The government is trying to get a stallion to push its water cart in the Kathmandu Valley by the end of the year 2002.  

Whether water is a social or an economic good has been a topic of debate for a long time. Oriental societies like ours carry a deep rooted tradition which regards water as welfare and social commodity. Beautifully crafted water spouts in midst of the city cores and public kuwas constructed by people aiming for the welfare of society are testimonies to this. In the modern times cityscapes have changed, population has grown, water sheds have degraded and the rivers are polluted. The water is now no more a plentiful divine commodity that may be easily wasted and forgotten about. Water management therefore has got to change with blends of complex engineering and management skills and has to invent new solutions to meet its new challenges.  

Many cities- both in the developed and developing world- are seeking more professional management organizations to manage their water supplies.  The market of private water utilities operators have been continually expanding as they have not only successfully transformed sick water utilities into   sustainable business institutions but mainly because they have been able to win the consumer confidence with better levels of service.  

If we were to apply the horse and the cart analogy to our utility in Kathmandu, we can sense where the problem lies. More than one horse is trying to pull the cart - all in different directions. The resultant effect is that everyone assumes that one is putting a lot of effort to pull the cart forward, but in fact the cart is just rotating around the same point. These horses could be identified as  political segment,  government,  utility management,  donors, etc. 

What we need to do is to change to a one - horse (but a strong) cart, which at one time will only move along one direction.  This will be the type of organization where the management does the managing, the politicians play the referees, the government sets the rules and the donors support the financing and the development. This can be achieved either through restructuring of the public utility, giving them ample autonomy, or through inviting a private operator to take up the distribution role. But, transforming public utilities have not proved much promising in the past; Nepal Water Supply Corporation already enjoys a fair deal of virtual autonomy indeed but results are far below public expectations.  

A private operator is definitely not a magical solution to the problem we have today. The hope for betterment comes from the fundamental difference of transforming the water utility from what is now looked upon more as a welfare organization to a business entity which runs the risk of loosing money and face if it were not to perform to defined standards and consumer satisfaction.  

The government formed a high level private sector participation committee in 1997 to process for the recruitment of a private operator to take over the operation and maintenance of the water utility in the Kathmandu Valley. A NGO coalition is also working as a civil society, which is closely monitoring the progress. Despite all these efforts, information needs to be more rigorously brought out into the public and a greater confidence and consensus needs to be built towards the process. Instead of blaming the donors and taking hesitant steps towards this direction, it is time that we spark off a general debate on what is good for us. Whether private or no private, we then at least have a much widely owned choice that we will have made for ourselves.  

It is generally misconceived that the whole process is about selling the utility to the private operator and the operator will charge high rates affordable to only the affluent classes.  The fear prevails - the poor may be denied the nature’s gift of life and good health.   

The facts are different. The contemplated contract does not allow the horse to own the cart. The horse can not also decide how much to charge for the delivery of goods. The state will still own the assets and the operator will have no role in fixing the water charges. An independent regulatory body of professionals will be established by the state to make adjustments in the tariff in line with a pre-defined and publicly notified tariff policy. The regulatory body is the driver of this cart. It tells the horse where to go and what standards to meet.  

The state is the owner. It is therefore the state and not the operator which will decide whether to make a profit from the water sold or to subsidize the water supply charges in the Kathmandu Valley. It will do so by defining a tariff policy. The operator will be paid his fees for water produced or sold irrespective of the water charges.  

The tariff is certainly going to be hiked, not because a private operator is coming in but because the utility is currently running dangerously low in resources. The generated revenue hardly meets the cost of operation and a decent maintenance, leave alone debt servicing and investment. It is one of the main reasons why the repair, maintenance and supply side remains so poor today. How long can people of country’s relatively affluent capital live on a system maintained through government charity, when even people of rural Nepal, with much lower household incomes, are paying fully for the regular operation and maintenance of their systems?  

The operator fees will be tied to pre-defined and contractually bound efficiency targets. These will include the water it has to deliver in the low income areas, the leaks it has to fix, the billing and collection efficiency it has to improve, the equitability in supply hours between different service locations, etc.  But besides the government, like we need the traffic police to regulate the cart on the road, we need civil societies, consumer groups and other social entities monitoring the operator.  

The experts, the civil societies, the consumer groups and above all the public have a stake in the whole exercise and need to interact more. With wider and factual information, the process is likely to win a broader support. After all, it is not a tiger to be afraid of, it is merely a horse. If we can tame the horse right, it will not kick our backs, it will only carry our burden for a modest dinner.

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