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ZAMBIA: Unsolved Riddle of Sustaining Water Utilities

Nebert Mulenga

MANSA, Zambia, Jan 29 2011 (IPS) - Sebastian Chilekwa’s job title at the Luapula Water and Sewerage Company is “Managing Director of Dilemma”. Or it should be.

As the Managing Director of Luapula Water, established in 2008 and charged with supplying water to seven districts in Zambia’s wettest province, Chilekwa is in charge of a water utility that must stand on its own financially, despite inherited infrastructure that had been neglected for 30 years and a puny client base.

The company’s revenues can’t cover its operating expenses, far less pay to upgrade infrastructure. But its client base cannot readily pay more for water.

Inadequate service

“This water may look like urine or something like that, but this is the water we use for everything,” said Monica Mutale with distaste, drawing water from a public tap in Mutende site and service residential area in Mansa town, the provincial headquarters of Luapula.

“Sometimes, like when we have visitors, we buy [bottled] mineral water but it’s very expensive. You can’t manage to drink mineral water [every day of the month].”

A majority of people in the province draw their water for household use from shallow and frequently unprotected wells dug by hand.

Zambia’s northern Luapula Province has more surface water than any other part of Zambia. Yet the government’s Central Statistical Office rates the province as having the lowest coverage of any province in terms of safe water supply – at 18 percent of the population – and adequate sanitation at 2.3 percent. The last published census, in 2000, placed four of Luapula’s seven districts in the bottom 10 of the national ranking of Zambia’s 73 districts for access to water and sanitation.

In his office in a rented three-bedroom house in Low Density, one of Mansa’s better residential areas, Chilekwa concedes the scale of the challenge in front of him.

“The quality and coverage of water supply and sanitation services [in Luapula] is the lowest in the country. This is a direct consequence of lack of investment in the water sector since the 1970s,” he says.

“As a result, we are only able to service 12 percent of our coverage area. Large areas of our supply catchment are not supplied … with more than 30 percent of the formal housing area without supply, and none of the many peri-urban areas [where the poor reside] is covered.”

Though the infrastructure inherited from the councils is badly run-down, Chilekwa maintains that all piped water pumped by the utility is properly treated, and attributes the bad colour to poor filtration.

Insufficient revenue

Luapula Water and Sewerage Company was formed in 2008, beginning operations a year later as mining of manganese, copper and citrine in the area placed growing demand for water on the region. Luapula was the final conversion of muncipal-owned utilities across the country into commercial entities. Before the LWSC, responsibility to provide piped water fell to each of the province’s seven district councils.

Luapula Water can barely meet its financial obligations. Its monthly operating expenses are around $61,000, according to Chilekwa, but monthly collections are barely a third of that sum.

“This is making it difficult to meet even basic expenses like salaries which are standing at 204 million kwacha ($41,000) per month. Salary payments are in arrears for five months.”

The company also inherited unpaid electricity bills from the system’s former operators that now stand at $250,000.

Part of the reason for the low revenue lies in the paltry fees that LWSC’s small client base pays for the water. Fixed monthly charges for water range between $5 for medium class and $10 for high class residential areas. In the Zambian capital, non-metred consumers in shanty compounds pay the Lusaka utility around $25, while those in high class residential areas pay up to $100 per month.

But increasing the tariffs requires the approval of the National Water and Sanitation Council (NWASCO), a regulatory body overseeing the operations of the commercial utilities in the country.

In 2010, Luapula Water applied for a 100 percent tariff adjustment to enable it invest into the system, but the Council has approved a hike of just half that requested.

“Previous tariffs were extremely low and inadequate to sustain the operations and maintenance costs of the company,” acknowledged NWASCO in a press statement.

“With the new tariff, non-metered customers in Mansa’s low, medium and high cost areas will pay 30,000 kwacha ($6) and 75,000 ($15) kwacha per month… NWASCO has a mandate to ensure water supply and sanitation provision is affordable to all.”

Chilekwa says it’s too little, especially as the increase outside Mansa district will be limited to 30 percent. Luapula Water is also at a disadvantage compared to its fellow water utilities in other mining areas, because unlike on the Copperbelt, Luapula Province’s fast-growing mining operations have their own independent water supply.

The future

He places his immediate hopes in a pledge of support from DANIDA, the Danish International Development Assistance, to expand the customer base over three years.

“All in all, we need about $28 million capital investment to be able to upgrade our system, and start making profits.”

Securing investment for new and expanded infrastructure and developing sustainable revenue streams while serving an impoverished customer base scattered across a wide area are twin challenges facing not just Luapula’s director of dilemma, but water managers across Southern Africa.