Prof.฀Seetharam,฀Visiting฀Professor฀and฀ Founding฀Director฀of฀the฀Institute฀of฀Water฀Policy฀in฀the฀Lee฀Kuan฀Yew฀ School฀of฀Public฀Policy.฀His฀active฀involvement฀in฀the฀project฀and฀expert฀ advice฀contributed฀to฀the฀fine-tuning฀of฀the฀findings. A฀Ranking฀Scheme฀for฀Asian฀Water฀Utilities Bhanoji฀Rao* This฀paper฀is฀aimed฀at฀exploring฀a฀ranking฀scheme฀for฀40฀Southeast฀ (SE)฀Asian฀water฀utilities฀from฀4฀countries฀(1฀from฀Laos฀PDR,฀5฀ from฀Malaysia,฀17฀from฀The฀Philippines฀and฀17฀from฀Vietnam)฀and฀ 20฀Indian฀water฀utilities.฀Data฀are฀from฀the฀Data฀Book฀of฀Southeast฀ Asian฀Water฀Utilities,฀2005฀and฀the฀2007฀Benchmarking฀and฀Data฀ Book฀of฀Water฀Utilities฀in฀India.฀The฀data฀bases฀provide฀13฀standard฀ indicators,฀out฀of฀which฀three฀are฀used฀to฀compute฀a฀service฀delivery฀ index฀(SDI)฀and฀4฀to฀compute฀an฀operational฀efficiency฀index฀(OEI).฀ The฀ inter฀ correlation฀ between฀ the฀ two฀ indexes฀ was฀ a฀ very฀ low฀ – 0.19฀in฀the฀SE฀Asian฀sample฀and฀0.29฀in฀the฀Indian฀sample.฀The฀ lack฀of฀a฀strong฀relation฀between฀the฀two฀indexes฀could฀be฀evidence฀ of฀ the฀ fact฀ that฀ priority฀ is฀ given฀ to฀ supply฀ drinking฀ water฀ at฀ any฀ cost฀ rather฀ than฀ worry฀ unduly฀ about฀ the฀ operational฀ efficiency฀ of฀ the฀ utilities.฀ Combining฀ SDI฀ and฀ OEI,฀ we฀ obtain฀ a฀ performance฀ index฀(PI)฀and฀the฀top฀5฀utilities฀by฀location฀are฀3฀in฀Vietnam฀and฀฀ 1฀each฀in฀Malaysia฀and฀the฀Philippines.฀The฀Indian฀utilities฀fall฀short฀ most฀ prominently฀ on฀ the฀ duration฀ of฀ water฀ supply.฀There฀ are฀ also฀ major฀differences฀between฀the฀variation฀in฀scores฀on฀OEI฀between฀ Indian฀and฀SE฀Asian฀utilities.฀While฀we฀applaud฀the฀initiative฀on฀ getting฀ such฀ valuable฀ information฀ from฀ the฀ participating฀ utilities,฀ it฀ is฀ perhaps฀ time฀ the฀ whole฀ exercise฀ is฀ evaluated฀ for฀ content฀ and฀ accuracy฀and฀upgraded฀both฀in฀terms฀of฀spatial฀and฀data฀coverage. 03฀IWP฀Bhanoji.indd฀฀฀43 6/10/11฀฀฀9:48:39฀AM Bhanoji฀Rao 44 1.฀ The฀Water฀Utilities฀Data฀ Thanks฀ to฀ the฀ efforts฀ of฀ the฀ Asian฀ Development฀ Bank฀ (ADB)฀ and฀ the฀ collaborating฀ water฀ utilities,฀ we฀ now฀ have฀ comprehensive฀ data฀ bases฀on฀some฀of฀the฀Asian฀utilities,฀covering฀4฀countries฀in฀Southeast฀ Asia฀ and฀ India.฀ Performance฀ data฀ on฀ utilities฀ in฀ 40฀ urban฀ areas฀ are฀ provided฀in฀the฀Data฀Book฀of฀Southeast฀Asian฀Water฀Utilities฀2005฀issued฀ in฀ November฀ 2007.฀ The฀ Data฀ Book฀ 2005฀ covered฀ 40฀ cities฀ and฀ the฀ respective฀utilities฀in฀4฀countries:฀Lao฀PDR,฀Malaysia,฀Philippines฀and฀ Vietnam฀ (Annex฀ 1).฀ For฀ each฀ water฀ utility,฀ data฀ are฀ provided฀ on฀ 13฀ indicators฀(Table฀1). Table฀1 Utilities฀Data:฀The฀Thirteen฀Indicators ฀ 1.฀ Water฀supply฀coverage฀(%):฀=฀[population฀served]฀×฀100฀/฀ [total฀population฀in฀the฀present฀service฀area] COV ฀ 2.฀ Average฀daily฀water฀availability฀in฀hours AVI ฀ 3.฀ Per฀capita฀consumption฀(l/c/d)฀=฀[total฀annual฀domestic฀ consumption฀(m3)฀×฀1,000/365]฀/฀[number฀of฀people฀served] CON ฀ 4.฀ Production/population฀(m3/d/c)฀=฀[annual฀production฀volume฀ (m3)฀/365]฀/฀[number฀of฀people฀served] PROD ฀ 5.฀ Non฀revenue฀water฀(%)฀=฀[total฀annual฀production฀(m3)฀–฀total ฀ billed฀consumption฀(m3)]฀×฀100/[total฀annual฀production฀(m3)] UNW ฀ 6.฀ Metered฀connection฀as฀%฀of฀total MCN ฀ 7.฀ Operating฀ratio฀=฀[annual฀O&M฀cost฀(US$)]฀/฀[annual฀ revenue฀(US$)] OR ฀ 8.฀ Accounts฀receivable฀(months฀equivalent)฀=฀[accounts฀receivable฀ at฀end฀of฀the฀fiscal฀year]฀/฀[total฀annual฀billings/12] ARM ฀ 9.฀ Collection฀efficiency฀(%)฀=฀[total฀annual฀collections฀(US$)฀/฀ total฀annual฀billings฀(US$)]฀×฀100 RC-Eff 10.฀ Average฀tariff฀(US$/m3)฀=฀[total฀annual฀billing฀(US$)]฀/฀[total฀ annual฀consumption฀(m3)] AT 11.฀ Fee฀charged฀for฀new฀connection NCF 12.฀฀Capital฀expenditure/connection฀(US$)฀=฀[total฀capital฀expenditure฀ ฀ over฀the฀last฀5฀years฀(US$)฀/฀5]฀/฀[number฀of฀utility฀connections] CEC 13.฀ Staff/1,000฀connections฀ratio฀=฀[number฀of฀utility฀staff]฀/฀ [number฀of฀utility฀connections/1,000] ST/C 03฀IWP฀Bhanoji.indd฀฀฀44 6/10/11฀฀฀9:48:40฀AM 45 A฀Ranking฀Scheme฀for฀Asian฀Water฀Utilities The฀following฀statement฀from฀the฀Preface฀to฀the฀Data฀Book฀2005฀ provides฀ an฀ explanation฀ on฀ how฀ the฀ data฀ are฀ collected.฀ “Information฀ for฀the฀Data฀Book฀was฀derived฀from฀questionnaires฀designed฀by฀ADB,฀ adopted฀by฀South฀East฀Asia฀Water฀Utility฀Network฀(SEAWUN)฀and฀ agreed฀upon฀and฀completed฀by฀the฀participating฀utilities.฀Much฀effort฀ has฀gone฀into฀confirming฀the฀accuracy฀and฀consistency฀of฀information฀ provided฀ by฀ the฀ utilities.฀ Many฀ clarifications฀ were฀ sought...