Pakistan's Decentralization: Implications and Challenges for Delivering Water and Sanitation Services Raja Rehan Arshad Water and Sanitation Program for South Asia Big Bang Decentralization  Local Government Ordinance promulgated on August 14, 2001   Devolution of political and fiscal authority to elected Local Governments Decentralization of administrative authority Water and Sanitation Pre-Devolution Context  Four Provinces      Districts   Sind Balochistan North-West Frontier Province Punjab Sub-divisions for deconcentrated arms of the provincial government administration and technical line departments W&S service delivery being a provincial responsibility Water and Sanitation Major Impediments  Overlap of jurisdictional assignment  More than one technical department responsible for W&S     Public Health Engineering Department, and Local Government and Rural Development Department in rural areas W&S authorities and/or municipalities in urban areas Centrally planned system of service delivery Absence of accountability between the providers and the client Water and Sanitation Major Impediments (Cont…)   Lack of capacity and appropriate institutional framework for sectoral planning; preparation of financially viable sector investments; and management of demand responsive investments Absence of strategic vision – in particular the implications of urban and rural transformation for the W&S sector Water and Sanitation W&S Service Delivery Situation  W&S systems investments without consideration of O&M arrangements      Centrally financed, operated and managed In the last decade, move towards community ownership, and operation and maintenance, but old systems still a major liability Both in rural and urban, public sector water utilities heavily subsidized by the government In rural areas, cost recovery less than 10 percent In urban areas, cost recovery between 10 to 40 percent Water and Sanitation Local Government Ordinance (LGO) 2001    Creation of approximately 100 district governments and district councils (average population of a district is one million) Creation of approximately 350 tehsil municipal administrations and tehsil councils (average population of a tehsil is 500,000) Creation of approximately 7,500 union administrations and union councils (population ranges from 18,000 to 28,000) Water and Sanitation LGO 2001 (Cont …)     Direct elections have been held only at the Union level The Deputy Mayor of the Union Council is a member of the Tehsil Council The Mayor of the Union Council is a member of the District Council All the union councilors in a tehsil and district elect the Deputy Mayor and Mayor for the respective tehsil and district  The Mayor and Deputy Mayor have to contest on a Joint Ticket (one vote for both) Water and Sanitation Salient Features of the LGO 2K1  Complete fiscal authority to each level       However during transition, the province is maintaining some decision making with regards to appointment of staff, setting of tariffs and tax structures, etc Rural – Urban divide has been removed Mega cities (million plus) have become City Districts and the remaining districts are referred to as Common Districts comprising urban and rural areas District, Tehsil, and Union are not subordinate to one another Principle of Subdiarity is the main theme Tax base for each level Water and Sanitation Salient Features (Cont …)  The new law has:   Decentralized service delivery providers and assets (approximately 30 provincial departments ranging from social services such as health and education to agriculture and soil conservation) Removed jurisdictional and functional overlap of institutions Water and Sanitation 10 Composition   All present Town Committees, Municipal Committees and Municipal Corporations Provincial Government Departments which will be decentralised to the TMA:    Local Govt and Rural Development Department Public Health Engineering Department Housing and Physical Planning (apart from the nucleus for the District) Water and Sanitation 25 Subsidiarity  Provision has been made in the law for management of service delivery at the lowest appropriate level  Based on mutual consent, a function can be transferred by the TMA to Union Administration and/or Village Councils, along with transfer of corresponding resources Water and Sanitation 26 Private Sector Participation  Provision has been made in the law for TMA to enter into contracts with the private sector as long as the former retains the responsibility of regulation and monitoring Water and Sanitation 27 Authority to Restructure  TMA has the authority to restructure the suboffices to meet the requirements of a particular tehsil   If a TMA transfers O&M responsibility to Village Councils and Union Councils, it will focus on regulatory and monitoring aspects A primarily urban TMA might want to strengthen its urban centers Water and Sanitation 28 Multi-Jurisdictional Management  The law allows for Multi-Jurisdictional management of services by Joint Committees of Councils to achieve economies of scale and scope   Bodies such as Joint TMA Committees Intra TMA bodies such as Joint Union Committees (across more than one tehsil) Water and Sanitation 29 Accountability    The Tehsil Council and the Monitoring Committees formed by the Council are responsible for oversight over the TMA The Union Council can also form committees to monitor the TMA’s work Village/Neighbourhood Councils and CCB’s can also monitor TMA’s work Water and Sanitation 30 Defining the Resource Envelope  There is a complete assignment of fiscal authority  TMA’s main tax base (Own Source Envelope) includes:       Property Tax Transfer of Property Tax Licence Fee Rental of Municipal Property, etc Intergovernmental transfers from the provincial divisible pool are made as a single line transfer Property Tax is collected by the district on behalf of the TMA Water and Sanitation 31 Cont …  Complete fiscal authority allows the TMA to plan both for the long and short term, and to ensure that a hard budget constraint creates the pressure for linking service coverage targets with appropriate service levels Water and Sanitation 32 Financial Management  The law procedures and bye-laws require the TMA’s to establish cost centers The costing of services, by sectors and areas, will ensure that the TMA knows the nature and amount of subsidy for each service and will be better able to make choices regarding the level and extent of services Water and Sanitation 33 Demand Responsiveness  Co-production requirements (CCB’s to contribute at least 20 % cash towards the capital cost) will ensure cost and management sharing of services Water and Sanitation 34 Situation After Years   Major capacity constraints Some local governments moving ahead     Innovating new procedures and systems Increasing OSR many-folds Improving service delivery Most local governments are still trying to find their way around Water and Sanitation 35 Situation After Years (Cont …)   Provincial governments are not allowing local governments to hire/fire City Districts are feeling the pressure more as there is still some baggage of the old system which they are having to carry, e.g., Water and Sanitation Authorities, etc Water and Sanitation 36 Challenges     How to develop appropriate capacity at the Local Government levels? What incentive does the upper level have to build capacity of the local governments? How to align external assisted projects/programs to the new decentralized framework? How to minimize recentralization? How to discourage parallel financing mechanisms and formula Water and Sanitation 37 Challenges (Cont …)    Does the market respond to the lack of capacity challenge by creating private sector capacity? Does the new institutional structure allow for cross-sectoral linkages between health, education and W&S? Does decentralization bring about increased public private partnership? What are the factors that need to be considered? Water and Sanitation 38 Challenges (Cont …)    How can key sector reforms be facilitated like corporatization of utilities, introduction of regional utilities, interface between local governments and communities/SSIPs? What incentive does the upper level have to regulate service delivery? How far will political pressures interfere with demand based service provision in a decentralized framework? Water and Sanitation 39