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Transformation of the Phnom Penh Water Supply Authority

In a developing country, being able to drink safely from the tap is very usual. What is even more unusual – this turnaround happened in fewer than 15 years, the water is fully priced, and yet, there is universal coverage for all households.

Content Table

The country – Cambodia. The city - Phnom Penh.

In 1993, Ek Sonn Chan was appointed the Director of Phnom Penh's Water Supply Authority (PPWSA).  It was only in 1991, that the country had a new constitution and in 1993, an elected government. At the time of Ek Sonn Chan’s appointment, only one-fifth of the city had access to the city's 280 km of cast iron pipes. Water flowed only for 10 hours a day and more than half was lost through leaks. Most of the pipes were 70 years old. There was almost no formal way to be connected to the city's water supply. You had to fork out US$1,000 to US$5,000 to buy the favour of water officials.

Only 12% of the PPWSA’s 26,881 customers had water meters and the collection ratio was only 50%. In addition, the PPWSA carried a heavy bureaucratic burden - with 22 staff per 1,000 connections. Not surprising, the PPWSA was constantly in the red, spending twice as much as what it managed to collect from its customers. 

At the time, Ek Sonn Chan was 43, and a low-profile civil servant in an obscure department working on the city's electricity grid.  But he was a man who dreamt big, after seeing what other countries could do.

“My dream was to bring enough safe water to the Phnom Penh people at a reasonable price. I never knew that we could drink water from the tap, because I was educated locally, and coming from the Khmer Rouge regime, we knew nothing about the overseas countries. But one of the companies that came from Canada got a contract to build some water supply infrastructure here. They said they were going to build a system which would enable the people to drink from the tap.

“So I dreamt. To bring safe, drinkable water to the people is the first dream of my career in the government. I think so. I swore that if I could perform this duty, that would be enough. I could retire because I had done something useful for the country,” he said.

This strong sense of justice came partly from the fact that he was born into a very poor family. During the war, in which the effete Lon Nol regime fought Pol Pot, he saw how the rich sent their sons away while the poor hunkered down to fight for their lives.

“My father was one of them. He fought for the Khmer Rouge, not a commander, but a man who had led others into battle many times,” said Ek. In 1979, he was killed by another faction within the Khmer Rouge in infighting. He was 53 and Ek, the youngest of four, was 29.

Another value from his poor upbringing - a belief in hard work. “At a very young age, I had to work very hard. My family and personally me, we were affected a lot by this injustice. So I really hated it. I wanted to do something for the nation, for society to come out from those bad habits of the developing society.”

From the time he was 10, until he turned 17, he walked 5 km over two hours, to and from the river, to earn money to supplement the family’s income.

He needed to make 10 trips to carry 400 litres of water to fill up a jar - and received 1,000 riels (US$1.00 at that time!). The river was on a slope and he had to carry the water for 500 metres to the jugs. So at a young age, he already knew that water has a cost. And the work made him a tough man, both in mind and in body.

His strong work ethic also impressed his subordinates. Long Naro, then 31 and a junior engineer at the time, said: “He’s not like other directors who come and say: “Today, I don’t want to stay late at work, so you stay. I’ll go home. Please do this and get me results.”  Ek Sonn Chan, he puts his hand on the table and he works.”

“Not to die but to act”

Long had graduated as a Mechanical Engineer from East Germany in 1988 and joined the PPWSA a year later, as a staff of the technical office. By 1993, he had already seen four directors come and go.

“Ek Sonn Chan was Number Five. But when I started to work with him, I knew he was different,” he said.

He had a feeling that boss Number Five was a man who would stick around. One of the first things he observing Ek Sonn Chan doing was planting more than 100 trees around the compound of the PPWSA.

“We call this tree “Dheam Thnaut”, in Cambodian. This palm looks like sea coconut, but this tree, you can use everything from it - its leaves, you can use for thatching a house, juice you can drink and make sugar. Everything from this tree is useful.”  It was a sign of hope and of endurance - both qualities that the PPWSA would need over the next three years. 

This was patently clear from his first meeting with the new director. “All the engineers and the higher level staff were there. He told us: “The situation is either do or die.” Either we accept that changes are needed, or we die. We chose not to die but to act.”

Feeling the pipes

From 1993 to 2008, its production capacity increased by 262% to 235,000 cubic metres per day. Its service coverage increased by 80% and its distribution network (km of pipes) increased by 456% to 1,558 km. The number of households and establishments with piped water connections had increased to 178,000 units. Today, all of them are metered compared to 12% in 1993. 

Table 1 - PPWSA’s transformation (1993-2008)

Indicator19932008Difference% Change
Production capacity (m3/day)65,000235,000170,000262%
Coverage              1210088733%
Collection ratio 726.07-65.93-92%

Total income (billion riels)

(US$1 = 4,100 riels as of Jan  2009)

0.7

103.26

102.56

14651%
Operating expenditure (billion riels)1.43.742.34167%

Source: PPWSA, 2008. 

Transforming Water: Changing the culture

When Ek first arrived at the PPWSA, he did nothing but observe. At the end of one month, he had divided his staff mentally into three groups. The first group he termed “no way”.  He said: “This group was finding ways to pursue their own interests, profits for themselves. This group told me everything I needed to know about how to make good money for myself.”

Financial independence for the PPWSA

In 1996, the PPWSA was declared autonomous. With this, came a key power - the ability to recruit staff itself. This was, perhaps, the most important factor in PPWSA’s turnaround. It also meant that it had to be run along commercial lines - ensuring that its revenues are robust.

The PPWSA started billing in earnest - the survey revealed that there were nearly 30,000 households connected to the water supply. Ek Sonn Chan’s own conviction was that water needed to be priced to be properly managed. It was partly the result of his childhood experience that taught him that water exacts a price in time and energy, and also the result of his exposure to other countries’ experience in efficiency and market forces. Last, and most important, water tariffs were part of the conditions for the loan from the Asian Development Bank.

By 1996, two out of three crucial factors were in place for Ek Sonn Chan to start charging for water the way he intended - according to volume consumed and not a flat rate. First, the survey had given him an idea of how the land lay, and some vital numbers to work on. Second, the infrastructure in terms of pipes and meters had been set in.  But to move from a flat rate to a volume-based tariff, he needed political support.

A change to volume-based pricing

In 1993, the PPWSA had continued with the previous system of using a flat rate because there were almost no water meters. Then, little by little, they laid the groundwork for a volume-based charge - they counted the number of people in one household, estimated a usage of 50 litres a day, and levied a per capita charge.

“The people started to be angry with me. Even if you take just very little, you are charged the same rate, they got angry. So to be accurate, we started to install the water meter. And they got angrier.”

“Water Devil"

In general, water tariffs are sensitive issues in developing countries. Because of the essential nature of water, many people feel they ought to receive the water for free. Indeed, even in some parts of developed countries today, such as Australia, water is given free or heavily subsidised. The move to charge for water in poverty-stricken Phnom Penh appeared to be politically very dangerous. 

Almost every day, negative stories about him and his crusade to get people to pay for water made the front pages of the local newspapers. He was called “Areak Tuk”, or water devil. When Ek presented his proposal to the council of ministers near the end of 1996, at the time led by the first Prime Minister, Prince Norodom Ranariddh, the reception was decidedly frosty.

At the same time, the PPWSA was getting requests from the poorer communities, the informal squatters in the outskirts of the city. From 1993 to 1995, water was distributed to about 40% of the city area but because of poor pipes, poor pressure and illegal siphoning, only around 20% to 25% of the people received water from the PPWSA.  The illegal squatters of course, simply did not have access to the proper infrastructure.

Finally, with this evidence and the help of the former Governor of Phnom Penh Chea Sophara (now Minister of Rural Development) he got an audience with the first Prime Minister Prince Norodom. The PM’s house was at a secluded street along Samdech Pan.

The PPWSA proposed a domestic tariff of around 500 riels, compared to the illegal vendors from whom the people had to buy untreated water at 5,000 riels. In the meantime, the Ministry of Finance also supported Ek’s efforts. “My proposal included a very strong letter to the Prime Minister, stating that if we were not able to revise our tariffs, we would have no loan from the Asian Development Bank (ADB). The ADB had set that as part of the loan conditions,” he said.

Impact of foreign donors

As can be seen from above, two key parts of the reform at the PPWSA were initiated by the conditions set by donors.

In 1993, shortly after the formation of the Government of Cambodia, it was a foreign donor, Japan, which helped prepare a master plan study which became the blue print for the country’s rehabilitation. Japan was a major donor in Cambodia. From 1993 to 2004, its donations to the PPWSA amounted to US$66.3 million. France also helped to improve and expand the water treatment plant and distribution network, and to computerise the PPWSA’s operations. The ADB and the World Bank provided concessional loans to the PPWSA, with conditions that the PPWSA be made autonomous and to set cost recovery tariffs.  

Autonomy gave him the power to change the PPWSA structure, the power to charge a volume-based water tariff now gave him the financial backing. With these two ingredients in place, he put a performance-based pay scale in place.

Changing salaries and pay structure

One of the first things he changed was the payment scheme of the water inspectors - these were the 24 men who walked on foot to read meters and to collect money from different households in 1993.

Collecting water dues was not a straightforward matter. In 1993, when Ek first came on board, there were 2,000 water meters in the system, although many customers were charged a flat rate.

At the time, his priority was to get all the water connections metered. From 1993 to 1997 the pipes were fully metered. But a volume-based tariff needed trained water meter readers.

He ran a course on water reader and gave all water readers a new contract. It also tightened up the way in which water was collected. Sim Kheng Lim, now Director of the Commercial Department, recalls the big shake up at the time. It was a move which that ensured bill collections, and hence PPWSA’s revenues, went up. “In 1993, what we did was to ask the meter reader to give the bill and to collect the money at the same time. Our collections were very low.” 

Why? He paused and said: “Some readers took money from the families and didn’t pay the money to the PPWSA. They kept it.”

The job is a much cherished one. Cambodia is still, by and large, a poor country. Its annual average per capita income (2006) is less than US$448, with 40% living below the poverty line.  Even in the PPWSA, which pays its officials far more than other civil servants, a top manager only earns about US$800 a month.

With this incentive, the number of bills that were paid increased from 40% in 1993 to 99% in 2007. The amount of money collected increased from 50% to 100%.

The PPWSA Today

Some 15 years later, you can drink straight from the tap in Phnom Penh. Almost everyone has access to water 24 hours a day. Out of 100 drops, only six are allowed to leak away. Singapore loses four, while some utilities in Britain lose as many as 10.

The water lost through leakage or illegal connection has dropped from 72% in 1993 to 15% in 2004. By 2004, water was available 24 hours a day, seven days a week. Illegal connections used to be rampant in 1993 with more than 300 cases per year reported - with connection rights usually sold by the PPWSA’s staff. In 2004, this was down to only five cases a year.

These efficiency improvements also came about along with improvements in personnel efficiency. In 1993, the ratio of the PPWSA’s staff per 1,000 connections used to be 22:1,000 but by 2004 this has improved to 4:1,000. Of its 536 full time staff, 78% are assigned in water supply with the rest in corporate services.

A difference on the ground

On garbage hill in the outskirts of Phnom Penh, stands a small village called Tuol Sen Chey 1. Its headman is Duch Sitha, 59 and a retired government technician. He says: “When we see the bill collector coming to us, we run to pay the bills. We are happy to do it - we don’t want them to take it away because we are not paying them.”

In the past, he says, people used to get sick when they drank straight from the well - they do not boil water because fuel is hard to come by and used only for cooking. When they had stomach aches from drinking well water, often at night, they had to brave the dark and insects to use the toilet. “Now, we drink from the tap and no one gets sick,” says Duch.

leong1.jpg

Last year, loyal customers like Duch helped the PPWSA earn US$5 million in profits.  This is the sort of money that none of the other 24 utilities in Cambodia has been able to match. Half of what the government of Cambodia spends comes from foreign assistance. So, the healthy bottom line of the PPWSA is a rarity. Its operating income has increased by 40 times to 34 billion riels (US$377.7 million) in 2004. It makes 20% profits, which compares favourably with water utilities in developing countries, which has seen their profits decline from 34% in 1988 to 8% in 1998.

In 2006, the PPWSA was transferred to the Ministry of Industry and Energy, whose boundary extends through the whole of Cambodia. There are 24 water authorities in Cambodia, eight privately-owned.  So, quite naturally, in 2006, he had a new dream.

“My dream is how to bring all the water supply in Cambodia to about the same level as the Phnom Penh Water Supply. And I found that it’s really a very big challenge for me to do this job. I can tell you I’m still very strong, in health. I can still do the job,”  said Mr Ek

 “I still think that I have it in me. This patient has exactly the same problem as the Phnom Penh patient…exactly the same illness and the doctor who treated the Phnom Penh patient is here, so, why don’t we have a way? I think we have 100% confidence to do the job but whether I “should” or “must” - they are not words for me to say.”

Resources

This article was written by Leong Ching and has been adapted from, Ek Sonn Chan and the Transformation of the Phnom Penh Water Supply Authority published by the Lee Kuan Yew School of Public Policy, National University of Singapore.

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