Municipal sector review
An Example: Municipal Services of Water and Wastewater
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- 3. CENTRAL GOVERNMENT FINANCING AND CONTROL
An Example: Municipal Services of Water and Wastewater
2.27 Individual water meters are used in the sector and have resulted in a reasonable level of consumption - 80 to 130 liters per capita/day. Water tariffs, set by local authorities, have a wide range, and vary from US$ 0.30/m3 to US$ 1.0/m3. The tariffs generally cover operational costs but are not adequate to cover investments, especially for the small and medium sized municipalities that have relied on the central transfers, heavily subsidized loans from Iller Bank, and Treasury guaranteed loans in the past to finance investments. This type of generous central government support cannot continue due to fiscal constraints. Thus, the water and wastewater companies would have to adjust tariffs to generate more internal resources and be less reliant on the central government. However, a systematic approach towards tariff adjustment is not in place today due to the lack of a regulatory framework in the water sector. Economic regulations for water, that would ensure that consumers pay affordable tariffs for good quality service, are missing and should be developed as part of strengthening the water and wastewater sector, a key municipal requirement. 2.28 The levels of unaccounted-for-water are high and often exceed 50% of the water produced. In Europe the corresponding number is typically around 15-20%. The staff productivity of the utilities and the water and wastewater departments in a municipality is reasonable but not as high as utilities in Europe. Typically, more than 3 employees are in place per 1,000 connections. The information on the performance of the utilities is not available to the public and the data is not aggregated which makes it difficult to review the operations across utilities and develop policies for the entire sector. As part of the pilot performance benchmarking system, being led by the Ministry of Interior, information on the sector would be available for given parameters for a number of municipalities. 2.29 The private sector has only a limited role in the delivery of water and wastewater services. There is strong interest in the private sector (both domestic and international) to be involved, but the perceived high political risks, the poor creditworthiness of the municipalities and the absence of a supporting regulatory framework on service quality and tariffs are barriers for entry for the private sector. Turkey has a mature private sector and the financial and technical knowledge to operate water and wastewater utilities exists in the country. This capacity, combined with international firms if needed, should be fully utilized to increase the role of the private sector for the provision of municipal services. The involvement of the private sector would bring about efficiency gains and also would create opportunities to raise private capital in concession type of arrangements. 2.30 In the last decade the World Bank carried out six water and wastewater projects in Turkey (Istanbul, Izmir, Ankara, Bursa, Antalya, and Cesme/Alacati) amounting to US$805 million. These projects were successful in increasing water and wastewater coverage. However, on the institutional and financial front, the expectations were often not met. The water utilities have had difficulties in servicing the debt and have at times invoked the Treasury guarantee. In 2000, the Bank carried out a review of the operations in Istanbul, Ankara, and Izmir and in that context also reviewed the water and wastewater sector. Some of the key conclusions of the review were:
2.31 The Bank is working with the Government to develop a detailed strategy for the water and wastewater sector. The strategy would provide suggestions on developing water and wastewater regulation (economic and quality), increasing efficiency in operations, involving the private sector in a more systematic manner, and raising capital to finance investments. 3. CENTRAL GOVERNMENT FINANCING AND CONTROL3.1 The Central Government exercises considerable control over Turkey’s municipalities and other local authorities, mainly through the Ministry of Interior (MoI) and the provincial and district governors. The legal framework for this is provided in the Constitution where it says that the central administration has “the power of administrative tutelage over local authorities … with the objective of … securing uniform public service … and meeting local needs in an appropriate manner”. While the central government oversight has worked in the past for the provision of municipal services, it is becoming increasingly difficult for the State to manage 3,200 municipalities in an effective manner. Further, the central government has tremendous budget pressures and unlike the past, cannot continue to increase its financial support to the municipalities. Municipal reform should focus on a decreasing level of central government financial support combined with an increasing level of local revenue generation and control of taxes and duties. Download 0.72 Mb. Share with your friends:
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