It is tough to be an effective first line of defense when you face threats on multiple fronts. But that’s the challenge currently facing water utilities as they aim to keep water flowing during the COVID-19 (coronavirus) pandemic, while the outbreak places substantial stresses upon them.
The COVID-19 crisis poses three main challenges for water utilities. The first is the loss of revenue. The suspension of water billing (for all or part of the population) has been a common and understandable feature of countries’ response to the crisis. Already, some utilities are reporting significant revenue reductions. Data collected by the International Benchmarking Network for Water and Sanitation Utilities (IBNET) reveals that collection rates have fallen by 40 percentage points for the utilities monitored.
The second challenge is the reduced availability of critical elements for operations, such as chemicals for water treatment, fuel for water pumps, or spare parts. Water utilities are also facing challenges in covering labor costs and providing adequate personal protective equipment (PPE) to their staff at a time when income is drying up. They are also adding costs as they rush water services to vulnerable communities by increasing access to water points, tanker services, and other enhanced delivery mechanisms.
The third challenge stems from the deferment of critical investments to meet the more urgent necessity of funding emergency responses. This is affecting areas such as the expansion of services, asset rehabilitation, and other capital expenditures.
In the short and medium term, the World Bank is helping utilities address these challenges. Resources include the following.
Considerations for Financial Facilities to Support Water Utilities in Crisis: This report lays out considerations that should be examined when designing a Water Finance Facility, which provides cash to help utilities continue providing essential services during a crisis such as COVID-19. The guidance in this paper can be incorporated into a standalone facility for water or a multi-sectoral facility encompassing water, electricity, transport and other sectors, which could be located at the national, regional or subnational level. It examines the key technical considerations related to water utilities that should be considered when designing such a Facility. It will help decision makers incorporate context-specific factors such as the economic situation, the scope and scale of the crisis, and the institutional arrangements governing the sector, along with policy considerations that will also influence the design of the facility.
COVID-19 Financial Impact Assessment Tool for Water and Sanitation Providers: This tool helps utilities quantify the financial impact of the pandemic on their operations. The tool looks at revenue, debt, operational expenditures such as wages and rent, and additional costs associated with the crisis such as chemicals, PPE, additional water points and tanker services. It can be updated on a monthly basis to provide an ongoing picture, and with informed inputs it can help service providers project the financial impact on their operations in the coming months.
These resources were developed with support from the Global Water Security & Sanitation Partnership (GWSP), a multi-donor trust fund hosted by the World Bank. GWSP is also providing virtual training courses across multiple regions on these subjects. Analytical work such as this can shape and benefit World Bank projects at the country level by providing the tools, frameworks, and resources needed for effective and evidence-based decision making. GWSP support, in quickly adapting to changing circumstances and delivering resources in a timely manner, has aided the speedy response.
At the national level, in Zambia, the World Bank is helping the Lusaka Water and Sewerage Company review and develop its emergency response plan. In Ethiopia, the Bank is helping the Addis Ababa Water and Sewerage Authority tap into expertise and experience from across the world and helping other local utilities procure necessary chemicals and reagents. And in Ghana, the Bank has partnered with the Ghana Water Company Ltd. to prepare an action plan to address the impacts and plan recovery from COVID-19 as well as modernize the utility.
The COVID pandemic has highlighted the importance of effective governance and strong water supply and sanitation (WSS) service providers. That’s why the World Bank is placing a strong emphasis on helping utilities ensure that they can fulfill their vital functions. Some longer-term interventions include:
The Utilities of the Future initiative addresses the challenges of delivering safe, efficient and resilient WSS services; it’s supporting the transformation of an initial group of 15 utilities.
The Policy, Institutions, and Regulations initiative is identifying governance bottlenecks to delivering sustainable services; it’s supporting an initial group of 10 countries.
The City Wide Inclusive Sanitation (CWIS) initiative provides technical assistance and other support to World Bank project managers and their government counterparts you are working for urban sanitation service delivery for all; this includes advocacy materials and project preparation and implementation resources and tools.
The Circular Economy and Resilience initiative promotes diversification of water sources to maximize availability, improve efficiencies across the water cycle, and harness wastewater as a valuable resource.
Over the past two decades, countries around the world have made major improvements in their WSS sector governance and utility performance. This has resulted in increases in the number of people reached by sustainable services.
Yet the current crisis risks backsliding and losing these hard-won gains. The COVID-19 pandemic has highlighted the importance of effective governance in the water and sanitation sector. That’s why the World Bank is placing a strong emphasis on helping utilities at this crucial moment and ensuring they can fulfill their vital function, so that they can provide safe water and sanitation services in a crisis and build resilience against major risks in the future.