Ministry of Water & Environment
Plot 21/28 Port Bell Road, Luzira
P.O. Box 20026 Kampala
Uganda
Tel: 0414-505942
mwe@mwe.go.ug

Project Code: 0168

Total Plan Expenditure: Shs U14.0 Billion

Link to RUWAS Brochure

Background

The Government of Uganda through the Ministry of Water and Environment (MoWE) and in consultation with line Ministries, Local Governments and Development Partners is reforming the Urban Water and Sanitation sub-sector to address the challenges of delivering equitable, affordable, sustainable and high quality services to the urban population. The reform initiatives are a direct contribution towards reaching the goals of the Ugandan Poverty Eradication Action Plan in that they enhance the quality of life of the poor and that they contribute towards rapid and sustainable economic growth and structural transformation. Furthermore they contribute towards reaching the Government of Uganda's commitment to the Millennium Development Goals.

Objectives

The reform initiatives are aimed at achieving the following objectives:

• Increasing access to water and sanitation services in the urban areas with the target of achieving full coverage by the year 2015.

• Establishing a clear separation of the sector's core functions of regulation, asset management/investments and operations to improve investment planning and efficiency and enhance professional asset management

• Developing or/and strengthening the legal, institutional and regulatory framework in the urban water and sanitation sub-sector which will enhance efficiency and cost effectiveness in the delivery of services

• Improving operational and financial performances of water and sewerage utilities through the promotion of private sector participation in the delivery of services.

• Developing and implementing pro-poor strategies for providing affordable and sustainable access to water and sanitation facilities and services for the urban poor.

• Decreasing the financial and management burden on Government of providing water and sanitation services.

Following a comprehensive review of the urban water and sanitation sub-sector which was undertaken from 1999 to 2000, the reform strategy containing specific proposals for reforming the sub-sector and the investment plans were prepared. These reform recommendations which were approved by Cabinet provide for:-

• Private Sector Participation in the delivery of services in the urban water sector through a Management Contract, Lease Contract or a Concession Contract, as may be most cost effective and sustainable at any one time.

• Public ownership of assets under an Asset Holding Authority for the large towns and Local Governments for the small towns.

• Establishment of an independent regulatory framework

Expected Outputs

• The existing Institutions responsible for the provision of water and sanitation services are restructured to separate the asset management/investment, operations and regulation functions to minimize institutional conflicts of interest and maximize transparency, accountability and efficiency in the sector.

• The Asset Holding Authority (AHA) that will be responsible for managing the assets and investments in the large towns currently under the National Water and Sewerage Corporation and those to be added on later established.

• An independent, effective and credible Regulatory Framework for the entire Urban Water Supply and Sanitation Sub-sector established to allow smooth operations and promote fair competition among Private Water Operators.

• Operation and Maintenance activities of the National Water and Sewerage Corporation under the Private Water Operator to be contracted through a transparency and competitive process.

• Robust Legal Framework that will facilitate the delivery of improved, affordable and sustainable water and sanitation services put in place.

• Efficient and effective Management Information System established in all the NWSC operation areas and other Water Supply Authorities to improve operational

Performance indicators

• Institutional functions of Asset holding, operations and regulation separated.

• The Asset Holding Authority established and is operational.

• Sound and effective Regulatory Framework for the Urban Water and Sanitation Sub-sector in place.

• Water revenues cover operating expenses and depreciation.

• Computerized l Billing systems.

• Standard Manuals on operation performance indicators and data collection procedures in place.

• Strengthened Management Information System.

• Private water operators managing the water and sewerage operations in all the urban centers.

Technical description

The project is being implemented under three components:

Component 1 deals with the implementation of the institution and legal reforms in accordance with the Cabinet decision of October 2003. This is intended to improve the policy and institutional framework, particularly the establishment of sound regulatory framework to enhance transparency, accountability and sector performance so as to facilitate the delivery of efficient, effective and sustainable water and sanitation services.

Component 2 deals with the reforms at the National Water and Sewerage Corporation (NWSC) to improve performance in the areas of operational, investment and financial management and to guarantee sustainability of services. Emphasis is on the separation of the core functions of regulation, asset management and operations, strengthening of the Management Information Systems and commercialization of operations and service delivery with focus on private sector participation.

Component 3 deals with management support to Urban Water Supply Department to increase operations and service delivery efficiency in the urban centers out side the jurisdiction of NWSC (Small Towns). Main focus is on creation of the monitoring capacity within the Water Authorities Division, computerization of the Billing Systems, developing computerized database and promoting private sector delivery of water services.

Financing

The project is funded by Government of Uganda and the Germany Development Cooperation (GTZ and KFW).

Plan of Operation

The project will set up capacity and institutional development framework for the urban sub-sector institutions (MWE, DWD & NWSC and others). It will in addition prepare and undertake to establish the Asset Holding Authority putting in place the entire required legal and regulatory framework.

Achievements

• The existing Institutions responsible for the provision of water and sanitation services were restructured to separate the asset management/investment, operations and regulation functions to minimize institutional conflicts of interest and maximize transparency, accountability and efficiency in the sector. 

• The Asset Holding Authority (AHA) supported for managing the assets and investments in the large towns currently under the National Water and Sewerage Corporation and those to be added on later is established. 

• An independent, effective and credible Regulatory Framework for the entire Urban Water Supply and Sanitation Sub-sector established to allow smooth operations and promote fair competition among Private Water Operators. 

• Operation and Maintenance activities of the National Water and Sewerage Corporation under the Private Water Operator restructured through a transparent and competitive process. 

• Robust Legal Framework that will facilitate the delivery of improved, affordable and sustainable water and sanitation services put in place. 

• Efficient and effective Management Information System and computerized Billing Systems established in all the NWSC operation areas and the Water Supply Authorities (Small Towns) to improve operational and financial management.