Priorities already set

Priorities already set

14 march 2024 0000
Smita Misra, Senior specialist for water supply and sanitation, World Bank
I was presenting on the strategy and vision for water supply and sanitation including short-term and long-term strategy priorities for water supply sanitation. I started out with congratulations on establishment of the Water Resource Agency. Indeed, before it there were fragmented responsibilities. So, it is the first time we’ve started seeing that the water supply sanitation responsibilities are getting more and more unified. Also, of course, I talked about the vision and given the transboundary related water issues and climate change related issues, it is very important that water resilience is built as part of the strategy and vision. I also stressed the fact that there is a need to ensure water security, improve efficiency, service quality, expand coverage, sustainable access while giving attention to demand management in a water-scarce environment. That’s very important for water supply sanitation. I was also talking about principles from various World Bank reports, and these are standard good practices, separation of roles and responsibilities between policy making regulations, service provision, improving sector governance, performance-based financing, maximizing finance for development, crowding in private sector financing, etc. An important point in this context is while the Water Resource Agency is established there is need to start looking at how to further set up the institutional roles and responsibilities taking into consideration these factors. Then I also mentioned short-term priorities that are based on the analytics the World Bank has recently carried out for Azerbaijan, and these reports are just being finalized. There are 4 key priority areas in the short term. First, as I just mentioned, is the need for establishing institutions and structures taking into consideration international good practices which we will be sharing with the Agency. The second priority is addressing the non-revenue reduction program. Our analytics show that while NRW or water losses are about 48 to 50 percent nationwide, it is nearly about 60% for Baku. So, it becomes really important to start addressing the NRW problem before the Agency brings in desalination because the pipes are leaking. So, the expensive water should flow into less leaking pipes, if I may say so. So, addressing NRW is addressing physical leakages as well as financial leakages or unauthorized connections. Reducing subsidy flows occurred we find former Azersu heavily subsidized by the Ministry of Finance with literally 8 billion manats over the past 10 years. Going forward, it will be another so many billions of manats unless we have a performance improvement program which should be built as part of the newly established united water supply sanitation public entity and the regional entity. This doesn’t imply raising tariffs because literally the revenue is much less than the cost of production, but it’s not just the issue of fixing the tariffs because tariffs here compare reasonably well with other benchmark cities. The question is reducing inefficiencies related to NRW reduction, which is critical and should be number 1 priority.
Then, there are inefficiencies with respect to billing collection. This can be improved. Coverage needs to be improved. There are also inefficiencies regarding staff, because based on the data received there are about 7-8 staff per 1000 connections. This can be reduced, made more efficient. There is need for professionalization of the staff and all these would help to improve the performance. And lastly, implementing public accountability incentive structures, which is again key. The financing from the Agency to these water supply sanitation companies should be target-based, performance-based. Between the headquarter of the company and the cities, it should be performance-based and target-based. That would increase accountability, both inwards in the company and outwards, to the Agency. It is a good practice to build these accountability structures within the water supply sanitation companies, especially for the urban areas. And for the rural, of course, there is a need for good practice models which could be public-private smaller operator-based models of public-private community-based models or even self-services in remote villages. So, those are kind of the short-term priorities. Looking at long-term priorities, we don’t know how long one will live but coming back in 2050, one would like to see Azerbaijan having achieved climate resilience, cost-effective water supply sanitation and coverage for urban cities, small towns, rural areas, circular economy with waste-water management, reuse, recycling, achieving a center of excellence for the water sector, innovative public-private financing including green financing in the water supply sanitation sector, and a paradigm shift established for incentive structures which go into public service contracts with built-in KPIs, and of course, reaching the remote rural areas including self-supply models, achieving self-sustaining water supply companies for urban and rural areas with minimum subsidies. So, basically, a smart water supply sanitation sector, smart technologies, smart incentive programs, intelligent use of AI.
Another thing I would like to say is fix the institutions before you fix the pipes. There is a popular saying that if you really want the water to flow, the institutions need to be fixed. There is always room for modernizing, professionalizing, promoting incentives, improving it making sure that it starts looking at sustainable financial services, climate resilient services.
I think this conference is great. It has been organized with so many professionals, with wide-ranging topics looking at technology, institutions, financing, economy, water-resource management, irrigation, water supply. It is really wide ranging and it’s what’s needed, because you have a newly established institution, Azerbaijan is moving forward in terms of improving sustainable coverage, and you need these conferences. They give you ideas and, I would say, a space to dream and make sure a dream is turning into reality.
What came out really clearly at this conference was climate change related impacts, that fact that water supply is declining, and everybody is feeling it, it’s pinching them. Azerbaijan has now realized that there is need to take action and I think this kind of a forum is needed to put all heads together and start thinking how we can do it.
The conference has been well organized with the right choice of moderators. The panelists are excellent in terms of their background, their experience and sharing of experience. I mean, you have Israel, you have many other countries represented and you have both the private sector and the government, and everybody is talking about how we are going to do it in Azerbaijan, what has been done, and that’s the discussion you need.
Azerbaijan is a beautiful place; its people are very warm. I always feel welcome here. It is part of the heritage to be hospitable and to be warm, and I can feel it.