18 Jun MAKING THE STATE WATER UTILITY WORK THROUGH CORPORATIZATION
The reform of public sector water utilities fails or succeeds based on effective corporatization. Corporatization is the process of transforming the Water Utility from a Government Agency to a Corporation. Transforming the SWA into a water utility corporation basically is changing a Civil Service organization into a corporate organization.
CORPORATIZATION IS THE BEST REFORM STRATEGY FOR THE SWA FOR THE FOLLOWING REASONS
- State Governments are over burdened with increasing needs for infrastructure and social services. Water is a critical social service that the Government funds. The financial burden on States ranges from $500M and above. Yet the performance of most State Water Utilities hovers at around 30%. Just as water is a social product, it is also and economic product. If a SWA is corporatized, it can become financially viable, relieving the government of the financial burden while increasing coverage and availability.
- The water utility must improve productivity, quality, consistency of supply, and number of people served to meet increasing needs for water supply. The chances of a water utility achieving such improved output and outcome is greatly improved through corporatization. As a Civil Service organization, the SWA is focused on running as a bureaucracy. The focus (and most times the goal) is always on doing things right, according to Civil Service Rules. When corporatized, the Water Utility is driven by outcome and therefore the focus is on doing the right things to achieve the output and outcome.
- Currently, most governments must play the role of regulator and supplier of water. Available data indicates the government’s performance at best is mediocre. Corporatization allows for the set-up of autonomous water utilities that produce and distribute water. This allows for multiple entrants into the business, and allows the government to focus on and excel at regulating the sector.
REFORM PROCESS INCLUDE
- Institutional Reforms: This relates to Institutional arrangements governing the water sector. It involves unbounding institutions involved and engaged in the Water Sector, allowing for better effectiveness, efficiency, and improved specialization. Governance of the Regulator and the water utility will be covered here
- Strategic Reorientation: This involves developing service and investment strategies to meet current and evolving needs. It involves such things as Government Strategies for Water Supply and Investment Plans, new business plans, new strategic plans, new
- Reorganization and Restructuring: This involves making changes to work functional structures and reporting and relationship structure resulting in a new organizational structure (new functional structure and new organogram).
- Re-engineering of Operational and Managerial Processes: This involves making changes to improve output, service delivery, and financial results. The focus will be to optimize operations, including commercial services.
- Change Management: Change management builds bridges between the Civil Service organization and the corporatized entity. It also includes adoption of new and improved operational and managerial processes. Change management involves Stakeholder identification, analysis and effective management, communication, training to build capacity and cohesion.