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Water Supply and Sanitation Guidelines

NWASCO has developed several guidelines which are mandatory for providers. These guidelines include the following:

• Minimum Service Level guidelines
• Tariff Adjustment guidelines
• Water Quality Monitoring guidelines
• Corporate governance guidelines
• Business planning guidelines
• Financial Projections guidelines
• Annual reporting guidelines
• Investment guidelines
• Accounting guidelines
• Water Supply for peri-urban areas guidelines

GUIDELINES

Minimum service levels guidelines
Minimum Service Level is a Standard which defines the acceptable minimum level of service which providers must achieve. In order to measure and quantify the Water supply and sanitation Service level provided. NWASCO has defined 11 service indicators as benchmarks to be used. These standards have been developed from benchmarks in Africa and other countries

Tariff Adjustment guidelines
The Objectives of the Tariff adjustment guidelines are to ensure:
- Sufficient revenues for the service providers to enable them to operate on a sustainable basis
- Protection of consumers from being overcharged
- Provision of efficiency incentives for the service providers
- Conservation of treated water
- Protection of the environment

Tariff negotiations
The Water Supply and Sanitation Act no. 28 of 1997 in part II section 2 (d) (iv) provides for NWASCO set guidelines for setting of tariffs in the provision of water supply and sanitation services. Providers can therefore only implement tariff after the approval of NWASCO

Water Quality Monitoring guidelines
The objectives of the Water Quality guidelines include the following:
- Ensure through regular monitoring that the quality standards set by MoH and ECZ are being complied with and that the customers can have confidence that the water they consume is potable.
- Create awareness among the water supply and sanitation service providers on the water quality monitoring requirements
- Ensure that all water utilities will follow a systematic way of water quality monitoring so as to have uniformity of the process.
- Ensure a minimum standard of water quality monitoring which will ensure justifiable costing.
- Promote transparency in the methods of water quality monitoring employed by the utilities and thus build public confidence in the system.
- Create awareness among consumers that information regarding water quality will be made available by the providers

Corporate Governance guidelines
Companies registered under the Company Act, such as the Commercial Utilities (CU’s) in the water supply and sanitation sector are autonomous entities whose decision making process is supposed to be free of external and specifically political influence. The main influence on the company should be the enhancement of shareholders value and delivery of the goods or services for which the company was established.

Good corporate governance is characterised by the respect of this spirit outlined in the Company’s Act (i.e. in terms of frame work, transparency, accountability etc.) and the degree to which decisions are in line with the commercial interests of the enterprise.

Corporate governance is important for the success of the company. It refers to the manner in which power is exercised in the handling of a company’s total portfolio of assets and resources, with the objective of maintaining and increasing shareholder value and satisfaction of other stakeholders in the context of its corporate mission or goal. Good corporate governance should be characterised by transparency, accountability and respect of the rights of stakeholders.

Transparency enhances economic efficiency hence the operations of the company should be open to the Board and Shareholders and the community at large.

These guidelines on corporate governance are very important because a number of Commercial Utilities in the WSS sector established two to nine years ago have not succeeded in improving their performance and this is mostly due to non-adherence to principles of corporate governance.

Business planning guidelines
A business plan provides a thought out and logical framework within which a business can develop and pursue business strategies over the planned period. It provides a benchmark against which actual performance can be measured and reviewed.

A business plan furthermore helps management to clarify, focus and research their business's development and prospects and serves as a basis for discussion with third parties (e.g. the financial institutions, stakeholders, regulator, etc).
The board therefore must endorse it, as future board and management decisions will be within the framework of the business plan.

The other documents to be elaborated by the providers should be consistent with it, e.g. the agreements concerning the minimum service level should be reflected in the business plan and the tariff adjustment proposals should be based on the objectives and targets set out in the business plan.

Financial Projections guidelines
Providers have to submit their Financial Projections to NWASCO in order to fulfil the requirements as stipulated by the licence.

Financial projections do not stand-alone but are interconnected with the planning of all water supply and sewerage services of the provider. As a consequence it is required that Financial Projections have to be submitted as a complement to a ‘Tariff Adjustment Proposal’ or an ‘Investment Plan’.

By issuing this guideline for “Financial Projections” NWASCO seeks to harmonize the practical steps in the financial planning process of the providers and to ensure the comparability of the statements among the providers. This guideline represents the expected minimum standard for establishing financial projections.

Investment guidelines
In fulfilling its tasks NWASCO has developed this guideline, which specifies the basic elements of investment planning. In addition, this guideline seeks to harmonise the presentation of investment planning documents and specifies the contents of them.

To be able to maintain the water supply and sanitation services (WSS) to customers, there is a continuous need for investments especially for re-investments in existing assets (such as pumps, storage tanks, pipes etc.). Further investments are required for the expansion of services especially to low cost areas for increasing the service coverage. Such investment needs require regular updated planning, which can be either contained in the annual documents (such as Annual Report, Business Plan and budgets) or can be presented separately in an Investment Planning Schedule. Apart from this regular planning activity, there is from time to time an additional need for a more extensive ‘Investment Plan’ for major investments. Quite often such plans are elaborated with the help of Consultants.

Accounting guidelines
The objectives of the accounting guidelines include the following:
- To assist providers to periodically and timely deliver reliable and relevant financial information. This information is basically historical in nature. (NWASCO has already developed guidelines on financial projection to assist providers deliver financial information on future planned operations).
- Enable providers submit accounting statements which are consistent with the water and sanitation sector as per the Annual Reporting Guidelines.
- Minimise the number of alternative accounting treatments. (This will enable NWASCO review accounting statement of providers and make comparisons on performance)
- Harmonise the maintenance and reporting of financial information among providers.