MAJOR infrastructural agencies are being converted into corporate entities. UNDP and the World Bank advisors met the seniors officials of the provincial government of Sindh on September 14 to discuss as to how to turn the Karachi Water and Sewerage Board (KWSB) into a company. The proposal has already approved for speedy implementation.

The Sindh government has also set up Karachi Infrastructure Development Company. The government will regulate these corporates while the interest of consumers/users will be looked after through stakeholder consortia.

Apparently, these changes will impact on the lives and performance of people. There are many pre-requisites that may be considered in order to get the best out of the impending changes.

An objective stock taking exercise of existing infrastructural assets is an important priority. Earlier, the stock-taking was through desk reviews based on the documents available with concerned agencies. The existing infrastructural components such as water supply mains, pumping devices, secondary and tertiary lines and reservoirs do not correspond to the records. The same applies to other utilities such as gas and electricity. Illegal connections, overlapping lines and linkages, wear and tear as well as locational deviation are some of the common ailments.

On a positive note, there are sizable investments undertaken by people in infrastructure, especially in informal urban settlements. People have laid down lane level sewers, water distributors and even electricity conduits in different localities in order to link up with trunk infrastructural supplies.

In any exercise of corporatization, the unique status of people’s ownership of lane or community level infrastructure needs to be accounted for. The public utility agencies do not have any right to change the ownership status of those infrastructural components that have been directly financed by private/community initiatives. A well meaning documentation exercise will be very useful to outline these complex but crucial matters.

The stocktaking of infrastructure and its analysis shall also generate a useful knowledge base for future planning and management of systems. A baseline of infrastructural situation is likely to emerge that shall be useful in the process of planning, expansion and extrapolation of infrastructural networks.

Human resource re-organisation is another vital issue. Existing strength of utility agencies display a mix of competent and incompetent staff. Whenever restructuring begins, it’s focus is converged at retrenchment and witch-hunting. The existing staff takes up retaliatory stand and moves to defeat the purpose of restructuring itself. An appropriate approach would be to promote the sense of confidence and security amongst the existing cadres; promote the most competent individuals to acceptable ranks and gradually nurture a culture of hard work.

The common ailments include declining capacities of service delivery, disregard to consumer satisfaction, line losses, thefts, selective recovery of revenue, inadequate preparedness to carry out routine maintenance and repairs, obsolete and cumbersome procedures of procurement of materials and execution of work, inefficient contractual mechanisms, highly centralized decision making pertinent to operational routines and application of orthodox approaches in contrast to operational requirements.

Debt burden has risen on many agencies including the KWSB. A preliminary estimate is that the KWSB has a debt portfolio amounting to over Rs46 billion. The revenue recovery has been dismal. The board has never been able to recover more than 10 percent of its dues from a consumer base that stretches to over 1.1 million. Many government departments are chronic defaulters. Despite the fact that army men have headed the institution for last 10 years, not much benefit has come out of it.

Studies in peri-urban areas reveal that KWSB has been efficient in sending the bills without providing water! Similarly, electricity bill of an honest consumer continues to rise while electricity charges on a palatial house stagnate to a minimum baseline due to invisible application of the clout. Such practices erode the performance of the organisations very rapidly.

An important aspect in infrastructural management is that the sector has been heavily influenced by donor preferences, policies, programmes, packages and guidelines. It is argued by utility agencies that they have limited funds for development. Hence, they are forced to accept donor assistance. To some extent, this is a valid point. The KWSB balance sheets for past three years show that more than two-third budget is spent on the recurring non-development heads. The same is also applicable for other infrastructural agencies.

However, donor dependence is not a sustainable option. It will only increase the debt burden without commensurate capacity to service the loans. Domestic resource mobilisation must be seriously considered. Infrastructural development and management through public-private partnerships is an option that has satisfactorily worked in many countries. For example, in Santiago-Chile, the government devised a targeted support package for water supply through public- private partnerships. Full charges were recovered from middle and upper-income groups while subsidy was extended to lower income households. System seemed to have worked very well.

During negotiations with donors on corporatization of infrastructure, the track record of donors must be carefully reviewed. In the present case, ADB has approached the government. The past performance of ADB itself has been unsatisfactory on many counts. Most of the assistance packages have increased the debt burden without necessarily achieving the targeted outputs.

During 2004, the audit reports prepared by the Operations Evaluation Department (OED) of ADB mentioned that the bank has funded 217 projects in Pakistan so far. Out of this, 67 have been evaluated. Two-third of these projects were rated as unsuccessful.

Pakistan has accumulated a debt of $2.6 billion due to such unsuccessful projects. Design deficiencies, time lags, lack of adequate benefit monitoring, lack of proper consultation with stakeholders, negative environmental impacts and cost over-runs were some common reasons.

Times are such that provision of subsidies to poor shall not sustain. However, the corporatization of utilities must ensure rise in the level of service, uniform procedures to ensure access to all, affordable tariff structure and a mechanism for addressing regulatory issues.

Consumers pay for an appropriate level of service. When quality of service declines, it has a negative impact on revenue recovery.