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Private sector involvement in urban water supply management, Ghana

Napoleon Abiwu, 2015 Thesis Abstract:

The performance of public utilities in low-income countries with respect to service to all customers, and particularly lower-income urban consumers, is understood to be limited in many cases. The Government of Ghana chose to implement a private sector management contract in order to deliver significant change in service delivery and financial viability. The five year management contract with Aqua Vitens Rand Limited ran from 2006-2011 and was not renewed.

This study investigates the public utility outcomes, both as a state owned corporation and a state owned limited liability Company, and compares those outcomes with the achievements of the private Management Contract. The latter two management models operated under the oversight of the newly formed economic regulator, Public Utility Regulatory Commission in 1999 and any effect of that regulation is considered. The hypothesis of the study developed in 2008 was that a management contract would not provide the necessary level of empowerment, incentives and commitment.

The case study approach was employed for the study and document review, interviews and survey were the main research instruments employed for data collection. The study areas and respondents used were carefully picked out taking into account the political, economic, geographical, social and cultural significance that each of them represents and commands. The results of the study were analysed and interpreted using secondary data from the literature review.

The study found that, both operationally and financially, there were no significant improvements during the period of the private operator compared with that of Ghana Water and Sewerage Corporation and Ghana Water Company Limited in areas such as water production, customer metering, non-revenue water, billing efficiency, bill collection efficiency, days receivables, liquidity, operating, profitability and labour productivity ratios, water tariff, creditworthiness and level of investment. Not only that, but also, the study revealed that the two previous reorganisations failed to make any significant difference. Averagely, the private operator reduced non-revenue water from 51.62% to 49.22% over the 5-year period.

Generally, all three regimes exhibited high levels of inefficiency and ineffectiveness in reducing non-revenue water. Political patronage, nepotism, cronyism, tribalism and corruption have eaten deep into the fabrics of the public water utility resulting in a high labour productivity. ii

Finally, the anticipated capital required for investment could not be accessed, a responsibility that remained with government, and the capability of the contractor did not appear to be strong enough to overcome the resulting challenges.

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