Something is changing in the way provincial water utilities are thinking business in Argentina.
Years of economic instability and strategic shifts in the water sector translated into a lack of a long-term vision of improvements in the provision of water and sewerage services in Argentina. As a result, coverage and service levels today are still far from optimal (in urban areas, 87% have access to piped water and 58% to sewerage. Only 20% of urban wastewater is treated). Cost recovery is low in most of the operators. Metering of consumption is rare; utilities generally cannot estimate non-revenue water rates, which are thought to be quite high. In the end, it is the customer, in one form or another, who ends up paying the costs of these inefficiencies.
The Government of Argentina, through the Secretariat of Water Infrastructure and Policy (SIPH) and the National Directorate for Water Supply and Sanitation (DNAPyS), has set new policy directions reflected in the National Water Plan, not only to increase access, but also to strengthen the institutional framework and to improve the sustainability of service provision.
This focus on institutional strengthening is ambitious, and sometimes difficult to harness… To the question of “where to start?”, the response was clear: Proper Planning.
The graph above (from a previous report by the World Bank) illustrates a path of a utility towards financial sustainability. At the bottom, utilities are unviable, do not cover O&M costs and depend on subsidies to survive; whereas utilities at the top are financially independent, with full creditworthiness and able to access financial markets to cover all their needs. Many Argentinian utilities are at the bottom of the ladder. Utilities and the DNAPyS had it clear that the race to the top needs to start with a proper Business Plan, to address, in a rational and systematic matter, the myriads of operational and managerial inefficiencies affecting performance.
In the federal context of Argentina, where the responsibility for service provision relies at the provincial level, and much of the financing comes from the federal government, it seems logical that the DNAPyS promotes a planning tool among the main water operators in the provinces as a systematic way to monitor performance across the nation.
So, what is the plan to start Planning “properly”? DNAPyS has defined a gold standard: The Results Management Plan or PGR for its acronym in Spanish. This is something as simple as a corporate Business Plan that sets a baseline (where the utility is today in terms of performance using key performance indicators) and an end line (where the utility wants to be in five years ), and then what are the activities that will take it there, either structural or non-structural, with the corresponding costs and financing mechanisms. The interesting part is that utilities are developing these plans on their own, using a participatory approach and engaging their key staff in the planning exercise.
The World Bank is supporting this effort in the ten provinces of the Belgrano Program, among the poorest of the country, in the North of Argentina. So far, six PGRs have been prepared and approved by the Operator, the Provincial Regulator, the Province and the DNAPyS at the central level in the provinces of Jujuy, Salta, Corrientes, Tucuman, Formosa and Chaco. It is indeed very promising to see this “new Compact” in the water sector, as these different stakeholders are agreeing on targets and means to reach them.
The other four PGRs are Santiago del Estero, la Rioja, Misiones y Catamarca and will kick off in 2019. Provinces outside the Belgrano Program such as Mendoza, Neuquen and San Juan have also followed suit.
True. The world is full of planning tools and other similar documents that end up on the shelves and may be useless at the end of the day… but what if there is a National Directorate for Water Supply & Sanitation (WSS) aiming to use these instruments to monitor progress at the provincial level, and take decisions on investments based on a mixed criteria of needs and progress made in implementing the PGRs?. The outlook may start changing… utilities would stop operating on a short-term basis and shift from basic troubleshooting mode to an operation based on long-term rationale and strategic vision. As progress is made in key performance indicators and utilities become financially stronger, service quality and customer satisfaction are expected to rise. The upward path in the sustainability ladder is ON.
Years of economic instability and strategic shifts in the water sector translated into a lack of a long-term vision of improvements in the provision of water and sewerage services in Argentina. As a result, coverage and service levels today are still far from optimal (in urban areas, 87% have access to piped water and 58% to sewerage. Only 20% of urban wastewater is treated). Cost recovery is low in most of the operators. Metering of consumption is rare; utilities generally cannot estimate non-revenue water rates, which are thought to be quite high. In the end, it is the customer, in one form or another, who ends up paying the costs of these inefficiencies.
The Government of Argentina, through the Secretariat of Water Infrastructure and Policy (SIPH) and the National Directorate for Water Supply and Sanitation (DNAPyS), has set new policy directions reflected in the National Water Plan, not only to increase access, but also to strengthen the institutional framework and to improve the sustainability of service provision.
This focus on institutional strengthening is ambitious, and sometimes difficult to harness… To the question of “where to start?”, the response was clear: Proper Planning.
The graph above (from a previous report by the World Bank) illustrates a path of a utility towards financial sustainability. At the bottom, utilities are unviable, do not cover O&M costs and depend on subsidies to survive; whereas utilities at the top are financially independent, with full creditworthiness and able to access financial markets to cover all their needs. Many Argentinian utilities are at the bottom of the ladder. Utilities and the DNAPyS had it clear that the race to the top needs to start with a proper Business Plan, to address, in a rational and systematic matter, the myriads of operational and managerial inefficiencies affecting performance.
In the federal context of Argentina, where the responsibility for service provision relies at the provincial level, and much of the financing comes from the federal government, it seems logical that the DNAPyS promotes a planning tool among the main water operators in the provinces as a systematic way to monitor performance across the nation.
So, what is the plan to start Planning “properly”? DNAPyS has defined a gold standard: The Results Management Plan or PGR for its acronym in Spanish. This is something as simple as a corporate Business Plan that sets a baseline (where the utility is today in terms of performance using key performance indicators) and an end line (where the utility wants to be in five years ), and then what are the activities that will take it there, either structural or non-structural, with the corresponding costs and financing mechanisms. The interesting part is that utilities are developing these plans on their own, using a participatory approach and engaging their key staff in the planning exercise.
The World Bank is supporting this effort in the ten provinces of the Belgrano Program, among the poorest of the country, in the North of Argentina. So far, six PGRs have been prepared and approved by the Operator, the Provincial Regulator, the Province and the DNAPyS at the central level in the provinces of Jujuy, Salta, Corrientes, Tucuman, Formosa and Chaco. It is indeed very promising to see this “new Compact” in the water sector, as these different stakeholders are agreeing on targets and means to reach them.
The other four PGRs are Santiago del Estero, la Rioja, Misiones y Catamarca and will kick off in 2019. Provinces outside the Belgrano Program such as Mendoza, Neuquen and San Juan have also followed suit.
True. The world is full of planning tools and other similar documents that end up on the shelves and may be useless at the end of the day… but what if there is a National Directorate for Water Supply & Sanitation (WSS) aiming to use these instruments to monitor progress at the provincial level, and take decisions on investments based on a mixed criteria of needs and progress made in implementing the PGRs?. The outlook may start changing… utilities would stop operating on a short-term basis and shift from basic troubleshooting mode to an operation based on long-term rationale and strategic vision. As progress is made in key performance indicators and utilities become financially stronger, service quality and customer satisfaction are expected to rise. The upward path in the sustainability ladder is ON.
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