The City Nazim of Karachi initiated steps to re-structure the Karachi Water and Sewerage Board (KWSB) while presiding over a high level meeting (Dawn, 28 November 2004).

From the limited details that were revealed to the press, it was found that the emphasis has been given to the stocktaking of real estate assets owned by the KWSB.

The Nazim has also directed the concerned officers to take measures to revise the tariff structure of water and sanitation service. Apparently these steps have been taken in follow-up of the president's directives to arrest the rising financial deficit of the KWSB.

It is not clear whether these attempts are done to improve the institutional capacity of the board for enhanced service delivery or there are clandestine motives behind it.

It shall be useful to review the current status of service delivery by the KWSB and the various attempts towards institutional re-organisations in the retrospect to assess the current move.

Karachi inherited a reasonably developed piped water supply system from the British administration. However, soon after independence, the city experienced one of the fastest phase of growth. The population multiplied 21/2 folds in just four years between 1947 and 1951.

Consequently, a plan was made to enhance the water supply from Indus source in 1953. Karachi Joint Water Board (KJWB) was constituted as the institutional mechanism to undertake this task. Many periodical enhancements in the supply were made thereafter.

The Karachi Development Authority (KDA) was entrusted to undertake bulk water supply schemes for the city while Karachi Metropolitan Corporation (KMC) was responsible for the supply to the consumers as well as recovery of water charges.

The KMC also controlled the sewerage system of the city. To streamline the water and sewerage service, Karachi Water Management Board (KWMB) was constituted in 1981. It was responsible for water supply to the entire metropolitan area of Karachi as well as cost recovery.

Soon it was recognised that due to inadequate legislative covers and administrative powers, the KWMB was not proving as effective solution. Under the advice of the World Bank, the Karachi Water and Sewerage Board was formed in 1983. This was done through an exclusive piece of legislation titled Sindh Local Government (Amendment) Ordinance, 1983. The Mayor of Karachi was made Chairman of the Board. It had a Managing Director to serve as the Chief Executive.

It had expanded powers and functions which included bulk water supply arrangements from the source; provision of retail water supply connections to consumers; undertake operation, maintenance and construction of water and sewerage works; collect water and sewerage charges from the consumers; undertake forward planning for emerging needs and requirements; impose penalties on defaulters; maintain accounts and records of the Board and prepare tariff proposals to KMC.

In all routine policy matters, KMC was the deciding authority. In 1996, the Sindh Assembly passed an act providing greater legal and administrative authority to KWSB. Its status changed from an affiliate organ of KMC to a fully autonomous body with its own board of governors drawn from the Government of Sindh.

A massive change was created in the local government setup by the promulgation and enforcement of Sindh Local Government Ordinance 2001. The KWSB, like other water and sanitation agencies of the cities, was to be devolved in the City District Government as per proviso of the SLGO (Amendment) 2002.

However there was no time frame given for this transition. The nature, extent and details of transition were to be decided as per the administrative convenience determined by the GoS and CDGK.

The case of devolution of KWSB became anomalous since the specified time frame and dead line pertinent to the spirit of the overall local government setup could not be met. The transition phase is still not complete as yet

In terms of performance, the KWSB experienced serious short comings during the past two decades. KWSB has accumulated a total debt of over 46 billion which stands as a large scale liability.

Its listed consumers are around 1.1 million whereas recoveries could only be made from 162,000 - a mere 7 percent of the total number. Massive leakages and thefts contributed to a net loss of 35 percent of supplied quantities.

An informal water market evolved which thrived with the connivance of some of KWSB staff members, water vendors, other operators and local area touts in low income and commercial / industrial areas. On assumption that this state of affairs was incurable, the World Bank advised the Government to initiate a private sector participation strategy (PSP) in 1994-95.

A World Bank mission on water and sanitation visited Karachi to hold discussions with the then Chief Minister (CM) Sindh and offered support to the provincial government for exploring the possibility of PSP as a solution to the worsening situation of water and sanitation.

At the invitation of the Sindh government, a follow up World Bank mission in January 1995 presented to the then CM a blueprint for radical reform of Karachi's water and sanitation sector with PSP as the focal theme. KWSB was advised of these deliberations after a policy decision had been taken by the provincial government.

World Bank continued to lead the PSP policy affairs. It suggested a shortlist of eight leading international organizations possessing vast experience in water sector privatization for consideration of the Sindh government.

On the advice of the World Bank, the CM, senior officials of the government and the KWSB attended a PSP seminar in Paris in June 1995 to demonstrate the commitment of the government to the idea of PSP.

On his return, the CM constituted a high-powered Steering Committee to oversee the PSP consultancy and to ensure that this initiative would not fall prey to bureaucratic red tape. A detailed terms of reference was prepared to streamline the various planned procedures and stages in private sector participation in KWSB.

The government advocated for privatization from different fora. The ministers in their speeches to the Sindh Assembly repeatedly gave their resolve to implement the PSP as a top priority task during 1995-96.

Similarly, the management of KWSB was also vocal about the issue through press briefings and seminars. It also published promotional literature in Urdu and English languages on the subject.

As a result of well-defined campaign, print and electronic media gave good coverage to various developments, covering almost all aspects of PSP in KWSB. During the public awareness campaign, efforts were made to ensure that accurate and impartial information could be made available with regard to PSP strategies as proposed by the consultants and approved by the GoS.

The KWSB opined that the PSP had the capacity to generate an efficient and equitable water supply and sanitation system that will be available to all the cross sections of the society.

According to the government PSP aimed at improving the water supply and sanitation for all the residents of the city without the reservation of higher or lower income groups in the city.

Independent analysis showed a different perspective. From the range of stakeholders that were associated with the water and sanitation, the apparent beneficiaries would be all but the urban poor who resided in unplanned areas without any legal title or regularized status.

Many procedural steps were completed such as inviting bids and preliminary scrutiny. However, the political situation in the province led to retardation of the process. Also, certain quarters have approached the Sindh High Court (SHC) against the PSP.

Trade unions, ex-officers of KWSB and citizens' groups had been active in its regard. The SHC issued orders to temporarily freeze the whole process. While the process was temporarily frozen by the Sindh High Court, it was found that the Government of Sindh has recently begun exploring the possibilities of the privatization of KWSB.

The Government of Sindh in several statements, expressed the keen interest to look into the possibilities of exploring into the issues of privatization afresh around 2000-2001. This aspect raised many concerns among the pertinent stakeholders.

The stake holders who comprised consumers of various ranks and profiles, professional experts on water and sanitation, former city administrators, former heads of KWSB, political groups and community organisations cited their views on privatisation of KWSB and subsequently the water and sanitation services.

Series of workshops, organised/structured research by academic institutions such as NED University and Urban Resource Centre helped document and analyse this situation during the past two years. This extensive research gave rise to many conclusions.

The privatization strategy that was prepared by the concerned decision makers only offers remedies the financial part and does not guarantee a logical service improvement. In the prevailing political and administrative climate of Sindh, the privatization of KWSB on the present format would be a difficult proposition to implement.

Absence of commitment from the different ranks of management of KWSB would pose a serious problem in the application of privatization strategy. The dynamics that led to the creations and application of privatization clearly suggested that it has been imposed as a macro level decision without gauging the fundamental ground realities.

While the KWSB had been declared as financially impotent, the reasons that have led to this state of affairs were neither documented nor analysed during the decision making. The various linkages that existed in the water supply and sanitation sector are not accounted for.

From the proposed privatization strategy, there appeared no convincing evidence as to how the system would improve after privatization since the proposed private operator was advised to focus only on tariff enforcement and improving revenue collection. Compound after effect of privatization of water at the proposed tariff rates 300 times higher offer five years would be very high, though it was not properly analysed.

It must be clearly understood that the water supply management of Karachi needs a comprehensive situation analysis. It requires detailed stock taking of every aspect of the service including water sources assessment, different grades of bulk water transmission, retail distribution, operation and maintenance and revenue recovery.

If CDGK is sincere then it must initiate this process for future water supply planning on firm basis. The experiment of PSP has also established that any clandestine attempt to privatisation shall neither be accepted by a sizable stake holders nor shall prove viable if undertaken without consultation and foresight.