Report No: ACS18544

People's Republic of Bangladesh

Strengthening Poor-Inclusive Urban Water and Sanitation Service Quality Information Systems in Bangladesh

May 2016

GWASS

SOUTH ASIA

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THE WORLD BANK GROUP

Strengthening Poor-Inclusive Urban Water Supply and Sanitation (UWSS) Service Quality Information Systems

in Bangladesh (P131951)

Water and Sanitation Program

4/26/2016

This synthesis report details the process, outputs and intermediate outcomes of technical assistance (TA) to support the Government of Bangladesh in developing information systems that incentivize improvements in the quality of urban water and sanitation services through enhancing the responsiveness of water and sanitation providers in particular to poor consumers. The strategic focus was on information systems (i.e. quantitative data tools and qualitative assessments) to strengthen the incentives for the central government and local providers to focus on the quality-of-service bottlenecks (i.e. operation and maintenance, consumer satisfaction, inclusion, regulation) in key aspects of the service delivery chain (i.e. water safety, water extraction, fecal sludge management and waste water disposal) to complement the existing high levels of access to low quality water and sanitation services.

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Table of Contents Executive Summary ......................................................................................................................... 5

Background ..................................................................................................................................... 7

Overview of Technical Assistance ................................................................................................... 8

Results Framework ...................................................................................................................... 8

Process ........................................................................................................................................ 8

Outputs ...................................................................................................................................... 12

Intermediate Outcomes ................................................................................................................ 13

Increased Utility Responsiveness to Consumers....................................................................... 13 Improved Utility Viability (Target = Operating Ratio <1) .................................................................... 13 Improved Personnel Efficiency (Target = Staffing ratio <8 per ‘000 connections) ............................. 13 Improved Revenue Collection (Target = >70% billings collected) ....................................................... 13 Accounts Receivable (Target = Outstanding dues >150 days) ............................................................ 14 Expanded Services (Target = >40% population with piped water) ..................................................... 14 Services to the Poor (Target = Revenues from Low-income Consumers Increase by 100%) ............. 15

Improved Government Capacity ............................................................................................... 15 Water Supply and Sanitation Regulatory Commission ....................................................................... 15 Rules for the Water Act to Regulate Abstraction ............................................................................... 16 Policies and Data on the Provision of Services to Low-Income Communities .................................... 16 Fecal Sludge Management Scorecard ................................................................................................. 16 Model By-laws for Local Governments to Control Wastewater ......................................................... 17

Outputs ......................................................................................................................................... 18

Urban Water Supply: Utility Benchmarking and Consumer Surveys ........................................ 18 Benchmarking to Improve Urban Water Supply Delivery in Bangladesh (2014) ................................ 18 Urban Development Assistance Map / Graphs ................................................................................... 19 DWASA Decentralization (Benchmarking Zonal Management) Report .............................................. 19 Utility Consumer Satisfaction Reports / Analysis / Forum .................................................................. 20 Utility Benchmarking Training Minutes, Network Reports and Exchange Visit BTORs ...................... 22 WSP / WBI Regional Water Utility Managers Training in Dhaka ........................................................ 23 Harmonizing the Water Act with Municipality / WASA Acts .............................................................. 24

Urban Sanitation: Fecal Sludge and Wastewater Management Diagnostics ........................... 25 Political Economy Analysis, Fecal Flow Diagram and Service Delivery Assessment for Dhaka .......... 25

Low-Income Customers: Delinking WSS Services from Tenure ................................................ 26 Low Income Consumer Service Improvement Plan (LICSIP) ............................................................... 27 Leveraging Slum Services .................................................................................................................... 28

Lessons Learned ............................................................................................................................ 29

Recommendations ........................................................................................................................ 30

ANNEXURES 1. Bangladesh Water Utility Benchmarking Report 2. Urban Development Assistance Map & Graphs 3. Zonal Benchmarking Management Reports (Decentralization within DWASA) 4. Consumer Satisfaction Surveys (1 Sample of 10 Reports / Bangla Translation) 5. Water Utility Network Reports (1 Sample of 7 Reports/ Bangla Translation) 6. WSP-WBI Regional Utility Training Program (Agenda and Presentations) 7. Report on Aligning the Water Act with the Municipal / WASA Acts 8. Political Economy Analysis, Fecal Flow Diagram and Service Delivery Assessment for Dhaka 9. Low Income Consumer Service Improvement Plan (LICSIP) for DWASA

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10. Leveraging Slum Services: Instruments to Leverage Improved WSS Services in LICs

Abbreviations & Acronyms ADB Asian Development Bank BBS Bangladesh Bureau of Statistics BDT Bangladesh Taka BMDA Barind Multipurpose Development Authority BTOR Back-to-Office Report BUET Bangladesh University of Engineering and Technology BWSSRC Bangladesh Water Supply and Sanitation Regulatory Commission CBO Community Based Organization CSO Civil Society Organizations DCC Dhaka City Corporation DMA District Metered Area DPHE Department of Public Health Engineering DWASA Dhaka Water Supply & Sewerage Authority DWSSP Dhaka Water Supply and Sanitation Project of the World Bank FSM Fecal Sludge Management IBNet International Benchmarking Network for Water Supply and Sanitation Utilities ICT Information and Communication Technology JICA Japan International Cooperation Agency JMP Joint Monitoring Programme for water supply & sanitation of UNICEF & WHO LIC Low Income Community LICSIP Low Income Community Service Improvement Plan LGD Local Government Division LGED Local Government Engineering Department LGI Local Government Institution lpcd liters per capita per day MLGRD&C Ministry of Local Government, Rural Development, and Cooperatives NGO Nongovernmental organization NoC No Objection Certificate NRW Non-revenue water PPP Public-private partnership PSU Policy Support Unit TA Technical Assistance UNICEF United Nations International Children Emergency Fund UP Union Parishad WARPO Water Resource Planning Organization WASA Water Supply and Sewerage Authority WBI World Bank Institute WHO World Health Organization WSP Water and Sanitation Program WSS Water Supply and Sanitation USAID United States Agency for International Development UWUN Urban Water Utilities Network UWSS Urban Water Supply and Sanitation

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Executive Summary This synthesis report details the intermediate outcomes, outputs and process of the World Bank Water Supply and Sanitation Program Technical Assistance to Strengthening Poor-Inclusive Urban Water and Sanitation (UWSS) Service Quality Information Systems in Bangladesh (P131951).

This technical assistance (TA) supported the Government of Bangladesh to develop information systems that incentivize improvements in the quality of urban water and sanitation services through enhancing the responsiveness of water and sanitation providers in particular to poor consumers. The strategic focus was on developing information systems (i.e. quantitative data tools and qualitative assessments) to strengthen the incentives for both the central government and local providers to focus on the quality-of-service bottlenecks (i.e. operation and maintenance, consumer satisfaction, inclusion, regulation) in the service delivery chain (i.e. water safety, water extraction, fecal sludge management, and waste water disposal) to complement the existing high levels of access to low quality water and sanitation services. Specifically, this TA contributed to the following intermediate outcomes: (a) Increased responsiveness of urban water and sanitation service providers to consumers, in particular

those in the bottom 2 quintiles:

Quantitative: Through an expansion in the number of utilities under the quantitative benchmarking program from 11 utilities in FY08 to more than 57 utilities in FY15. In FY13/14 alone, the expansion of networks within the benchmarked 34 utilities and the extension of the program to a further 23 utilities equated to an additional 3.9 million people receiving water services from utilities where operational data is being quantitatively benchmarked.

Qualitative: The uptake of demand-side consumer satisfaction surveys (against the utility benchmarks) by utilities including the hosting of citizen forum meetings in more than 10 municipalities in FY14/15 was instrumental in improving the accountability of utilities for the quality of their water services.

Poor Inclusive: An additional 48,600 consumers in low income communities served through the extension of legal water connections including access to a mobile phone based redressal system and bill payment options.

(b) Improved capacity of the Government to monitor and incentivize the quality of urban water and

sanitation service provision:

Following the passage of the Water Act (2013), the Water Resource Planning Organization (WARPO), Local Government Division (LGD), Department of Public Health Engineering (DPHE) and municipalities have collaborated on the drafting of rules / by-laws for the implementation of the Water Act in urban areas.

A Bill for the establishment of the Bangladesh Water Regulatory Commission for urban areas has been passed by the Local Government Ministry and the National Forum for Water Supply and Sanitation and sent to the Law Ministry.

The Ministry of Local Government has established a Committee to oversee the drafting of a National Fecal Sludge Management (FSM) Framework (that will potentially include the introduction of a FSM tax to internalize the externalities of poor quality sanitation).

The Ministry of Local Government has issued guidelines enabling the extension of water and sewerage connections into low income communities separate from the requirement for tenure security.

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The major activities supported by this TA over the period from 2011-2015 have been:

Technical assistance to 57 utilities to annually benchmark water management performance (i.e. the provision of benchmarking training, data compilation and cleaning, comparing data nationally and internationally through the International Benchmarking Network for Water Supply and Sanitation Utilities (IBNet), networking workshops and peer learning visits).

Technical support to 10 pourashavas to undertake consumer satisfaction surveys (i.e. develop the questionnaires, train local enumerators, collate & analyze the data, compare this demand side results against supply side benchmarking results, conduct public meetings between elected representatives, utility staff and consumers).

Analysis of fecal sludge management in Dhaka (i.e. the conducting of the Political Economy Analysis, Fecal Flow Diagram calculations, Service Delivery Assessment as part of the global study on fecal sludge management and consolidating World Bank feedback on the draft of a national Fecal Sludge Management Framework developed by the Government).

Technical support in water utility reform management processes (i.e. hosting of a South Asia regional utility managers workshop bringing together global and local experiences of utility management reform; the conducting of a detailed technical assessment for Dhaka Water and Sewerage Authority (DWASA) on the options for the decentralization of management autonomy and the strengthening of management accountability through the zonal benchmarking of service delivery performance).

Analytical support to the Ministry of Local Government in the Implementation of the Water Act (i.e. local consultations, workshops, analysis and recommendations to ensure that the rules and by-laws for the implementation of the recently passed Water Act (2013) are aligned with the Local Government Acts (2009), the Water and Sewerage Authority Acts (1996) and the draft Water and sanitation Regulatory Commission Bill (2016)).

Analysis of the options for extending water and sanitation services to low income communities (i.e. support to DWASA in the assessment of the existing water and sanitation service delivery status in Low Income Communities (LICs) and the development of a Low Income Customer Service Improvement Plan (LICSIP) including the costed public investment requirements. For small paurashavas, this included an assessment of the options for leveraging water and sanitation service delivery improvements in LICs).

Follow-up recommendations for this TA are:

the establishment of the Bangladesh Water Supply and Sanitation Regulatory Commission (BWSSRC) to institutionalize the incentives for water utility benchmarking.

the deployment of the ‘Service Level Benchmarking (SLB) Connect’ mobile application (http://www.slbconnect.in/) developed with TA support in India to systematize the interrogation of ‘supply side’ utility benchmarking data with ‘demand side’ consumer feedback against the same performance indicators.

to explore the costs / benefits of investing in primary wastewater treatment plants to treat the outfalls of the storm water drains that carry almost all of the fecal waste in Dhaka.

to interrogate kW.hr electricity consumption data from all sewage pump stations and treatment plants prior to considering any investment in the expansion of any sewerage system.

to explore the instruments that government can deploy to leverage those exercising ownership rights over low income community (LIC) land and housing assets to also bear the financing liability for the investments in water and sanitation asset improvements necessary to meet specific quality of service standards.

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Background 1. Bangladesh has made significant progress towards achieving the Millennium Development Goal

(MDG) 7 targets for both improved water supply and sanitation access of the Bangladesh population. The recent WHO-UNICEF Joint Monitoring Program (JMP) 2015 shows that 98% of the population has access to a protected source while 87% of the population has access to an improved water supply. While only 1% of the population currently practices open defecation, 61% of the population has access to improved sanitation facilities, another 28% and 10% of the population respectively has access to shared or unimproved sanitation facilities1.

2. While access has increased substantially, there are still significant challenges if Bangladesh is going to ensure safe, affordable, reliable and sustainable services for all. For sanitation, while there has been a significant movement in Bangladesh from ‘open defecation’ towards ‘fixed point defecation,’ the quality of sanitation coverage is an emerging area of concern, with over 40% of all latrines classified as ‘unimproved’ according to the MICS 2012-13. For water supply, while access to a protected source is almost universal, severe quality issues mean that only 34.6% of households consume water which meets both the Bangladesh standard for arsenic (<=50 ppb) and E. coli (<=1 cfu/100 ml). 2

3. With regard to urban service provision, piped water supply reaches only 32% of the population1 (and

only a third or 102 of the 308 Pourashavas), while the growing majority of the urban population relies on hand pumps for drinking water. With the intermittent, unreliable and questionable safety of piped water supplies, most households that are connected to piped water are forced to treat this water for drinking or continue to drink water from hand pumps. Urban sanitation is also largely comprised of on-site sanitation with access to basic and improved sanitation improving for the poorest segment of the population but still lagging behind the level of access of the richest quintile of the population. Across the urban centers of Bangladesh, there is no systematic excreta disposal and treatment system. Only Dhaka has a sewerage system serving only 25% of the city but where almost all of the effluent, the solid and liquid waste is transferred to low lying areas, canals and rivers with little or no treatment3.

4. Given the high levels of access to basic water and sanitation services in urban areas in Bangladesh

but the low quality of water and sanitation services from that infrastructure, the Government through this TA has sought to improve the overall quality of service provision through enhancing information systems which are inclusive of the particular characteristics of low income communities (i.e. the bottom 40% of the urban population). This sought to (a) increase the responsiveness of urban water and sanitation service providers to consumers, in particular those in the bottom 2 quintiles and (b) improve the capacity of the Government to monitor and incentivize the quality of urban water and sanitation service provision through targeted activities directed towards the following three areas:

Urban Water Supply: Quantitative expansion of utility benchmarking (https://www.ib-net.org/) and qualitative deepening via exchange visits and consumer satisfaction surveys.

Urban Sanitation: Development of fecal sludge management and wastewater management diagnostic tools and their application in the Bangladesh context.

1 Progress on Sanitation and Drinking Water 2015 Update. WHO/UNICEF Joint Monitoring Programme (JMP).

2 2012-13 Multiple Indicator Cluster Survey, (2015) Bangladesh Bureau of Statistic and UNICEF. (NB - Bangladesh water safety

standards are less stringent than recommended WHO standards of <= 10 ppb for arsenic and 0 coliforms per 100 ml for E. Coli.) 3 Fecal Sludge Management: Dhaka Diagnostic Report (March 2016 Draft), WSP-The World Bank

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Low-Income Customers: Develop models and guidelines for improving service delivery to poor customers with (and without) land tenure.

Overview of Technical Assistance 5. This technical assistance (TA) supported the Government of Bangladesh to develop information

systems that incentivize improvements in the quality of urban water and sanitation services through enhancing the responsiveness of water and sanitation providers in particular to poor consumers. The strategic focus was on developing information systems (i.e. quantitative data tools and qualitative assessments) to strengthen the incentives for both the central government and local providers to focus on the quality-of-service bottlenecks (i.e. operation and maintenance, consumer satisfaction, inclusion, regulation) in the service delivery chain (i.e. water safety, water extraction, fecal sludge management, and waste water disposal) to complement the existing high levels of access to low quality water and sanitation services. Specifically, this TA contributed to the following intermediate outcomes:

Results Framework Intermediate Outcome(s) *

Target Indicator(s) * Results

Increased responsiveness of urban water and sanitation service providers to consumers, in particular those in the bottom 2 quintiles

Benchmarking data from WASAs and municipalities show improved accountability towards consumers, including

improved utility viability (operating ratio <1)

personnel efficiency (staffing ratio <8 per ‘000 connections)

improved revenue collection (>70% billings collected)

accounts receivable (outstanding dues < 150 days)

expanded services (>40% population with piped water)

services to the poor (revenues from low-income customers increase by 100%)

Benchmarking data from a total of 57 utilities in FY15 reveals:

Av. Operating Ratio = 1.0

Av. staffing ratio = 8.7

Av. revenue collection = 77%

Av. accounts receivable = 100 days

Water coverage = 43% Registered LIC connections increased by 870% [serving 108,800 dwellers].

Improved capacity of the Government to monitor and incentivize the quality of urban water and sanitation service provision

Regulatory systems are established to identify, monitor and share quality of services, including

1. urban water and sanitation quality regulatory commission

2. rules for the Water Act to regulate abstraction

3. policies and data on the provision of services to low-income communities

4. fecal sludge management scorecard

5. model by-laws for local governments to control wastewater

Significant improvements in urban regulatory systems including:

Draft Bill for a Water Regulatory Commission with Law Ministry

Rules/by-laws for Water Act under preparation by WARPO

Extension of connections to LICs based on trade licenses

Draft National Fecal Sludge Management Framework

Revision to building code on waste water for municipalities to enforce

Further detail on these Outcome Indicators are elaborated in paragraphs 7-20

Process 6. Knowledge support has been extended to the national and local governments that oversee service

provision, as well as utilities and NGOs that manage service provision to improve the quality and inclusiveness of urban service delivery arrangements. The interventions have included field assessments, analytical notes and studies, presentations, study tours and training programs. In order to deliver greater impact, some of these have been undertaken in partnership with existing and proposed Bank projects, as well as government programs related to urban water supply. The

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areas of support under this TA are in alignment with the government’s overall agenda for the sector in terms of strengthening the accountability, capacity and viability of the urban water supply and sanitation sector in Bangladesh.

7. The benchmarking process was initiated with 11 utilities in Bangladesh. As there are no sewerage

systems in Bangladesh (outside of Dhaka), the IBNet format was adapted to purely focus on drinking water supply. These utilities were supported to generate the operational data necessary to shift from indicators of access to infrastructure to operational indicators of service delivery performance. Through the provision of ‘hands on’ training and benchmarking formats, water utility superintendents were trained in collection, collation and interrogation of benchmarking data. These utilities were then supported to form a network for the routine sharing and comparing of the data generated which then formed the basis for the generation of the water utility performance improvement plans. These performance improvement plans sought to direct future investments to address the areas where the water utility benchmark performance was comparatively poor and where the good practices of other utilities potential offered solutions to improve service delivery performance. Translating the service improvement plans into investment plans was then sought by broadening the engagement beyond the water utilities to include the Mayors of the respective municipalities. Over the course of this TA, the benchmarking process of training and handholding, collating and uploading to IBNet, sharing data and networking on good practices, preparing performance improvement plans and investment plans, managing and measuring water service delivery improvements was extended from 26 to 57 utilities.

8. Through the course of this TA the risk of utilities producing supply side operational performance

data ‘at odds’ with the demand side experience of consumers was managed in several ways.

The first, was through the generation of demand side consumer satisfaction data on the same supply side benchmarking indicators generated by the utility. The focus on using the data to drive practical improvements in service delivery performance was achieved by engaging with elected representatives of the municipality to arbitrate on the disparities in perceptions of performance.

The second, was to utilize peer pressure within the utility network to drive real service delivery performance improvements. Through the rotation of the hosting of benchmarking network meetings combined with site visits to ‘best practices’ within the hosting utility the incentives of utilities to falsify data and fudge best practices was reduced. On the contrary, this created incentives for utility managers to deliver above and beyond the call of duty.

The third, was through the strategic engagement with the Mayors of the municipalities on the interface between routine utility benchmarking performance, municipal investment plans and consumer satisfaction. In most cases, the collective influence of the mayors of the municipalities was a stronger influence for substantive policy change at the central level (and municipal level) than that of the utility managers or the lobby of external technical assistance.

9. The engagement of the TA with utility managers and municipality mayors under the benchmarking

program highlighted the need for increased influence at the policy level. The regulation of ground water resources through the pricing of water animating the drafting of the Water Act (2013) provided the basis for this TA to engage with the government to deliberate on the role assigned to municipal governments for drinking water and sanitation. The provision of analytical technical assistance to the Ministry of Local Government was instrumental in ensuring that the role of Local Governments and their utilities was prioritized in the Implementation of the Water Act by the

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Ministry of Water Resources and that pricing of water is prioritized in the draft Water and sanitation Regulatory Commission Bill (2016).

10. As there are no sewerage systems in Bangladesh (except for Dhaka) and as the utility benchmarking

process was focused purely on water utilities, resources under this TA were directed towards the generation of knowledge on the onsite management of sanitation in Bangladesh preference to networked management. Focusing the knowledge generation under this TA on Dhaka (boasting a sewerage system servicing 25% of the population of the city4) enabled the pros and cons of on-site fecal sludge management versus networked sewerage systems to be elaborated. This included the:

collation of primary and secondary data necessary to generate the Fecal Flow Diagram (FFD)

exploration of policies and programs required to generate the Service Delivery Assessment (SDA)

conducting of interviews and mapping of stakeholders for the Political Economy Analysis (PEA) for the city of Dhaka. This provided the TA with the knowledge base on which to engage with the government to (a) raise the need to address on-site fecal sludge management, (b) the assignment of responsibilities for fecal sludge management in Dhaka, and (c) provide advice on the draft of the national fecal sludge management framework for Bangladesh.

11. Throughout the course of this TA, support has been directed towards the generation of information

justifying a poor inclusive approach to water and sanitation service delivery. This has incorporated (a) strengthening the focus of water utilities on operational cost recovery from all consumers including the poor, and (b) the assessment of effective interventions for delivering improved water and sanitation services to the poor. For the former, this TA has prioritized support to DWASA to develop systems that enable DWASA to reduce non-revenue water (NRW) including that which is lost to the Low Income Community (LIC) consumers of DWASA water. For the latter, this TA has targeted the knowledge support to learning from different NGO interventions in Low Income Communities (LICs) and translating this into investment modalities by DWASA that can accelerate the extension of services to the poor in LICs. This support has been extended to DWASA through the World Bank supported Dhaka Water Supply and Sanitation Project (DWSSP) specifically through the extension of technical assistance for the feasibility, design, procurement of investment options for extension of services under the Low Income Community (LIC) component. The lessons learnt from the engagement with NGOs and DWASA in low income communities in Dhaka in combination with the ongoing engagement with utilities under the benchmarking program providing the basis for the development of social and legal options for leveraging those who exercise land ownership rights in LICs to make investments to improve water and sanitation services within LICs.

12. It is important to note that the service delivery improvements supported through this TA were the

result of the investment of resources (financial, human, social, knowledge) by the Government of Bangladesh, bi-lateral and multi-lateral Development Partners, the municipalities and the utilities, NGOs and civil society. The contribution of this TA was to provide the information management systems for the generation of the knowledge to leverage specific targeted service delivery improvements that are sustained by substantive policy changes. This also explains why this TA directed considerable effort to the collation of government and development partner data-bases to identify who is directing what investments, under which programs, to which municipality. Resources under this TA were also directed to support the work of the World Bank as the co-chair of the official Government platform for coordination in the water supply and sanitation sector. This unique

4 Fecal Sludge Management: Dhaka Diagnostic Report (March 2016 Draft), WSP-The World Bank

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position occupied by the World Bank and the partnership with the Government and municipalities, development partners and NGOs providing this TA with considerable knowledge influence over service delivery investments. However, this experience also formed the basis for this TA to advocate for the rationalization of the intergovernmental fiscal transfer system of imbalance and performance transfers to municipalities associated with drinking water and sanitation service delivery.

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Outputs 13. Policy engagement on the strategic bottlenecks in the sector was supported through the following three activity components designed to

improve the flow of information on the quality, inclusiveness and reliability of urban water supply and sanitation services.

Intermediate Outcome(s) *

Targets Outputs Deliverables

Urban Water Supply: Utility Benchmarking and Consumer Satisfaction Surveys

Extend of the IBNet utility benchmarking system to more than 50 utilities

Expansion from 11 utilities in FY08, to 26 utilities in FY10, to 34 utilities in FY12, to 57 utilities from FY14 onwards.

Water Utility Benchmarking Report (FY13)

Urban Development Assistance Map / Graphs

DWASA zonal management report

Consumer satisfaction surveys in sample municipalities

Consumer satisfaction surveys and deliberative citizen forums in 10 municipalities.

10 consumer satisfaction reports / analysis.

Training on IBNet, networking, exchange visits

13 hands-on benchmarking trainings

11 exchange visits

11 network workshops

Hosted WSP/WBI Utility Manager Training

13 hands–on-utility training minutes

11 BTORs from exchange visits

11 Bangladesh Water Utility Network workshop reports http://www.bwun.org/#

Utility manager program and presentations

Analytical inputs to Bangladesh Water Act and Urban Water Commission

10 workshops / consultations with LGD, WASAs, Municipalities and WARPO

Analytical report for WARPO on Water Act consultations with Utilities / Municipalities

Urban Sanitation: Fecal Sludge and Wastewater Management Diagnostics

Fecal sludge management diagnostic study (Dhaka chapter)

Contributions to the global FSM study incl.

Estimation of the Fecal Flow diagram

Develop the Service Delivery Assessment

Undertake the Political Economy Analysis

Political Economy Analysis (PEA), Fecal Flow Diagram (FFD) and Service Delivery Assessment (SDA) reports for Dhaka City

Consolidated inputs to the draft National Fecal Sludge Management Framework

Low-Income Customers: Guidelines and Models to Serve the Poor with (and without) Land Tenure

Development of guidelines to improve the incentives for low-income customers to access registered connections

Development of models for leveraging improved water and sanitation in LICs

Exploring options for successful models to be embedded in local practice

Secondary data analysis on water and sanitation services in all municipalities

Surveys and consultations with LICs on service delivery options

Editing of the preliminary national slum census report undertaken by BBS

LICSIP analytical report on options for DWASA to scale-up water services to LICs

Report on social / legal options for leveraging improved services for the urban poor

Further detail on these Output Indicators are elaborated in paragraphs 21 - 49

Intermediate Outcomes

Increased Utility Responsiveness to Consumers 14. Increased responsiveness of urban water and sanitation service providers to consumers, has been

assimilated through the compilation of benchmarking data from WASAs and municipalities.

Improved Utility Viability (Target = Operating Ratio <1) 5 15. The average viability of the water utilities decreased as the program expanded to incorporate

smaller less viable utilities from FY07 to FY15 (i.e. the average operating ratio increased from 0.68 to 1.0). The decreasing viability of Khulna, Chittagong, Rajshahi, Rangpur, Comilla and Sylhet City Corporations is a function of the high cost of supply and/or challenges associated with recent changes to adopt the City Corporation governance structure. Despite these decreases in viability, an average operating ratio of less than 1 indicates that most of the utilities are viable, all be it operating from a very low base of cost and quality of service.

Improved Personnel Efficiency (Target = Staffing ratio <8 per ‘000 connections)6 16. Probably, the most notable area of improvement has been the consistent reduction in the staffing

ratio across all utilities, which has decreased from 9.2 staff per thousand connections in the 11 utilities in FY07 to 8.7 staff per thousand connections in 54 of the utilities in FY15. This is associated with staff reductions and increased performance that does not fully capture the improvements in efficiency associated with a massive increase in the number of people served as single connections to households are upgraded to serve to multi-dwelling units and then high-rise apartment buildings.

Improved Revenue Collection (Target = >70% billings collected)7 17. There has been a steady increase the average collection efficiency from 74% in FY07 to 77% in FY15.

In general, the average billing and collection efficiency drops as the programme expands to incorporate new utilities with lower efficiencies and then improves as those individual utilities become engaged in performance improvement plans to improve their billing and collection cycle.

5 Operating Ratio = Total annual operational revenues / Total annual operating costs

6 Staffing Ratio = Total number of water staff expressed as per thousand water connections

7 Collection Efficiency = Cash income / Billed revenue (expressed as a %)

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00

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Utilities

Staffing Ratio FY 07 FY 09 FY 11 FY 12 FY 13 FY 14 FY 15

Source: Water utility data collation for IBNet by WSP

14 | P a g e

Accounts Receivable (Target = Outstanding dues >150 days)8 18. The reduction of accounts receivables has consistently improved with outstanding dues reducing

from an average of 190 days in 11 utilities in FY07 to 99.7 days in 54 of the utilities in FY15. The major improvements in performance occur within the utilities that have been in the program for several years (i.e. the accounts receivable in the 39 utilities under the program in FY13 improved from 110 days in FY13 to 98 days in FY14 but the newly joined utilities pushed the average up to 109 days).

Expanded Services (Target = >40% population with piped water)9 19. Over the period from FY07 to FY15, the percentage of people with access to piped water supply in

the initial 11 utilities has risen from 48% to 59% while the average population served with piped water in all benchmarking utilities declined from 48% to 42.7%. This decrease is associated with the expansion of the benchmarking process into smaller utilities with lower levels of piped network coverage, the rezoning of the jurisdiction within some City Corporations and rapid urban population growth without an associated increase in water supply production and network distribution infrastructure.

20. In the 11 utilities that commenced the benchmarking at the beginning of the program, an additional

6,757,200 people have been connected with piped water since 2007 (i.e. coverage increased from

8 Accounts Receivable = Year-end accounts receivable / Total annual operating revenues * 365 (expressed in days)

9 Population with access to piped drinking water as a percentage of the total population under the utility's nominal

responsibility

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Utilties

Collection Efficiency FY07 FY09 FY11 FY12 FY13 FY 14 FY 15

Source: Water utility data collation for IBNet by WSP

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Source: Water utility data collation for IBNet by WSP

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Utilities

Piped Water Supply (%) FY 07 FY 09 FY 11 FY 12 FY 13 FY 14 FY 15

Source: Water utility data collation for IBNet by WSP

15 | P a g e

11,202,100 people in FY07 to 17,960,000 people in FY14). In FY14, there was an increase of a total of 3,870,550 people under the benchmarking program as it expanded from 34 utilities to 57 utilities. In FY15, the number of people served by the utilities engaging in benchmarking increased by 582,830.

Services to the Poor (Target = Revenues from Low-income Consumers Increase by 100%) 21. With the establishment of the Low Income Community (LIC) Unit within Dhaka WASA in 2009 there

has been consistent growth in the number of LIC consumers with legal connections. Since this time, DWASA has increased the number of registered connections in LICs by 870% from the 121 connections in FY09 to a total of 1,174 connections in FY15 serving about 108,800 people on public land (or about 12% of the 884,000 people that live in public LICs). There is however an estimated additional 2 million customers living in LICs and paying alternative sources for the consumption of DWASA water through illegal connections. At an estimated BDT 608 per connection an additional 2 million more connection customers in LICs, should enable DWASA to generate an additional BDT 156 million revenue per year10.

The World Bank was the first donor to allocate USD 10 million dollars to DWASA to scale up the NGO intermediary model for extending services to LICs. Although this project has suffered from various procurement challenges, subsequent other ADB and UNICEF supported projects with DWASA have successfully extended water and sanitation services in LIC areas.

Improved Government Capacity 22. Improved capacity of the Government to monitor and incentivize the quality of urban water and

sanitation service provision has been supported through the establishment of regulatory systems to identify, monitor and share quality of services, including;

Water Supply and Sanitation Regulatory Commission 23. While most of the water supply and sanitation budget is allocated to urban areas, these financial

commitments are insufficient to meet the demands of the urban WSS sector. To increase the ability of public utilities to raise revenues, the Government drafted a bill for the establishment of the Bangladesh Water Supply and Sanitation Regulatory Commission (BWSSRC). This draft Bill for the establishment of the BWSSRC has been cleared by the Ministry of Local Government, the National Forum on Water Supply and Sanitation and is currently with the Law Ministry.

Under this TA, several rounds of comments on the draft Bill proposed that the Water Regulatory Commission should not be responsible for both the setting of standards as well as arbitrating on tariffs. The draft Bill was subsequently amended to focus the Commission on data generation and management, community consultation and arbitration on the tariff implications of the quality of service standards set by the government.

10 Castalia, Existing Situation Report on Water and Sanitation Services in Dhaka's Low-Income Communities (February, 2015)

1

10

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1,000

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erv

ed

Utilities

Piped Water Supply (#*000) FY 07 FY 09 FY 11 FY 12 FY 13 FY 14 FY 15

Source: Water utility data collation for IBNet by WSP

16 | P a g e

Rules for the Water Act to Regulate Abstraction 24. In FY13, the government passed the Water Act enshrining the right to water and the responsibility

of government to license abstraction. In FY14, the WARPO on behalf of the Ministry of Water Resources has commenced drafting rule to address the issues of pricing for water resources, the delegation of authority for licensing and alignment with other Acts i.e. Local Government (Municipal) Acts and the WASA Act. These rules and potential model by-laws for municipal authorities are currently under preparation by WARPO with collaboration from LGD.

This TA has supported various workshops, meetings and analysis bringing together the WARPO and LGD, City Corporations and Pourashavas, DPHE and WASAs to deliberate on the implications of the Water Act on the existing Municipal / WASA Acts. As a result of these several potential areas of alignment between these Acts were identified. One of the most promising areas of alignment was the assignment of the authority for licensing ground water abstraction compliance to the municipalities whilst retaining the powers of regulating failure with the WARPO (on behalf of the Ministry). Another prospective area of alignment is the establishment of a regulatory authority for the pricing of water resources.

Policies and Data on the Provision of Services to Low-Income Communities 25. The model for the extension of water and sanitation services to low income communities (LICs) has

evolved over the last decade in Dhaka. This is primarily a social intermediation model where NGOs invest in storage / distribution systems in LICs, establish CBOs and assist them to obtain a registered connection. While this model has become well established, its scale-up has been limited by the pace of infrastructure investments of NGOs. In addition, given that these CBOs are not registered entities the connection with DWASA is generally registered in the name of a single member of the CBO who may then be in a position to exploit the assets provided by the NGOs. The acceptance of this service provision model by DWASA has led to changes in the DWASA guidelines for the provision of water connections enabling connections to be provided into registered and non-registered LICs. However, given the large numbers of people in LICs illegally consuming and paying someone else for DWASA water, the challenge is to scale-up the legalization of connections in LICs.

This TA has extended support to DWASA to develop a Low-Income Customers Service Improvement Plan (LICSIP). This proposed that DWASA should could scale-up LIC connections by (a) introducing some immunity from prosecution for illegal connections, (b) streamlining the process for obtaining a registered connection (including reducing the fees and introducing a mobile based redressal service) and (c) broadening the criteria for the registration of a legal connection to include a trade license or a National Identity Card.

Fecal Sludge Management Scorecard 26. While citizens and government have focused on the eradication of open defecation, only recently

has there been any recognition of the need to improve fecal sludge management. The government has recently established a committee to oversee the drafting of a National Fecal Sludge Management Framework for Bangladesh. The first draft of the fecal sludge framework for Dhaka city proposed the introduction of a fecal sludge management tax on all households by local governments (linked to holding tax) for the public good costs associated with the management of fecal sludge. It also suggested the establishment of environmental police, a database of sanitation disposal systems and payments for delivery of fecal sludge (all of which could potentially be financed and managed as part of the fecal sludge management tax system). While these are extremely progressive ideas to improve the management of fecal sludge in Bangladesh, this potentially demands the reform of the regulatory systems that govern the containment / emptying / transport / treatment and re-use of fecal sludge in Bangladesh.

17 | P a g e

This TA has supported several studies of fecal sludge management in Dhaka. This has included estimates to enable the calculation of the Fecal Flow Diagram, the Service Delivery Assessment and Political Economy Analysis. This analysis found most fecal effluent and sludge is simply discharged into the storm water drains. However, given the general high levels of satisfaction and low individual costs associated with the use of storm water drains for the discharge of fecal matter, challenging this status quo is bound to be difficult.

Model By-laws for Local Governments to Control Wastewater 27. Following several high profile building collapses in Dhaka and an explosion of the property

development market into high rise apartments, there have been several revisions to the Bangladesh National Building Code (BNBC) in regards to the design and construction of sanitary facilities including the training of builders, plumbers and masons. Under the code the Local Development Authorities and/or Municipalities are delegated the authority to issue land use permits (against spatial development plans), building permits (against the building code), occupancy permits (building inspection against the approved plans) and revoking builders licenses (against inspection non-compliance). Under the 1997 Environmental Conservation Rules, municipalities are also responsible to issue No Objection Certificates (NoC) for industries / projects seeking environmental clearance from the Department of Environment. While these various rules seem to be clear in regards to the allocation of responsibilities, the reality is that none of these procedures appear to be followed.

This TA has supported an assessment of the various rules / standards / codes that relate to sanitation in Dhaka. This included feedback to a Ministry of Local Government established committee to develop a national fecal sludge management framework for Bangladesh which proposed the introduction of a FSM tax (as a component of the property holding tax assessment formula) to assess household sanitation status, finance environmental police and the purchase of fecal sludge for treatment.

18 | P a g e

Outputs

Urban Water Supply: Utility Benchmarking and Consumer Surveys 28. Under this TA, support for benchmarking has focused on incentivizing improvements in the O&M of

water supply systems through the networking and sharing of quantitative performance data amongst a total of 57 utilities in FY14. The validity of supply side data has been strengthened through the select support for qualitative demand side compilation of consumer satisfaction information. Together, these systems for generating information on the operational performance of public water supply providers have provided an information base to address key quality of water supply service issues at the policy level (i.e. evaluating quality and raising tariffs through a Regulatory Commission, developing a legal basis for regulating ground water abstraction). The primary outputs under this component have been:

Benchmarking to Improve Urban Water Supply Delivery in Bangladesh (2014) 29. The water utility benchmarking report for Bangladesh

https://www.ib-net.org/docs/Bangladesh_Report.pdf summarizes the data of the 33 utilities participating within the water utility network in the period from 2011 - 2012 (FY12) against IBNet water utility indicators. This includes an analysis of the time series data for the 7 utilities that initiated this utility benchmarking process in 2007 and those other utilities as and when they joined the network. To improve analysis of utility performance across the network this data was also broken down into bands depending on the number of water utility customers. Based on the peer reviewer recommendations, this document also includes analysis of the institutions (legal, administrative, water resources) responsible for urban water supply and sanitation. (See Annex 1 for the full utility benchmarking report)

30. Key findings from benchmarking data analysis are that:

Utility performance is being challenged by urban population growth rates of an average of 3% per year which negatively affects many indicators (i.e. coverage rates, hours of supply). Utilities experiencing the greatest difficulties are those serving populations of 500,000 to 1 million.

Utilities are generally covering their operation and maintenance costs from tariffs but the tariffs are so low (<USD 0.2/m3) that the utilites can only afford to deliver a low quality service.

High labour costs (>50% in all utilities) infer low expenditures on maintenance and high electricity costs (>29% in all utilities) represent high vulnerability to shock from changes in electricity prices.

31. Key findings from the institutional analysis are that:

The ad-hoc tariff setting by Pourashava Councils has not resulted in tariffs that can generate the revenue necessary for utilities to deliver high quality and responsive drinking water services.

The overlap of the roles of DPHE, LGED and and LGIs (e.g. Union Parishad and Pourashavas) needs to be clarified in the form of rules and regulations by the Local Government Division.

19 | P a g e

There is the need for greater delegation of licensing powers to local governments and improved enforcement of the regulation of failure under the existing Local Government Acts, 2009.

Urban Development Assistance Map / Graphs 32. One of the realizations under the utility benchmarking

process was that multiple donors were working to support multiple utilities to improve urban services but there was no consolidated central picture of ‘who’ was doing ‘what’ and ‘where’. Through the urban LCG, this TA supported the preparation of a consolidated map of who / what / where for urban development assistance making both the front end and back end data available to other partners. This has subsequently been updated by JICA and ADB for their own purposes High resolution map and data sets of Urban Development Assistance have been included at Annex 2

33. Working through the urban LCG, this TA then collated

and uniformly coded urban data sets that included water and sanitation in all 316 Pourashavas (JICA), mayor affiliation and contact details (USAID), pourashava population, water and sanitation access details (BBS). Through the urban LCG this data was loaded on the WSS Open Data Platform enabling the visualization of urban data as well as the downloading of the back-end data sets. Utilizing these urban data sets, this TA analyzed all of the urban centres in Bangladesh against different parameters. This sought to identify to identify priority urban centres for differing water supply and sanitation investment projects against the following parameters

Sanitation Poverty (i.e. open defecation density, latrine access vs poverty and renters)

Water Poverty (i.e. access to water, poverty vs water access, governance vs political affiliation)

Hard to Access Water (i.e. saline, arsenic, iron, rock layer, low yield affected water sources)

O&M Reliability (i.e. operating ratio, coverage, accounts receivable, collection eff., staffing ratio) Analysis of the different targeting options for Urban Development Assistance are at Annex 2

DWASA Decentralization (Benchmarking Zonal Management) Report 34. Water supply is being improved city-wide by building district metered areas (DMAs) across DWASA’s

entire service area. Each DMA will have continuous supply and reach all communities within it, including all LICs. DMAs will be rolled out over time with 63 DMAs scheduled to be completed by March 2016, covering about eight million of Dhaka’s roughly 15 million people. This TA supported DWASA to undertake a comprehensive assessment of the options for introducing delegated zonal management within DWASA. The DWASA Zonal Management report has proposed driving down the management / budget authority within the utility while holding zonal managers to account through the benchmarking of their performance against other zones.

Source: LGD & Urban LCG data compilation

20 | P a g e

35. The assessment report found that there is limited autonomy at the zonal level. Zonal technical and revenue operations are very closely related with one affecting the other but zonal technical and revenue operations are not structured under common leadership, but rather run as parallel streams each reporting to their functional heads. They are not organized under one administrative unit, and therefore do not function as business units which can minimize costs and enhance efficiency. This affects effective coordination of deliverables and hence revenue performance. This report also found that while DWASA has a Citizen Charter and an outsourced Call Center with an automated system for recording complaints and escalating unaddressed complaints at the zonal level, the assessment found that there was no central process owner to manage, monitor and evaluate customer service / satisfaction.

The Diagnostic Report of the Organizational Structure of DWASA is included at Annex 3. 36. Subsequent analysis sought to improve DWASA’s performance by improving its organizational

structure and human resource management. The development of structural reforms were guided by the imperatives to (a) support DWASA’s strategic goals and initiatives; (b) increase efficiency in service delivery; (c) increase accountability; (d) increase commercialization of DWASA. The following three options were submitted to DWASA on 30th July, 2015 and presented on the 16th August, 2015:

Option 1: “Basic” Model: Proposes structural improvements within each of DWASA’s existing business streams

Option 2: “Integrated Zonal Management” Model: Builds up from Option 1 and introduces “joined up” performance management at the zonal level. Each zone is treated as a business unit and headed by a zonal manager.

Option 3: “Customer-Focused” Model: Making DWASA more commercially oriented, by elevating the commercial unit (currently under Finance) into a separate Business Stream.

After considering the various options, DWASA indicated interest in moving forward with the Integrated Zonal Management Model (Option 2) with some modifications. A major strength of this model is that each Zone is organized under one administrative unit, meaning that operations and revenue teams report to a single Zonal Manager. This allows the Zones to function as strengthened business units, with increased accountability. The model strives to enhance cooperation and coordination between technical and commercial teams, minimize costs, and enhance efficiency. The final report detailing the organizational structure, outlines of job descriptions for key staffing categories, and the revised salary structure was submitted to DWASA in October 2015.

The Options Report of the Organizational Structure of DWASA is included at Annex 3.

Utility Consumer Satisfaction Reports / Analysis / Forum 37. This TA supported consumer satisfaction surveys and

deliberative citizen forums in a total of 10 municipalities. This consisted of the following:

Demand-side survey of consumer’s perception of the quality of water utility services

Analysis against the supply-side benchmarking data generated by the water utility

Deliberative forum with citizen / consumers, the pourashava council and utility managers.

Reports, analysis and minutes of the deliberative dialogue were captured in Bangla. A translated version of the

21 | P a g e

assessment, analysis and dialogue in Faridpur and Munshigonj Municipalities is captured in Annex 4.

22 | P a g e

38. Key findings from this demand-side citizen engagement to validate the benchmarking data and drive accountability for performance are:

While there were differences in the supply-side and the demand-side perception of certain indicators, the greatest value-added was the deliberative discussion on these indicators and the necessary conditions for improving service delivery performance from both sides.

There is a need to streamline (and scale-up) this process of demand-side consumer engagement. This could be possible by developing a Bangla version of the SLB Connect application (http://www.slbconnect.in/) developed with World Bank support in India.

39. SLB-Connect (Service Level Benchmarking - Connect) is an ICT based citizen feedback initiative

focused on urban water and sanitation services, that was launched with the aim of addressing some of these challenges. It leverages the use of emerging ICTs such as mobile to web systems to conduct citizen feedback surveys, and make the data available real-time for monitoring, analysis and dissemination. The initiative has been operationalized as an extension of the Service Level Benchmarks (SLB) initiative of Government of India (GoI), which is aimed at institutionalizing performance reporting by urban local bodies. Since the proof of concept in 2012, SLB Connect (SLB-C) has been implemented in eight cities covering over 30,000 households. It has also been leveraged as part of a national urban sanitation program in India (Swachh Bharat Mission), for conduct of city sanitation assessments covering 75 cities. It has also been integrated into the design of a Bank supported urban water supply project in Karnataka. Through this implementation experience, SLB-C has demonstrated a systematic ICT based approach for implementing citizen feedback processes at scale, and using it to improve service delivery monitoring as well as inform service improvement plans11.

Utility Benchmarking Training Minutes, Network Reports and Exchange Visit BTORs 40. To expand the utility benchmarking process to over 50 utilities, support was extended for 13 hands-

on training sessions on utility benchmarking data collation and analysis to a total of 119 water utility superintendents, finance and billing staff from a total of 59 utilities. These trainings in Bangla translating international IB-Net formats to operational staff within the utilities including:

Briefing on utility benchmarking, the International Benchmarking Network (IB-Net) and global IB-Net tools;

Detailed deliberations on the definitions for generating the utility benchmarking indicators and interpreting the data;

Hands on practice in the entry of utility benchmarking and demonstration of analysis and reporting at the country level;

A translated version of the minutes of the training from the 10th – 11th May, 2014 at the World Bank Office in Dhaka is included at Annex 5.

41. To move from the generation of benchmarking data to the analysis of water utility performance, this TA supported a total of 11 workshops for

11

Further information on SLB Connect is available in the output report for the World Bank executed technical assistance project P131968 “Service Level Benchmarking, Citizen Voice and Performance Improvement Strategies for Urban Water Supply and Sanitation Services in India”

23 | P a g e

utility managers to share their data with peer utilities. This created a form of peer pressure for utilities to justify their data as well as allowing strategic areas of performance improvement to be identified and shared amongst the network. Some key results from these network workshop reports were:

The development of performance improvement plans to address areas with poor benchmarking indicators

Use of utility benchmarking indicators for monitoring the effectiveness of the turn-around program (DWASA)

Sharing of consumer satisfaction surveys and identification of utilities to undertake ‘demand-side surveys’

Most of the workshop reports are available http://www.bwun.org/. The report from the 8th utility network workshop held in Srimangal, Moulvibazar from the 2nd - -4th April, 2014 has been included at Annex 5.

42. To move from the sharing of utility performance improvement plans to replicating those

performance improvements, this TA supported 11 exchange visits amongst utilities. Through these exchange visits water utility managers learn from their peers but at the same time they improve the accountability of benchmarking data by validating the validity of the data claims by their peers. Some of the key results of the exchange visits were:

the introduction of computerized billing systems

entering into agreements with banks for the payment of bills

mobile teams for identifying illegal connections / pumps

development of complaint redressal systems

escalating the issuing of disconnection notices The report from the 6th exposure visit and network workshop held in Sylhet from the 23rd – 25th July, 2011 has been included at Annex 5.

WSP / WBI Regional Water Utility Managers Training in Dhaka 43. An Executive Training Program on “Designing and Implementing Successful Utility Reform in Water

Supply and Sanitation” was conducted by the Water and Sanitation Program (WSP) and the World Bank Institute (WBI) from April 15 – 18, 2013 in Dhaka, Bangladesh. The training was conducted by World Bank staff from five country offices as well as Managing Directors of the Uganda National Water and Sewerage Corporation and the eThekwini Water and Sanitation Corporation, the Chief Executive of Water and Sanitation for the Urban Poor, and Director of Samatva Infrastructure Advisors.

44. This four day in-person executive training brought together senior and middle level managers and

decision makers from water service providers, relevant government departments (state and local) and other stakeholders from across three countries in South Asia, namely, India, Pakistan and Bangladesh. Through presentations, case studies, group exercise, guest speakers and interactive debates, the training aimed at helping participants to examine the issues that confront management of underperforming utilities on a daily basis. Key aspects of the training focused on performance benchmarking, public-private partnerships (PPPs), innovation and strategic communication, tariff design and revenue, financial challenges, strengthening relationships with CSOs and NGOs, gender equity, and the value of integrating ICT into the water sector. Furthermore, the program (i)

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incorporated south-south knowledge exchange; (ii) foster interactions among regional utilities; and (iii) share best practices and experience of change agents from within the region and globally.

45. The 35 participants from across the South Asia region included 15 Bangladesh representatives from

the Local Government Division, WASAs and Pourashavas. After the training these participants have made contributions to several initiatives currently underway in their respective utilities that includes:

The engaging of trade union leaders in organizational efficiency / reform processes

The establishment of a water utility training centre in Dhaka WASA

Undertaking skills development training for the pump operators of various municipalities The agenda and participants from this executive training session are included at Annex 6

Harmonizing the Water Act with Municipality / WASA Acts 46. The approval of the Water Act in 2013 (based on the National Water Policy) seeks to ensure the

integrated development, management, extraction, distribution, usage, protection and conservation of water resources in Bangladesh. As per the Water Act, all forms of water (e.g., surface water, ground water, sea water, rain water and atmospheric water) within the territory of Bangladesh belong to the government on behalf of the people. The Water Act provides for the priority usage of water (drinking water > domestic usage > irrigation > fish culture > bio-diversity > wildlife > instream flow > industry >salinity control > power generation > recreation > miscellaneous) in areas where the water resources is in critical condition. The Water Act requires the issuance of permits/licenses for individuals and organizations to extract, distribute, use, develop, protect, and conserve water resources including any structures that impede the natural flow of rivers and creeks.

47. To support the harmonization of the Water Act with the existing Municipality and WASA Acts this TA provided technical assistance to the Policy Support Unit in the Local Government Division of the Ministry of Local Government Rural Development and Co-operatives and Water Resources Planning Organization (WARPO) under the Ministry of Water Resources. This comprised of

Analysis of the existing the Water Act (2013), the Local Government Acts [City Corporation, Municipality and Union Parishad] and the Water Supply and Sewerage Authority (WASA) Act

Consultations with City Corporations and Pourashavas, Union Parishads and WASAs, Ministries of Local Government and Water Resources, Donors and NGOs to understand the existing laws and rules, practices and challenges in the regulation of water resources.

Propose central government rules / circulars and model local government by-laws to align the implementation of the Water Act with existing Municipal / WASA practices and capacities.

48. The key recommendations from this TA support to the development of rules for the implementation

of the Water Act are:

Establish a Water Resources Regulatory Commission with the mandate and capacity (social and technical) to arbitrate on the price point associated with the standards set by the relevant ministries and efficiencies of water resource managers. In water stressed areas this could include the introduction of differential tariffs on ground water versus surface water abstraction where metered (i.e. BMDA areas) or differential electricity tariffs for agriculture.

Given the legacy of failure of regulatory systems in Bangladesh associated with a culture of political patronage and rent seeking, it is proposed to develop rules and model by-laws under the Water Act that systematically separate the regulation of failure (by the central

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government), from the licensing of compliance (by local governments), from the management of services provision (by asset owners).

The report on Harmonizing the Water Act with Municipality / WASA Acts is included at Annex 7

Urban Sanitation: Fecal Sludge and Wastewater Management Diagnostics 49. With high levels of access to basic sanitation infrastructure but very low access to sewerage and

negligible treatment of fecal sludge, this TA has prioritized the areas of the greatest impact on the greatest number of people. In urban sanitation, this TA has focused on the establishment of an analytical framework for understanding the disposal of fecal sludge and understanding the impact of discharging sewage and effluent into poorly maintained open drains. Working with operational colleagues this has extended support for the identification of appropriate non-networked sanitation solutions for urban areas that addressing the safe disposal of both the fecal effluent and the fecal sludge. Working with the government this has sought to try to address the perverse institutional incentives that promote and sustain the indiscriminate disposal of fecal sludge and fecal effluent. The primary outputs under this component have been:

Political Economy Analysis, Fecal Flow Diagram and Service Delivery Assessment for Dhaka 50. At the start of this TA, there was little recognition in either policy or practice of the need to collect /

transport / treat and re-use the fecal waste that is contained in pits and septic tanks across Bangladesh. While considerable attention has been focused towards the eradication of open defecation and improving the quality of latrines there has been minimal attention to fecal sludge management (FSM). More recently, there has been growing recognition of the FSM challenge, largely as a result of the WSP Review of Fecal Sludge Management in 12 Cities highlighting the poor status of fecal sludge management in Dhaka City. Since then, an FSM Framework for Dhaka has been drafted by BUET with the support of the Gates Foundation while the DWASA sewage master plan supported by the World Bank has included proposed the installation of FSM treatment plants.

51. As part of a global study to develop instruments to assess the status of Fecal Sludge Management,

this TA has supported components of the Dhaka assessment, namely the political economy analysis, the fecal flow diagram and the Service Delivery Assessment. Key findings of this report reveal:

Although there is practically no open defecation in Dhaka, most all fecal sludge and fecal effluent is discharged into the storm water drainage system in-spite of the rapid upgrading of housing under rules / building codes to the contrary and a sewerage system serving 25% of the city. Fecal matter enters the storm water drains either through both direct connections and septic tanks, through DWASA sewage lines and DCC drains, through both formal and informal pit emptiers.

Previous assessments of the status of the existing wastewater systems for the preparation of the D-WASA Master Plans for Sewerage and Drainage primarily focused on the status of the infrastructure rather than the use of the infrastructure. This may have led to the erroneous assumptions on the operational status of the sewerage infrastructure. Given the fairly standardized nature of the pressures generated in sewerage systems it was possible to use electricity data from the pump stations to ascertain the effectiveness of previous investments in sewerage systems. In the development of the fecal flow diagrams for Dhaka city it became apparent that historical electricity data for pump stations and treatment plants would enable the viability of any World Bank investments in any sewerage and drainage infrastructure in any city to be more accurately assessed prior to investing based on legacy performance.

Given the general high levels of satisfaction with the use of storm water drains for fecal disposal by property developers and households, formal and informal pit emptiers, DCC and

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DWASA staff and the apparently low personal costs for the majority of citizens (financial, health, fewer blockages) in-spite of strong housing / environmental / professional rules to the contrary it is considered essential to separate (a) the central government regulation of failure, from (b) the local government licensing of compliance, from (c) the management of assets to provide services to improve the incentives for regulatory compliance.

Given the sheer volume and the massive percentage of fecal waste from Dhaka that is carried through the storm water drainage system it is necessary to explore options to monitor and treat the storm water. Whilst this is in no way ideal, it is essential to treat the symptoms of the existing problem while seeking to address the underlying infrastructural and institutional causes. The PEA / FFD / SDA report on Fecal Sludge Management in Dhaka has been included at Annex 8

52. The government has recently established a committee for the establishment of a National Fecal Sludge Management Framework. The first draft of the fecal sludge framework for Dhaka city proposed the introduction of a sanitation tax, environmental police, a national data-base and payments for the receipt of fecal sludge. Through this TA, feedback was collated from across several units of the World Bank and provided to the Committee. This feedback suggested that:

the sanitation tax on all households by local governments (linked to holding tax) should be clearly targeted for the public good costs associated with the management of fecal sludge.

the costs of the environmental police and payments for delivery of fecal sludge could potentially be financed from the revenues of the imposition of the FSM tax

the national database of household sanitation could be delegated to local governments to be collated as part of their routine Property Holdings Tax Assessment.

Feedback on the draft FSM Framework by the World Bank is included at Appendix 8

Low-Income Customers: Delinking WSS Services from Tenure 53. According to the Census of Slum Areas and Floating Population 2014 there are a total of 598,490

households with 2,235,384 people living in 13,938 slums in all of the city corporations, municipalities, Upazila headquarters and urban areas of Bangladesh. These slums are characterized by at least four of the following: Poor housing; Room crowding; Poor water supply and environmental sanitation; Low socioeconomic status; Lack of security of tenure. Since 1997, this represents an increase of 9% in the number of households but 366% in the number of slums. This is associated with a huge growth in small and predominantly private low income communities (i.e. 70% of slums in Bangladesh have less than 24 households). The massive growth in the number of slums presents significant challenges to improving the water and environmental sanitation services in urban Low Income Communities (LICs).

The conventional approach of governments has been to seek to transform informal LICs into regularized settlements as a pre-cursor to extending water, sanitation and drainage infrastructure. This is has proven to be to be extremely complex and has generally failed to keep pace with the rapid dynamic process of slum creation.

An alternate approach has been for the governments to extend networked water and sanitation infrastructure services into LICs. However government resistance to this approach has been that can confer greater security of tenure to these residents justifying the argument that this should be preceded by the regularization of the LICs (as described above).

Another option for governments has been to engage with NGOs and donors to work with LICs on the demand side to upgrade the quality of water and sanitation services before applying for formal water, sewerage and drainage connections. The primary risk associated

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with this approach is that the water and sanitation services provided by the infrastructure beyond the meter / connection is not governed by any quality of service parameters.

Another approach is to forge partnerships with the existing providers of water and sanitation services (i.e. retailers, middle men, communities) and those that exercise de facto ownership rights over the land and housing within these areas. That is to deploy social / legal instruments to safeguard the quality of water and sanitation services where the government neither owns the assets nor bears the financing liability for the creation of assets.

Recognizing the importance of the provision of services to the urban poor, this TA has sought to explore different options for extending services to Low Income Communities. This exploration has been undertaken from both the perspective of utilities (i.e. service providers) and local governments (i.e. service ensurers) due to their differing mandates and social / legal / financial capabilities. This has included the following activities:

Low Income Consumer Service Improvement Plan (LICSIP) 54. The World Bank supported project DWSSP initially allocated USD 149 million to Dhaka-WASA

primarily for the upgrading of sewerage and drainage services within Dhaka city according to the prioritized investments identified under separate Sewerage and Drainage Master Plans. This project also included the allocation of USD 10 million for the extension of water and sanitation services into Low Income Communities through the adoption of the NGO social intermediation model.

55. Having suffered from excessive procurement delays, the World Bank supported DWSSP was scaled

back to USD 76 million. During this time, several of the LICs identified for World Bank support had subsequently disappeared being replaced by high rise apartment buildings. Given the growth of LICs and the inability of the NGO social intermediary model to catch-up or keep up with the demand for services in LICs, this TA has supported DWASA in developing a Low Income Consumer Service Improvement Plan (LICSIP) with the express intention of scaling-up the extension of legal connections to low income communities as registered consumers. Key findings of the LICSIP baseline report are:

LIC residents generally receive a good and affordable drinking water supply which is: o Accessible (an average of 11.6 metres and no source >18 metres from their house) o Sufficient (only 14% of residents ‘seldom’ or ‘never’ have enough water) o Reliable (on average water is available 18 hours / day) o Safe (75% of residents reported good quality water, only 20% treat before drinking) o Affordable (average households spend BDT 110/month = 1.2% of monthly income).

which is almost exclusively supplied by DWASA (but for which DWASA receives less than 12% of the potential revenues).

LIC residents generally receive a poor quality yet affordable sanitation service which is: o Accessible (56% within the compound and most latrines are nearby) o Insufficient (on average 13 households or 60 people per latrine seat) o Unsafe (10% hanging, 44% unimproved and 83% unhygienic latrines) o Affordable (average households spend BDT 31/month = 0.4% of monthly income). and is almost exclusively included in the rent to landlords (i.e. only 9% pay separately).

Barriers to the extension of formal water connections to LIC residents include: o Connection fees (BDT 15,000) and security deposit (BDT 20,000 or 5,000 in public

LICs) o Lack of clarity on the process for obtaining a legal connection o Perception of impermanence (although only 4% of LICs disappeared since 2006)

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o Commercial intermediaries (i.e. CBOs) do not consistently pay their rates o The control over LIC services by powerful mafia / middle men o High cost of piped sewers / drains in LICs o Indiscriminate disposal of fecal sludge (even by formal vacu-tugs)

The Low Income Consumer Situation Report is included at Appendix 9 56. Based on several rounds of consultations, feedback from sector stakeholders and DWASA the LICSIP

report has proposed the establishment of a LICSIP Project Unit to plan, design, procure, and supervise construction of new infrastructure in LICs. This LICSIP Unit will contract NGOs as a

Customer Service Agents to consult with community members and local zonal offices to develop a plan. The LICSIP Unit will contract a construction firm to build new WASA infrastructure and the Customer Service Agent will verify the quality and receive a fixed fee for each new registered customer. The proposed service delivery options for water supply and sanitation are as follows:

Water supply options in LICs: includes standpipes in public LICs, pre-paid water dispensers in private LICs, meter banks in vulnerable LICs and social businesses in select LICs. To keep the barriers to connections low DWASA will require only three conditions (a security deposit of BDT 1000, registration for the DWASA mobile billing program, a signed connection agreement) to be fulfilled in order to provide an authorized water connection. Customers with illegal connections will be allowed to regularize within a limited amnesty period.

Sanitation options in LICs: includes small bore sewers in stable LICs close to DWASA sewer lines, small bore sewers with anaerobic baffled reactors in relatively stable LICs further from DWASA sewer lines and settled sewers (septic tanks) in LICs that can be connected to sewers.

The total estimated capital cost of expanding water supply and sanitation services to all unserved LICs in Dhaka is BDT 31.4 billion (USD 405 million) of which BDT 1.87 billion (USD 24.09 million) is for water supply and BDT 29.5 billion (USD 379 million) is for sanitation.

The Low Income Consumer Service Improvement Plan is included at Appendix 9

Leveraging Slum Services 57. The delivery of water supply and sanitation services to LICs is particularly problematic. In many cases

the payment for water and sanitation services is included in rents for housing. In many other cases, high quality water and sanitation services allow landlords to charge higher rents. In both cases, public investments to improve water and sanitation services can result in higher rents for poor people. In this scenario, public investments to benefit the poor in LICs run the risk of primarily benefitting the de facto land / house owners and displacing the expenditures of the poor. However it is possible for the government to leverage improved water and sanitation services within informal / illegal settings without conferring tenure, or securing tenure, or risking the capture of public assets. This can be achieved by deploying social / legal instruments establishing some form of quality of service agreement with de facto land / house owners (i.e. mafia, middle men, retailers, households).

58. Under this TA, some of the social / legal / economic instruments were explored that government can deploy to leverage water and sanitation service quality in settings where the government neither owns the assets nor bears the financing liability. This comprised of:

A theoretical framework requiring asset ownership and financing liability to be retained together in any public provider partnership. This implies that a responsible public agency should not be investing in asset creation (i.e. bearing asset financing risks) in settings where ownership rights over land / housing / water / sanitation (de jure or de facto) lie with others.

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An assessment of the de jure and the de facto assignment of the functions of policy, planning, capital creation, operation and maintenance, monitoring and evaluation within the drinking water supply and sanitation subject in Bangladesh to identify the responsible public agency for ensuring the provision of water supply and sanitation services to all.

An exploration of the various social / legal / financial instruments that local governments can deploy to leverage services for the poor within LICs. This included an elaboration of a range of options that could be deployed both with and without addressing the issue of the security of tenure (or more importantly the size of the window of tenure).

LEVER DESCRIPTION EXAMPLE

NEG

ATI

VE

P

OSI

TIV

E

Quid-pro-quo “I will do this, if you do that” Orangi Pilot Project (component sharing)

Bulk tariffs Reduced rates for registered on-sellers CBOs licensed against quality of services

Rebates ‘Money back’ for meeting quality standards Households protect hand pump casings

Recognition To elevate the status of informal networks Tanker unions impose quality standards

Tax Breaks Reduce barriers to formalizing of providers Regulate makers of sanitary-wares

Loans Enable informal providers to access credit Upgrade donkey carts to safe vessels

Quality Mark Increased market share of quality providers Quality mark on safe water bottles /cans

Rewards Recognition of exemplary performance Awards to cleanest communities

Access Rights Authorization to access resources / locations Ragpickers access waste transfer sites

Fee Waiver Reduce the cost for the poor to connect Then cross-subsidize from user charges

Amnesty Agree not to prosecute illegal connections To regularize water / sewer connections

Clearance Authorization of legitimate works No objection certificate on works

Trade License Authorization to perform a qualified activity Registration of plumbers / tankers

Fines Penalty for a failure to meet standards ‘On the spot’ fines for littering

The report on Leveraging Slum Services is included at Appendix 10

Lessons Learned 59. This TA has been built on the premise that better access to information on the ‘quality of service’

bottlenecks at different points in the water and sanitation service delivery chain can create incentives for improved decision making by service providers and policy makers. This has shown in particular that:

this external technical assistance (TA) has been able to develop the capacity to generate utility benchmarking data but it has not been able to generate sufficient incentives to utilize this water utility benchmarking data for service delivery improvements. For this reason, it has been proposed that the Bangladesh Water Supply and Sanitation Regulatory Commission (BWSSRC) can create incentives for the generation and interrogation of this utility benchmarking data.

deliberative dialogue on the differences between ‘supply side’ operational performance data generated by water utilities and ‘demand side’ consumer satisfaction data generated by local governments against the same benchmarking indicators can strengthen the accountability for the delivery of water supply services that are more accountable to citizen voice.

both the existing networked sewerage systems and the on-site fecal sludge management systems in Dhaka are ineffectual. Interrogation of data on the electricity consumption of sewerage pump stations and treatment plants as well as the practices of DCC and DWASA staff, formal and informal pit emptiers, property developers and households reveals that almost all fecal waste is actually discharged into the storm water drains.

LIC residents in Dhaka appear to have sufficient, proximate, affordable less reliable but unsafe access to drinking water and sanitation services however the levels of access, the reliability, the

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safety and the price of water and sanitation services are primarily mediated by market forces that are often distorted by the exercise of control over the ownership of LIC land and assets.

Recommendations 60. While this TA sought to move from the support for the generation of information to the fashioning

of systems (i.e. institutions) to generate, manage and make decisions based on service delivery information there is still a need for support for institutions to interrogate service delivery data. In particular, there is a need for future follow up in the following areas:

While water utilities have the capacity to generate benchmarking data, a system for comparing and making tariff decisions based on this data is still pending with the draft Bill for the establishment of the Bangladesh Water Supply and Sanitation Regulatory Commission (BWSSRC). Support for the establishment (and effective functioning) of the BWSSRC is essential to create the incentives for utilities to continue to generate the data necessary for the calculation of water tariffs and the benchmarking of utility performance.

While the use of ‘demand side’ consumer satisfaction surveys to interrogate ‘supply side’ utility benchmarking indicators has been tested through this TA, this could be simplified and scaled-up through the SLB Connect (Service Level Benchmarking - Connect) application developed with World Bank TA support in India. SLB-Connect (http://www.slbconnect.in/) is an ICT based citizen feedback initiative that can develop ‘demand-side’ citizen feedback to interrogate ‘supply-side’ generated benchmarking indicators of urban water and sanitation service delivery performance.

Almost all of the fecal waste of Dhaka city is ultimately ‘collected by’, ‘transported in’ and ‘discharged from’ the deep storm water drains. Given the role that these storm water drains play as a combined storm water sewerage system, and given the strong political economy in favour of the use of the storm water drains for the transfer of fecal sludge, it is proposed that:

o the Government; explore the cost / benefit of establishing primary treatment facilities at the existing outfalls of these storm water drains (which has not been assessed in either of the Sewerage or the Drainage Master Plans for D-WASA).

o the World Bank; require all electricity records of all sewage pump stations and treatment plants (or ideally smart kW.hr electricity meters to be installed) to evaluate the effectiveness of pre-existing sewerage systems prior to considering any future investments in the expansion of sewage pumps stations or treatment plants.

Public investments in extending access to water and sanitation assets in LICs is deeply problematic when the ownership rights over land or housing or water or sanitation assets (de jure or de facto) is exercised by others. Not only does this enable those who exercise asset ownership to benefit from such public investments but it also fails to establish a system to enforce water and sanitation service standards. In such contexts, there is a need to explore the instruments that governments can deploy to enforce service standards on those who exercise the ownership rights on the land and housing assets to also bear the financing liability for water and sanitation asset investments. This could include a range of

o positive incentives (i.e. quid-pro-quo instruments of making public investments in bulk mains if private owners invest in feeder mains, offering lower bulk tariffs for private owners that ‘on sell’ water that meets public service standards, financial rebates for private owners that invest in improved sanitation facilities, tax breaks reducing the costs or certified quality marks increasing the potential retail price for vendors that comply with quality standards), or

o negative incentives (i.e. an amnesty on prosecution of illegal water connections, a fee waiver on the legalization of illegal water connections, the provision of access rights of rag-pickers to public waste transfer station, the requirement for all vendors to have a

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trade license for gaining a water connection for the on-selling of drinking water, fines on water asset owners for a failure to meet water and sanitation quality standards).

Future technical assistance to the government of Bangladesh should be directed to linking the systems for the monitoring and evaluation of water and sanitation service delivery to the fiscal intergovernmental system for incentivizing the performance of municipalities. This should potentially provide technical assistance to identify:

o the potential monitoring indicators and fiscal systems to incentivize municipalities to ensure that all drinking water and sanitation service providers within their jurisdiction comply with central drinking water and sanitation quality of service standards.

o the potential avenues for municipal local governments to access the capacities necessary to issue the by-laws strengthening their planning, licensing and monitoring processes and build the social capital necessary to support adherence to drinking water and sanitation quality of service standards.

o the identification of the arbitration options to enable the just adjudication on the tariffs that need to be associated with quality of service standards (given the implications of quality of service compliance on the cost of service delivery).