Regulating to revive water supply in urban Nigeria

By
Joachim Ezeji

Perhaps, in recognition of the importance of water resources management for the economic development of Nigeria and the well-being of its citizens, the government took a number of initiatives related to water resources policy in the latter part of the 1990s, which ultimately led to present day discussions on revision of the water law. These included development of a set of key water resources principles that were circulated initially in 1998 for review by approximately 100 representatives of government agencies, academics and other water specialists; a World Bank sponsored study, concluded in 2001, that included specialist reports on the legal and regulatory framework, institutions and trans-boundary waters, various drafts of a water policy culminating in the 2004 National Water Policy, and the EU funded report on Water Resources Management and Policy etc.

Progress was being made in other water-related areas during the same period. A National Water Supply and Sanitation Policy was drafted in 2000 (FMWR, 2000) which, although currently under review, incorporates a number of principles for which water resources policy and law needs to provide the framework. In 2006, a draft Irrigation Policy was prepared that draws on the principles of the National Water Policy. At State level, a model Water Supply Services Regulatory Law has been prepared in association with the World Bank-supported WIMAG initiative, (Water Investment Mobilization and Applications Guidelines). It provides a basis for water supply reform legislation including establishment of State Water Regulatory Commissions and licensing procedures for water service providers. It is anticipated that most states will adopt such legislation, adapted to their individual contexts as required. In relation to natural resources and the environment, a national policy on the Environment was formulated in 1999 that provided for sustainable development based on proper management of the environment and in 2006 a second reading of a Bill to establish the National Environmental Standards Enforcement Agency (NASEA) went through the National Assembly.

But, in view of all the foregoing, it is germane to understand what influence the regulation of water utility performance would have on poverty alleviation. This could be viewed from the perspectives of legislative reform in urban utilities in order to achieve a new institutional framework for it, defining functions and powers of the institutions; to license water use, regulate operations, and monitor compliance etc. This has been predicated on the premise that in Nigeria, all the 36 State Governments and the Federal Capital Territory (FCT) have each set up a State Water Supply Agency (SWA) charged with the responsibility of providing potable water supply to the urban and in some cases their semi urban communities but that sad tales of high operational costs, poor revenue, epileptic power supply, inadequate funding, ill-motivated personnel, aging plants and machineries have remained the undoing of these utilities. The consequence is that many Nigerians lack sustainable access to clean drinking water, and those for productive activities. The tragedy in all these is such that if sustainable water supply is a ladder in economic development with higher rungs representing steps up the path to economic well being, there are roughly 80% of households, three-quarter of Nigerians, who live lacking support to get a foot on the first rung of the development ladder.

A typical case is the Lagos State Water Corporation. Here, the water distribution network can only reach one in every three of the 15 million inhabitants of the city. Yet, they projected population growth of 4% per annum of the city means that the city’s water demand, will double by the year 2020. The cost of meeting current and projected demand has been put at around $2.5 billion over the next 20 years.A World Bank 2003 report had stressed how the abysmal performance of public utilities has come to symbolize the poorest aspects of governance in Nigeria. Using Lagos as a reference the report revealed that being neglected and close to collapse, the publicly run Lagos State Water Corporation holds the dubious distinction of having the highest recorded level of unaccounted-for-water in the world. Only 4 percent of its water production capacity goes towards the creation of revenue.
Unaccounted-for-water is the most common measure of the efficiency of a water company. The World Bank defines it as “the difference between the quantity of water supplied to a network and the metered water by the customer” It has two components; physical losses due to leakage from pipes; and administrative losses due to illegal connections and under registration of water meters. For any water utility to maintain or restore a lead to consumers on water efficiency, it must get on top of its leakage problems. Leakage by water companies in England and Wales fell by around 20 million liters a day (ml/d) in 2005/06 because of strict regulation by the Office for Water (OFWAT); its official regulator. The overall leakage in England and Wales was close to 3,600ml/d in 2006 compared to nearly 5,000 ml/d just a decade earlier. OFWAT took action that required a utility like Thames Water to make a substantial reduction in leakage, and the company entered into a legally binding agreement with the regulator (OFWAT), committing it to spend GPB150million of its own money to step up the program of water mains replacement. It also risks being fined if it does not meet its future leakage targets.

But in an ailing economy such as Nigeria’s where the Gross National Index is US$560 (World Bank, 2006), no authority actually regulates the urban water utilities. Yet, over 70% of the populations are poor and well over 50% of them live in the cities, and depend on these utilities for their daily water needs. I will therefore suggest that a review of a recent document put in place by consultants for the Federal Government of Nigeria in this context is desired. This model water supply services regulatory law has been prepared in association with the World-Bank supported Water Investment Mobilization and Applications Guidelines (WIMAG). WIMAG provides a basis for water supply reform legislation including the establishment of State Water Regulatory Commission and licensing procedures for all water service providers. It provides an equitable approach to water pricing in Nigeria.

In tandem with the Nigerian National Water and Sanitation Policy (2000) and the National Water Resources Bill (2007), WIMAG and the model State Water Supply Services Regulatory Law (WSSRL) insists that each state of the federation with a State Water Agency (SWA) must establish a regulatory commission that is empowered to issue licenses for the provision of water supply services by both government and private sector entities; define minimum service requirement; set tariffs; define rights and obligations of the water service providers; and define performance standards.

Further to the foregoing, States are to ensure that water service providers are autonomous bodies subject to regulation by the state regulatory commission; and that the regulatory commission is not subject to the direction or control of the state governor or any other person in respect of any determination, report or inquiry; and that the sector is structured to prevent misuse of monopoly power. Above all, WIMAG demands that Nigerian States should incorporate principles of good governance into the structure and operational procedures of state water agencies, particularly; equity, accountability, efficiency, transparency and public participation. States are also required to establish appeals mechanisms for decisions taken by water service providers under their jurisdiction.

The likely influence of the WIMAG document on utility performance and poverty alleviation in Nigeria need to be further explored under this premise; in addition to comparing it with those of organizations such as OFWAT and the Environmental Agency in the UK. I think that doing this will support age long efforts to revive many of Nigeria’s ailing water utilities.