Drinking Water in Nepal Issues for Nepal Water Supply Corporation

Submitted in partial fulfillment of the requirements for Masters of Business Administration (MBA) By

ARJUN NIROULA Register No 1011301006 Batch of 2011-2013

SONA COLLEGE OF TECHNOLOGY Affiliated to Anna University of Technology, Coimbatore

SALEM 636 005 JULY 2012

SONA COLLEGE OF TECHNOLOGY SALEM 636 005

PROJECT WORK JULY 2012
This is to certify that the project entitled

Drinking Water in Nepal; Issues for Nepal Water Supply Corporation

is the bonafide record of project work done by

ARJUN NIROULA Register No: 1011301006

Of MBA during the year 2011-2013.

.. Project Guide

Head of the Department

Submitted for the Project Viva-Voce examination held on .

................................. Internal Examiner

.. External Examiner

ACKNOWLEDGEMENT

This paper has grown and has been enriched with the contributions of many, and I am grateful to them all. I express my hearth felt gratitude to our beloved Principal, Dr. C.V. Koushik, M.Sc, Ph.D Sona College of Technology, and the management for providing us an opportunity to undertake the project work. Especially, to Dr. M. Selvaraj, Professor and Joint Director, my project guide for guiding me through this entire process. His encouragement, knowledge and inputs have been always valuable. I have been motivated and challenged and hopefully, as a result, become a better researcher through this experience. I would also like to express my gratitude to our director, Dr. Latha Krishnan, M.Com., Ph.D., Post Doctoral Fellowship (IIT-M) whose comments have always been detailed and insightful, highlighting areas which I have often overlooked. I am also thankful to Mr. Shankar Guragain, Assistant Manager Nepal Water Supply Corporation (NWSC) for his valued suggestions, proper guidelines and personal interest during the course of my project work period. I am thankful to all the staff members of NWSC for their cooperation, support and willingness to share information and their experiences.

DECLARATION

I, Arjun Niroula, Register No, 1011301006, of 2011-2013, a full-time bonafide student of first year of Master of Business Administration (MBA) Program of Sona college of Technology (An Autonomous Institution). I hereby certify that this project work carried out by me at Nepal Water Supply Corporation, the report submitted in partial fulfillment of the requirements of the program is an original work of mine under the guidance of the faculty, Dr.M Selvaraj and is not based or reproduced from any existing work of any other person or on any earlier work undertaken at any other time or for any other purpose, and has not been submitted anywhere else at any time.

(Students Signature) Date:

(Faculty Signature) Date:

Executive summary
Climate change impacts are observed in several sectors of Nepal among which water resources is one of the hardest hit sectors. Evaluating the impacts in water resources is challenging because water availability, quality and stream flow are sensitive to changes in temperature and precipitation. Increased demand for water caused by population growth, changes in the economy, development of new technologies, changes in watershed characteristics and water management decisions are some of the other factors to be taken into consideration. Nepal is rich in water resources. There are about 6000 rivers in Nepal having drainage area of 191000 sq. km, 74 % of which lies in Nepal alone. There are 33 rivers having their drainage areas exceeding 1000 sq. km. Only about 72% of the countrys population has access to basic water supply and only 25% of the whole population has sanitation facility. In this regard, Nepal Water Supply Corporation is a government based corporation involved in delivering safe drinking water in urban areas of Nepal. So, the issues of drinking water, its challenges and opportunities in the context of Nepal Water Supply Corporation (NWSC), specifying on its Mahendranagar branch are the subject matter of this report.

TABLE OF CONTENTS
Title Page Acknowledgement Declaration Company Certificate Executive summary Abbreviations Table of Content List of tables List of figures Bibliography CHAPTER 1 INTRODUCTION 1.1 Introduction of the study 1.2 Industry Analysis (Nepal Background) 1.3 Need and Scope of the Study 1.4 Objectives 1.5 Limitations CHAPTER 2 ORGANIZATION ANALYSIS 2.1 Introduction to the organization 2.2 Establishment 2.2.1 2.2.2 Statutory Provision Provision regarding Capital city ............................................. 7 ............................................. 9 ............................................. 9 ............................................. 11 . 14 . 15 . 15 . 16 . 18 1 3

. 5 . 5 . 5

2.3 NWSC Service Areas 2.4 Technical Status 2.4.1 2.4.2 2.4.3 Water Supply Comparative Chart of last three years Completed Projects in the Fiscal Year

2.5 General Assessment of the service system of NWSC. 19

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2.6 Water Quality Unit 2.6.1 Sources of Water Supply

.. 20 . 21 . 21 . 22

2.7 Human Resources 2.8 Analysis of Financial Performance

2.9 Summary of Mahendranagar Drinking Water Supply system . 28 2.9.1 2.9.2 2.9.3 2.9.4 Description of the WSS intervention Organizational and Institutional Aspects Financial Aspects . 29 . 31 . 34

Sustainability of the Water Supply System . 36

CHAPTER 3 FINDINGS SUGGESTIONS AND CONCLUSION 3.1 Suggestions 3.2 Findings or Lessons Learnt 3.3 Conclusion . 41 . 42 . 45

CHAPTER: 1 INTRODUCTION

1.1. Introduction of the Study This study is about one of the burning issues regarding drinking water supply in Nepal. Water is indispensible for life. But, 97.5% of all the water on Earth is saltwater, leaving only the remaining 2.5% as freshwater. Approximately 70% of the freshwater available on the planet is frozen in the icecaps of Antarctica and Greenland. This leaves only the remaining 0.7% of the total water resources worldwide accessible for direct human uses. This is the water found in lakes, rivers, reservoirs and those underground sources that are shallow enough to be tapped at an affordable cost. This also is the only amount that is regularly renewed by rain and snowfall and therefore available on a sustainable basis. Freshwater is mainly utilized for household use, water supply, agriculture and in industries. About 67% of the water is used in irrigation for the production of food grains worldwide. The per capita use of water also reflects the living standard and economic activities of the people. In this regard, this paper tries to analyze one of the state based corporation- the Nepal Water Supply Corporation (NWSC)- which was established with the main objective to provide safe drinking water supply mainly in urban areas. Since its establishment in 1989, this corporation has been focused on achieving the governments objective of providing access to safe drinking water to all Nepalese citizens by the year 2017. However, this objective seems too far to achieve in the present context whereby water supply in the capital city is being provided less than 50 percentages in relation to the demand. Water has become a serious problem for the people of the valley both in terms of quantity and quality. The Central Bureau of Statistics study carried out in Kathmandu shows that 59% of the surveyed households do not have adequate water supply from the piped water line and on average, water is available only four days a week. Similarly in the case of wastewater treatment system in Kathmandu valley, most of the wastewater plants and equipment are either out of operation or are only partially operational. Big demand of good services in water and sanitation is found everywhere in the valley. Demand driven management seems attainable than supply driven. The state based enterprise is facing difficulty to provide adequate water supply as per the level of demand. Similar is the condition of other urban sector of the country. Viewing this situation, NWSC in collaboration with ADB, has gone through the phase of restructuring its corporate identity in the capital city by privatizing its presence in the capital.

So, this project report work is mainly concerned with finding the difficulties that the state owned corporation is facing along with identifying the way outs it can take to supply drinking water as per the level of demand. Mainly, this paper tries to focus on the functioning of NWSC in Mahendranagar municipality of the country which is one of the less developed areas of the nation. Along with this, focus on overall position of NWSC has also been tried to analyze.

1.2 Industry Analysis (Nepal Background): Nepal is predominantly a mountainous country formed due to the uplift of the Indian tectonic plate following a collision with the Asian plate. The country can be divided into five physiographic regions, viz. High Himalayas, Lesser Himalayas (High Mountains), Middle Mountains (the Mahabharata Range), Siwaliks (the Churia Range) and the terai plains. Due to topographic features, Nepal experiences a wide range of climates varying from the sub-tropical to the Alpine type as the elevation varies from 64 meters (m) above sea level to 8,850 m (world's highest mountain peak, Mt Everest) within a span of less than 200 km. The country also experiences heavy rains during June to September due to the south-westerly monsoon, which accounts for 80% of the total rainfall, and winter rains, during November to January, accounting for the rest of the rainfall. Water is Nepal's largest known natural resources. The major sources of water are rainfall, glaciers, rivers, and groundwater. Over times, the country's requirements for water for drinking and personal hygiene, agriculture, religious activities, industrial production, hydropower generation, and recreational activities such as navigating, rafting, swimming, and fishing have increased. Yet, the rivers are also the main repositories for the nation's untreated sewage, solid waste, and industrial effluent. Nepal is rich in water resources. There are about 6000 rivers in Nepal having drainage area of 191000 sq. km, 74 % of which lies in Nepal alone. There are 33 rivers having their drainage areas exceeding 1000 sq. km. Drainage density expressing the closeness of spacing of channels is about 0.3 km/sq. km. If this natural resource is properly harnessed, it could generate hydropower; provide water for irrigation, industrial uses and supply water for domestic purposes. Concerning about water includes both quantity and quality of the resources and relates to human health standards. Normally, a person requires 2.5 liters of water per day for their basic physiological processes. In addition, water is also required for domestic hygiene such as washing, bathing, cleaning, and so on. An adequate supply of drinking water alone does not fulfill human health needs, as its quality refers to the suitability of the water to sustain living organism and other uses such as drinking, bathing, washing, irrigation, and industry. Anthropogenic activities are considered as major factors for bringing our qualitative and quantitative water quality changes.

The surface water available in the country is estimated to be about 225 billion m3 (BCM) per annum or equivalent to an average flow of 7,125 m3/s, out of which only 15 BCM per annum is in use. Around 95.9% of 15 BCM has been used for agriculture, 3.8% for domestic purpose and only about 0.3% for industry. It is observed that around 78% of the average flow of the country is available in the first category river basins, 9 % in the second category basins and 13 % in the numerous small southern rivers of the Terai. Studies have shown that the first Category Rivers have surplus flow but the second category rivers have deficit flow in the dry season by glaciers. There are 3,252 glaciers covering an area of 5,323 sq.km with an estimated ice reserve of 481 km3. There are 2323 glacier lakes in Nepal covering an area of 75 sq.km. Nepals economy is largely based on agriculture; it contributes about 40% to GDP and provides employment to two-thirds of the population. However, Nepalese agriculture is mainly rain fed and agriculture production in both rain fed as well as irrigated areas are being badly affected due to droughts, flooding, erratic rainfall, and other extreme weather events. Nepal was self-sufficient in food grain production until 1990. Due to drought condition in 2005/06, production fell short by 21553 metric tons and by 179910 metric tons in 2006/07 due to drought and natural calamities. In addition to surface water, a large volume of water is available in the shallow and deep aquifers which are estimated to be 8.8 BCM annually which can be used for irrigation and domestic water supplies. Only about 72% of the countrys population has access to basic water supply and only 25% of the whole population has sanitation facility. Apart from management of services by private sector in Kathmandu valley, two major governmental agencies involved in provision of drinking water and sanitation are Department of Water Supply and Sewerage (DWSS) and NWSC. While NWSC works in 22 larger municipalities, DWSS takes care of in rest of municipalities and rural parts of the country. The government adopted user group approach to involve community in drinking water and sanitation. Apart from government, there are several International and National Government Organizations (I/NGOs) working in the sector. The responsibility for managing water supply in Kathmandu valley has recently been given to Kathmandu Upatyaka Khanepani Limited (KUKL), hence limiting service area of Nepal Water Supply Corporation (NWSC) to 22 major towns outside Kathmandu valley.

1.7 Need and Scope of the study The need to study about Nepal Water Supply Corporation emerges from its inherent identity of being the sole organization to provide drinking water supply in the nation, Kathmandu valley being an exception due to privatization. The scope of this report extends from overall view of NWSC along with the analysis of functionalities and overall performance of its Mahendranagar Branch of the Nation. So, the analysis of the relevance of NWSCs performance in the context of present days scarcity of drinking water is the subject matter of this project work. 1.8 Objectives The primary objective of this project report is to analyze the overall performance of NWSC in the context of overall nation along with analysis of its Mahendranagar Branch. The other major objectives of this project report are outlined as follows: To explore the drinking water situation of Nepal and its relevance to Nepal Water Supply Corporation. To study the working procedure and different operational aspects followed in NWSC. To explore the issues of privatization of state owned enterprise. To understand how NWSC is performing in sub urban areas like Mahendranagar. To identify the opportunities for NWSC in present days globalized and technological world. To point out the weak points and suggest strategic moves that NWSC should make in providing its public services. 1.9 Limitations While doing the summer project work in a government based corporation, there were some limiting factors which are mentioned as under: Internship for a limited period of time itself posed restricting factor to go deep into all the activities of the corporation.

Willingness to share information is of low level in government based organization along with low level of publications made on their performance.

Interns are supposed to be assigned to only limited activities.

CHAPTER: 2 ORGANIZATION ANALYSIS

2.1 Introduction to the organization The credit of starting the drinking water services in Nepal goes to Rana Prime Minister Bir Sumsher JBR. Around 100 years ago, the work of distributing water pipes was carried out in Kathmandu. Later, water Goswara water supply development committee and water supply and Sewage Corporation were formed respectively to work in the field of water supply. In 1989 the issue of Nepal Water Supply Corporation Act led to the establishment of NWSC which has been performing the task of supplying drinking water to public and maintaining sanitation services across the nation. It is working towards achieving the sector objective of Government of Nepal which is to achieve sustained improvement in health status and productivity for Nepalese people as a whole with particular emphasis on lower income group through the provision of adequate, locally sustainable water supply and sanitation facilities in association with improved personal, household and community hygiene behavior. In line with achieving the above sector objective, Government of Nepal has set the goal of providing all the Nepalese people access to drinking water supply and sanitation facilities by the year 2017. Talking about its area of operation, NWSC is mainly focused on delivering drinking water services since the past few decades in urban areas (i.e. Metropolitan city, SubMetropolitan city, Municipality and Village Development Committees. Till this day, NWSC has been satisfactorily delivering water supply services many customers through twenty three towns. It has been able to deliver its services as per Nepal Drinking Water Quality Standard (NDWQS) with sufficient quantity of potable water that is about 125 liters per capita per day. The corporation is currently providing services to 28 Municipalities and neighboring villages form its 42 offices at municipal, zonal, regional and central level. 250000 water taps are serving people in different locations. It is also working in the field of sewage system management. Currently, 1650 permanent, 602 contract based and 200 wage based employees (total 2452) are working in the corporation. From the service, the corporation generates yearly revenue of around $10 million. The revenue is spent on salary of
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employees, maintenance of water pipelines, electricity bill and further extension of the services. The main problem of the corporation is financial crisis. As no strong financial support is provided by the government; the corporation has to manage and mobilize its own resources to meet the running cost. The corporation is getting worse due to lack of government investment and political interventions which hinders the autonomous performance of the corporation. The government of Nepal viewing this entire situation has adopted a new policy with the changing scenario of globalization context. The government wants to satisfy consumer's demand by delivering potable drinking water with easily assessable to all group of people under the PPP (Public Private Partnership) concept. According to this policy, the Kathmandu Valley Water Supply system was handed to the Kathmandu Upatyaka Khanepani Management Board in the year 2008. Whereas majority of the current figures of coverage are due to the efforts of NWSC in the past, currently many other agencies (such as other government bodies, INGOs, and NGOs) are working in the sector. As such the NWSC is now facing the challenge of integrating the efforts of all the agencies working in the sector towards the sect oral national and the millennium development goals. In order to take on this challenge, NWSC is preparing to start the task of developing database on actual status of coverage, and has plan of networking of available information sources, and formation and activation of sect oral coordination forum. NWSC is currently in the process of devolving all its district level operations to the local district authorities focusing more on central level projects and coordinating activities.

2.2 Establishment 2.2.1 Statutory Provision After realizing demanding of conduit water in Kathmandu valley, government had established a systematic development of water supply system with the PANI ADDA (PANI GOSWARA) unit in May 1973. The then His Majestys Government of Nepal had developed Nepal Water Supply Corporation (NWSC) Act in February, 1990. Under this ace NWSC has blooming drinking water supply services in twenty three urban areas in different parts of the country. Under moderated statute in last four decades the following predecessors had been formed and finally working as a Nepal Water Supply Corporation. PANI ADDA or PANI GOSWARA until May 1973 WATER SUPPLY AND SEWERAGE BOARD, July 1973 ( under the Development Board Act, 1957) WATER SUPPLY AND SERERAGE CORPORATION, July 1985 (under the Corporation Act, 1965) NEPAL WATER SUPPLY CORPORATION, February 1990 (under Nepal Water Supply Corporation Act 1990) According to NWSC Act 1990, the corporation gets its annual accounts audited by a certified auditor (Chartered Accountant) appointed by the Office of the Auditor General. The government of Nepal had developed a PPP (Public Private Partnership) concept for delivering water supply services to the consumer by handing over water supply scheme to the local Board in 2005. Under this policy, the Kathmandu Valley Water Supply system has been functioning under PPP concept since last four years. Similarly Bharatpur and Hetauda water supply systems are in under process.

Board of General

Accounts Departme nt

Finance Departmen t Central Accounts Section Budget and Treasury Central Expense Section Income Supervision Section

Administrativ e Department Public Information and General administration section Law and Property Employees Administration Section Procurement/ Store Section

Engineering Department

Branch Offices

Fig 2.1: Organization Structure of NWSC

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2.2.2 Provision regarding Capital City: To overcome the deplorable state of water supply and sanitation situation in the valley, GON has adopted two pronged strategies of infrastructural development and institutional reform in the water sector of the valley. The infrastructure improvement aimed to augment the supply both in terms of quantity and quality includes diversion of 170 MLD water from Melamchi River through 27 Km tunnel, provision of treatment faculties, strengthening of distribution network by reduction in leakage and provision of equitable water distribution and expanding the distribution network laying new primary and secondary pipelines. The institutional reform aimed to establish a mechanism for representation of municipalities & the public at a policy level, to protect the operating company from political interference in management and operational decisions, to implement an efficient set of tariffs based on the principle of cost recovery, to run operating company in a professional and commercial way, to introduce PSP modality to manage service delivery of operating company, and to develop the capacity to implement improvement programs and Maximize benefits of Melamchi Water Supply Project. The proposed institutional framework for the provision of water supply and sanitation facilities in the Kathmandu Valley has objectives: (a) to make it independent of NWSC and (b) to separate three basic functions namely ownership (planning and investment), operation and regulation (fixing tariff) as shown in Fig. 1.Thus three entities are formed for Kathmandu Valley water supply and sanitation sector namely Kathmandu Valley Water Supply Management Board (KVWSMB), Kathmandu Upatyaka Khanepani Limited (KUKL) and Water Supply Tariff Fixation Commission (WSTFC).

11

Fig 2.2: Organization responsible for water and sanitation services in urban areas of Kathmandu valley at different periods of time & present institutional arrangements (Source: KUKL at Glance: Third Anniversary Report, 2010).

Fig 2.3: Overview of Kathmandu valley water management. Source :Adapted from: Drinking Water Management in Newa State, available at http://www.ccd.org.np/news/trans/policy_Drinking_water .pdf As shown in figures, since 2008, KUKL has been the utility operator for drinking water in the Kathmandu valley. The KUKL leased the operation from KVWSMB for 30 years.
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The WSTFC is responsible for the economic reviewing of the tariff system. The management in city areas of Kathmandu valley. However, it is responsible for the provision of drinking water to the cities outside Kathmandu valley. Currently, KUKL is supplying much less water due to the current scarcity. According to the KUKLs annual report for 2010, water demand in Kathmandu valley is 320 MLD (million liters per day) while the supply is only 120 MLD in the dry season excluding losses. The ADB supported Melamchi Project is currently under construction. This project is going to supply 170 MLD of water to the Kathmandu valley from the Melamchi River in Sindhupalchok district. The larger population, increased economic activities and modern lifestyles exert significant pressures on water demand. The current water management system of Kathmandu valley is both insufficient and inefficient due to the old pipe line system. Many of the distribution lines were laid during the Rana regime. Leakage also is one of the most important causes of the water shortage. Furthermore, in Kathmandu valley there are currently three tiers of water supply systems (Moench, 2001). The traditional dhungedharas, the KUKL supplied piped water (municipal connection) and the tanker truck supplied water. Policy makers and planners hope that after the completion of the Melamchi project, there will be sufficient water for the next 40 years. However, the completion of the project is uncertain due to the inter-basin water conflict between the people living in the Indrawati basin and the project management (the ADB and the government of Nepal).

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2.3 NWSC Service Areas

NWSC has endeavored to provide quality service to consumers in spite of innumerable ranges of problems encountered especially during the dry seasons. The presently NWSC has 22 Branch offices under its jurisdiction. Towns 1. Bhadrapur 2. Biratnagar 3. Dharan 4. Rajbiraj 5. Lahan 6. Janakpur 7. Jaleswor 8. Malangawa 9. Gaur 10. Kalaiya 11. Birganj 12. Hetauda 13. Bharatpur 14. Pokhara 15. Butwal 16. Bhairahawa 17. Taulihawa 18. Krishna Nagar 19. Nepalganj 20. Dhangadi 21. Mahendra Nagar 22. Banepa&Panauti Branch Offices Bhadrapur Biratnagar Dharan Rajbiraj Lahan Janakpur Jaleswor Malangawa Gaur Kalaiya Birganj Hetauda Bharatpur Pokhara Butwal Bhairahawa Taulihawa Krishna Nagar Nepalganj Dhangadi Mahendra Nagar Banepa Districts Jhapa Morang Sunsari Saptari Siraha Dhanusa Mahottari Sarlahi Rautahat Bara Parsa Makwanpur Chitwan Kaski Rupandehi Rupandehi Kapilbastu Kapilbastu Banke Kailali Kanchanpur Kavre Zones Mechi Koshi Koshi Sagarmatha Sagarmatha Janakpur Janakpur Janakpur Narayani Narayani Narayani Narayani Narayani Gandaki Lumbini Lumbini Lumbini Lumbini Bheri Seti Mahakali Bagmati

Table2.1: List of Municipal Towns Served

2.4 Technical Status 2.4.1 WATER SUPPLY

S.N. Description
1. Water Demand

Unit
MLD

F/Y (2010/11)
221

14

2.

Water Production In Dry Season In Wet Season MLD MLD MLD Nos. Nos. Nos. Nos. Nos. MLD MLD % MLD MLD Nos. Nos. Nos. Thousand Nos. Nos. Nos. Nos. Nos. No. 95.00 125.00 109.00 73 14 13 3 2 9 66.50 86.10 30.00 126.00 98.00 109992.00 2029.00 1043.00 1416.19 17 24 6 1 22 4

3 4

Average Production Deep Tube Wells are in -Working -To be Repaired - Not Repairable

5 6 7 8

Dug Wells Sump Wells Surface Intakes Water Delivery -In Dry Season -In Wet Season

9 10

Average Leakage Deficit -In Dry Season -In Wet Season

11

Water Connection -Metered -Unmetered -Public Stand Post

12 13

Total Population Served Service Reservoirs -Ground Tank -Overhead Tank

14

Water Treatment Facilities -With Full Treatment System -Partly -Chlorination Only

15

Water Tankers

Table: Water Supply Status 2.4.2 Comparative Chart of Last 3 Years A. Water Demand S.No. 1. 2. Fiscal Year 2007/2008 2008/2009 Unit MLD MLD Water Demand 188 203
15

3.

2009/2010

MLD

221

B. Water Production S.No. 1 2 3 Fiscal Year 2007/2008 2008/2009 2009/2010 Unit MLD MLD MLD Water Production Dry Season Wet Season 85 113 90 118 95 123

C. Water Supply (After Leakage) S.No. 1 2 3 Fiscal Year 2007/2008 2008/2009 2009/2010 Unit MLD MLD MLD Water Supply (After Leakage) Dry Season Wet Season 85 113 90 118 95 123

D. Number of Water Connections S.No. 1 2 3 Fiscal Year 2007/2008 2008/2009 2009/2010 Unit Nos. Nos. Nos. Water Production Metered Unmetered 100198 2565 105953 2196 109992 2029

Public Tap 1043 1043 1043

Total 103806 109192 119124

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Fig: Comparative figures for last 3 Years

2.4.3 Completed Projects in F/Y 2010/11 A. Water Production Improvement Program

S.N. Description 1 New Tube Well Construction 2 Procurement of Pumps 3 Construction of Over Head Tank (under construction) Qty Unit 9 Nos. 21 Sets. 2 Nos. 17

4 5 6 7 8

Construction of Reservoir (under construction) Pipe Line Extension Work Procurement of Transformer Procurement of Water Tanker Construction of Mineral Plant (Civil Work)

6 13 9 3 1

Nos. Km Nos. Nos. No.

B. Water Storage Project

Capacity S.No. Description 1 New Tubewell Construction Production improvement from surface sources 2 (Butwal and Pokhara) Qty Unit 9 Nos. 2 Nos. (MLD) 11 35

C. Water Distribution Project

1 Distribution Pipe Laying Work 13 Km

D. System Improvent Programs

S.No. Description 1 Procurement of pumps 2 Procurement of Transformer 3 Distribution pipeline extension in different towns Qty 21 12 13 Unit Nos. Nos. Km. Capacity various . .

2.5 General Assessment of the Service System of NWSC Almost all water production figures are from historical data or are estimated. Only a few production plants have metering equipment. It is assumed that NWSC in dry season has a shortfall in supply of some 60%, and in rainy season the shortfall is 30% of supply. Treatment plants are in poor functional and maintenance state and spare parts are not available in all treatment plants. Water is distributed directly to the customer

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without treatment from many tube wells from which some waters have high content of ammonium, iron and some, arsenic. The use of chemicals is found to be done according to its availability in stock rather than on the need for water treatment and disinfection. Properly trained and qualified operators to conduct disinfection are not often available. Pumping equipments are not routinely inspected (treatment plants, tube wells and booster stations). Maintenance is not done in a planned manner. In many branches, state of their networks and appurtenances were not good. o About 48 % of the network is older than 25 years. o Most Branches are not undertaking planned leak detection in their networks. o On an average 70 (18 200) repairs in the networks are executed per month. The most common hydraulic Network Problems are: o Spaghetti connections, o Leaks and Contamination o Unplanned Network, o No construction Standards. The Customer service at Branches receives approximate 60 (5 200) complaints per week. The three most common complaints are: o No or limited supply, o Leaks & pollution, o Un-equal distribution.

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Branches did not have well structured Operation and Maintenance Plans, Standard Operating Procedures and Emergency Response Plans.

Branches had not updated drawings of the networks.

2.6 Water Quality Unit The Unit has a fair knowledge on the production and the availability of water as well as quality of the raw water sources. However, it did not have full knowledge about the executed treatment processes of water supply and waste water. NWSC has its own water quality analysis laboratory at Butwal. This laboratory is in operating condition. This laboratory has been faciliated to analyze physical, chemical and bacteriological water quality parameters. Treatment plants are visited regularly, however they are not under the supervision of the Water Quality Unit. Generally there is some doubt if Potable water is supplied according to Water Quality Standards. Operation & Maintenance Plans, Standard Operating Policy (SOP) and Operational Manuals are not available. The water quality standards applicable under the License are as set out as the Water Quality Standards. WHO water quality standards are adopted for Nepal but national water quality standards supersede the WHO standard, where available. NWSC has started to carry out testing of water sources in accordance with the following minimum requirements: No Activities as per License Raw Water Control 1
Treated Water Control For Chemical Water Quality Standards

Frequency
All Sources before and after wet seasons (2 times a year)

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Water treatment & sources supplying direct into the networks residual chlorine - turbidity - iron - color Where aluminum coagulants are Used in the treatment process. Treated water to be tested on - pH - Aluminum Bacteriological test - treatment works - Raw water sources Distribution Network Random test Sampling methods, location in accordance with WHO Guidelines

1* Daily

Daily Monthly 25 locations * daily

Table: Schedule of Water Quality Check of NWSC 2.6.1 Source of water supply Mainly two sources are used; namely Surface Water Source and Ground Water Source. There are total 110 numbers of pumps for the supply of ground water in its all branches. NWSC is procuring ground water from Pump Set with panel board of 92 in numbers. NWSC is also operating tanker service in Pokhara, Butawal, Banepa and Dharan for public as well as private supply. Public is made through either PVC tanks or inject point. No additional bill is charged for such supply. 2.7 Human Resources Human capital is the backbone for effective performance in any organization. There are 910 numbers of employees in NWSC. The Board members of the corporation comprises of 9 members who lay down the rules and regulations for performance level of its employees. The Board member is composed as: One member from related Department of Water Ministry of the Government. One from Finance Ministry of Government of Nepal. Three members from specialist in Water sector. One member form Municipality.
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Two members as experienced personality in Water from Government or from public.

One General Manager as Secretary.

The human capital of NWSC lack sufficient level of training on effective water supply and quality to be provided to the general public. There are lack of technical staffs inside the organization resulting delay in repair and maintenance of the system. Modern technology has not been introduced inside the organization and employees lack computer skills for proper maintenance of records and flow of information.

2.8 Analysis of Financial Performance Balance Sheet

S.No. 1 Descriptions Capital and Liabilities Capital and Fund Capital Reserve Long Term Loan Current Liabilities Total 2 Assets and Properties Net Fixed Assets Work in Progress Total (A) 3 Current Assets Receivables Advance & Deposits Life Insurance Funds Stock Inventories Bank & Cash Balance Total (B) 4 Accumulated Loss Total (C) Total (A+B+C) F/Y (2010/2011)

Nepalese Rupees
F/Y 2009/2010 F/Y 2008/2009

470053711.90 105167047.41 964252516.00 823606260.44 2363079535.75 805788670.16 304531635.42 1110320305.58 240994330.09 32074961.69 8999896.67 152965234.09 393064584.26 828099006.80 424660223.37 2363079535.75

470053711.90 105236752.54 812069343.33 865678584.25 2253038392.02 756058426.78 178019216.45 934077643.23 351215026.63 17046220.26 8999896.67 224544412.48 325706611.02 927512167.06 391448581.73 2253038392.02

470053711.90 105306457.67 659569343.33 750554116.14 1985483629.04 714028493.50 74617063.32 788645556.82 315779395.06 6317156.75 7448034.17 231230389.12 362903242.55 923678217.69 273159854.53 1985483629.04 22

Income Statement
S.No Descriptions 1 Income Water Revenue (After Rebate) Other Income Total 2 Expenditure Production Distribution Quality Control Consumer's Account Administrative Expenses Write Off Stock Sale Expenditure Provision for D/D Provision for Gruatity Fund Provision for Life Insurance Fund Total Operating Surplus Interest Payable Depreciation Depreciation Transferred from Capital reserve Net Profit/Loss Last Year's Adjustment upto Previous Year Accumulated Loss Accumulated Loss Carried to B/S F/Y 2010/11 N.Rs. 271762576.85 61271477.08 333034053.93 105595936.63 62327865.63 3039840.66 29405903.93 69774894.77 6948957.14 23159454.99 1713562.50 301966416.25 31067637.68 (45490815.77) (28651437.53) 69705.13 (43004910.49) 9866018.85 (391521331.73) (424660223.37)

Nepalese Rupees
F/Y 2009/10 N.Rs 261700107.73 49999923.81 311700031.54 102999776.58 67056018.65 2777796.05 30635480.83 72054584.56 2567964.85 3543563.15 45244306.46 39604470.00 366483961.13 (54783929.59) (36460356.53) (26989850.92) 69705.13 (118164431.9) (124295.29) (273159854.5) (391448581.73) 2008/09 N.Rs 247906698.92 41553708.03 289460404.95 90876859.67 45971005.77 2780589.86 25454153.11 56640073.91 782039.19 1824658.09 80424696.37 1107033.33 305861109.30 (16400704.35) (27578368.51) (23540952.31) 69705.13 (67450320.04) (962621.65) (204746912.84) (273159854.53)

23

Based on the information given in the profit & loss a/c and the balance sheet attached to it, we can interpret the financial performance in the following way: INTERPRETATION OF P&L A/C PARTICULARS REVENUE 1. WATER REVENUE 2. OTHER INCOME 1. 2. 3. 4. 5. 6. 7. EXPENSES PRODUCTION DISTRIBUTION QUALITY CONTROL CONSUMERS A/C ADMINISTRATIVE EXPS STOCK SALE EXPENSES PROVISION FOR D/DEBTS YEAR 2010-11 AS COMPARED TO 2009-10 3.85% increase 22.54% increase 2.52% increase 7.05% decrease 9.43% increase 4.01% decrease 3.16% decrease 170.60% increase NO PROVISION IN 10-11 48.81% decrease 95.67% decrease 24.77% increase 6.16% increase No change 63.61% increase YEAR 2009-10 AS COMPARED TO 2008-09 5.56% decrease 20.33% increase 13.33% increase 45.87% increase 0.1% decrease 20.36% increase 27.21% increase 228.37% increase 94.20% increase 43.74% increase 3477.53% increase 32.21% increase 14.65% increase No change 75.19% increase

8. PROVISION FOR GRATUITY FUND 9. PROVISION FOR LIFE INSURANCE 10. INTEREST PAYABLE 11. DEPRECIATION 12. DEPRECIATION TRF FROM CAP. RES. OVERALL NET LOSS

INTERPRETATION OF BALANCE SHEET RATIOS Long Term Debt Ratio Current Ratio Fixed assets Turnover Ratio Capital Gearing Ratio 2010-11 1.43 1.01 2.965 0.597 2009-10 1.41 1.07 2.89 0.708 2008-09 1.45 1.4 2.88 0.872

24

Table: Interpretation of Income Statement and Balance Sheet

Note: Long term Debt Ratio = Current Ratio = Long Term Loans/ Capital+Reserves Current Assets/ Current Liabilities

Fixed Assets turnover ratio= Net Fixed Assets/ Total Receipts Capital Gearing Ratio = Equity Share Capital/Fixed Interest Bearing Funds

From the above given profit & loss a/c as well as balance sheet, we can draw following points: 1. The company is undergoing in a huge loss because of its vast expenditure and low revenue. The net loss has increased heavily increased year by year as is clear from the above chart. Every head of expense has been increasing as compared to previous years, except a few expenses whose steep decrease has timid effect to bring any year to profitable situation.

2. The net loss of 2009-10 has increased by 75.19% as compared to 2008-09. Similarly in 2010-11, net loss has increased by 63.61% as compared to 2009-10. The main reasons are considerable increase in almost every expense like distribution expenses, stock sale expenses, provision for doubtful debts, gratuity and provision for life insurance, etc.

3. The provision for life insurance has nearly increased by 35 times & provision of gratuity by 43.74% in the year 2009-10. This can be interpreted by saying that many employees were likely to be retrenched and the insurance scheme of many employees was undertaken in the year 2009-10.

25

But these figures have decreased by a great extent in 2010-11 as compared to 2009-10. It means that there were new employees just appointed due to which the company made low provision for gratuity. Likewise the provision for life insurance has also decreased because many employees had been retrenched.

4. The stock sale expenditure has increased by 228.37% in the year 2009-10 as compared to 2008-09. It has also increased by 170.60% in 2010-11 than 2009-10. Because of this the closing inventory has been decreasing considerably as the time passed on.

5. The distribution expenses have decreased in the year 2010-11 as per the chart prepared above. Thus more water pipelines may not have been increased in 2010/11.

6. The low increase of production expense in 2010-11 as compared to previous years shows that the company has been able to cope off with the burden to some extent in this head.

7. The distribution expenses have decreased in 2010-11 than 2009-10 which is a good position.

8. The decrease in consumers a/c in 2010-11 has also decreased the expenditure to some extent.

9. The increase in depreciation is due to increase in net fixed assets of the company as is clearly evident from the attached balance sheet.

26

10. The company has taken huge loans and loan has also increased considerably. Thus, the interest payable has also been increasing as the year passes on.

11. The long term debt ratio is around a stable ratio in the three years. Though this ratio is not heavy, yet its adverse for the company because the company has huge accumulated carried forward loses of previous years and its current profit is unable to pay all the interest on these loans.

12. The current liabilities have decreased in 2010-11 which is as a result of decrease in provision for gratuity and life insurance, decrease in administrative expenses and so on. 13. The Capital reserve has decreased by equal amount in all the three years as it has been transferred to profit and loss a/c as depreciation.

14. The collection from debtors became favorable in 2010-11 and so it has decreased in this year. Likewise the company has made no provision for doubtful debts in this year. 15. The company has been undertaking many capital works and hence there is a considerable rise in the work in progress in balance sheet.

16. The capital gearing ratio is low. Its not a good sign for the long term effectiveness. Thus comparing and studying the balance sheet and profit and loss a/c we can say that: a. The company is undergoing heavy losses. It might affect the going concern principle. If same condition remains in the future, the company might be wound up in the near future.

27

b. The company can improve its position by requesting subsidy from the government. Likewise, it can cutoff unnecessary expenditures and leakages of funds to improve its condition.

2.9 Summary of Mahendra Nagar Drinking Water Supply System Ground water is the major source of water supply in the Mahendranagar municipality. Nepal Water Supply Corporation (NWSC) Mahendranagar Branch is the institutional entity for water supply management in this municipality. Although efforts have been taken since several years back, still more than 70% of the population of the municipality does not have access to NWSC services. Households without access to private drinking water connections are using tube wells and public taps to fulfill their water needs. The main feature of the organizational and financial setting of NWSC is its high degree of centralization. Programs, policies and budget are decided in the head office of NWSC in Kathmandu. Such approach widely limits the capacity of the branch office to manage the
28

system and take own initiatives to improve the service. Participation of local community and representation of consumers in the decision-making is neglected in NWSC system. Similarly, coordination with local stakeholders such as municipality is also lacking. NWSC has financial constraints to improve existing water supply system and carry out new projects. This Branch Office has been running with operating loss since it assumed the management of the water supply system in 2000. Moreover, the amount of arrears is alarming, reaching to as high as NRs.3, 123,500 by the end of fiscal year. The Arrears to be recovered generally consist of water bills not paid by the consumers and public institutions. The estimated amount of unaccounted for water (UFW) is also remarkable with 31% of the total production. Leakages in the distribution pipes and an improper monitoring and maintenance are the main causes behind the large amount of UFW. Major challenges of NWSC to ensure sustainability of the system and improve the level of service include well-planned maintenance and extension of the existing system. Regular dialogue and interaction with users would also contribute to guarantee the well functioning of the existing water supply system.

2.9.1 Description of the WSS Intervention Mahendranagar Municipality is located in Kanchanpur District which falls in the Far Western development region of Nepal. Most of the wards in municipality are rural-based. Only wards 4, 6 and 18 are urban-based and two other wards (9 and 13) are in the process of urbanization. The population of this municipality is 3, 77,899 with average family size of 5.88. The average literacy rate is 57.6%. Mahendranagar has a long history of water supply that goes back to 1973 when the Department of Water Supply and Sewerage (DWSS) constructed the first Water Supply Utility under the grant support of Indian Cooperation Mission (ICM). Under this grant support, the DWSS constructed a tube-well along with
29

treatment facilities, service reservoir, and distribution system and service connections. Additionally, in 1987, the DWSS accomplished the construction of another tube-well to further enhance the capacity of the system. However, none of the tube wells constructed in 1973 and 1987 are currently operational.

fig: overhead reservoir constructed in 1973

fig: private tap managed by NWSC

The demand of water supply in terms of quality and quantity increased over the years due to increase in urban population. Government of Nepal took initiative by making a request to Japanese Government for the improvement of water supply utility in the municipality. In this regard, Japanese Government extended support to the government through Japan
30

International Cooperation Agency (JICA) in 1992. Construction of two deep tube-wells, treatment facilities, elevated reservoir and extension of transmission main and distribution pipeline were the major part of the infrastructure developed under Japanese support. With the increasing infrastructure and system improvements, overall production and distribution capacity of the water supply system was significantly increased. This system was maintained and operated by Water Supply and Sanitation district Office (WSSD) until 1999, which later was handed over to Nepal Water Supply Corporation (NWSC) for operation and maintenance. Subsequently, as a sole authority, NWSC is undertaking overall responsibility1 for drinking water supply in the municipality. Only the two tube wells constructed with the support of JICA along with its own more two wells are currently in operation. The existing capacity of NWSC is 8000 private connections. However, due to reduction in water yielding capacity, high level of leakage and lack of proper repair, maintenance and replacement, the existing capacity cannot be fully utilized. The reduction of production capacity and increasing of water supply demand has put NWSC under a great public pressure. According to NWSC Mahendranagar Branch, NWSC has been serving to more than 25,000 populations in four command areas of wards 3, 4, 6 and 18 through 1,500 private connections and 40 public taps. Public taps are located at various parts of the wards and are meant to provide water for those community people who cannot afford private pipeline connection. People residing in 15 wards (out of 19), which constitute about 70% of the total population, are deprived of NWSC water supply. Most of them also rely on public/private hand-pumps and tubewells. However, the quality of ground water is not good as it has significant level of arsenic and calcium carbonate content. Meeting demand of deprived population is a challenge for NWSC and even for the municipality. Now municipality is making efforts to approach different institutions as there is a good source of available water (river Mahakali) to undertake a big-scale project. And the effort is still going on for exploring potential partners/agencies for the support. At the small-scale, it has been making its endeavors with its limited resources to help people installing public hand-pumps and in conserving/managing other natural local based resources. But this would not be appropriate solution since the quality of ground water is not good; there is a significant level of arsenic contains in the case of groundwater, and for other natural sources there is high risk of contamination because of lack of appropriate sewerage and drainage system in the municipality.
31

Regarding sanitation, about 60% households do not have private toilet. Altogether there are 12 public toilets in the municipality and there is increasing demand of more public toilets in different parts of the municipality. Most of the disadvantaged people are compelled to use open place to defecate. This is one of the major problems in health and sanitation concern in the municipality. Moreover, all the toilets are connected with septic tank since there is no sewerage system; and drainage is also limited within core part of the municipality. Similarly, proper system for solid waste management is lacking. 2.9.2 Organizational and Institutional Aspects Organizational structure of Mahendranagar Branch Mahendranagar Water Supply Corporation is a branch office of NWSC which is accountable to its Head Office in Kathmandu. NWSC Head Office is responsible for overall planning, policy and program development. The role of branch office is to implement district level program priorities and actions. The Branch offices organizational structure comprises of three major sections - Technical, Administration and Account. The total number of staff currently working in NWSC, Mahendranagar is 21. Out of which only 10 are permanent and 11 are on contract basis. The technical section is headed by an overseer and is responsible for overall distribution and production. A team of ten staff including junior plumbers, helpers and labor are designated to this section. Administration Section is responsible for the administration and management of the branch office. It is headed by Technical Assistant and five support staff. Similarly in the Account Section there are five positions consisting of accountant, cashier, meter-readers and assistants. The overall responsibility is of the Branch Manager who is looking two branches (Mahendranagar and Dhangadhi) at a time. NWSC has centralized planning and administration system. Generally, Branch Office does not have significant role in planning and decision-making. It requires prior approval in making every major decision. Further, a branch office cannot take any decision with regard to utilization of revenue on regular maintenance and improvement of the system even if branch is running on profit. The major role and responsibility of branch office is simply to move forward district level programs and policies and carry on regular operation and maintenance with centrally allocated budget. Centralized governance and decision making system is one of the major hindrances for the branch office resulting delay in decision-making process. Similarly, lack of role of the branch office in planning and policy development particularly is another issue. The

32

Branch office has been provided with role simply on implementation of district-based programs. Adequate capacity and resources on operation and management is itself a big challenge for NWSC. Consequently, all the branch offices bound to face resource deficit problem. The Branch office is suffering with under budgeting even to carry on regular operation and maintenance of existing infrastructure. Similarly, under-staffing and lacking human development initiatives are the other parts of the challenge. Moreover, capacity building and staff training has not been a part of regular process.

Fig: Stakeholders' map and their interactions Stakeholders' Group WSSDO NWSC Head Office NWSC- Mahendranagar Technical Section Donor agencies Municipality Main Activity Management of Water Supply until1999 Overall Planning, policy and program development Management of water supply system Operation and maintenance of the system Support of expansion of the system Support of deprived population Table: Main Role of the Stakeholders.

Local participation The success of community oriented social and development initiatives largely depends on the level of public participation and their share of ownership. Unfortunately, in the case of
33

NWSC system public participation is absent. All the planning, policies and development initiatives are designed at the central level and are implemented by its branch office. Although it provides service to the people, its ultimate accountability is with its central office. Peoples participation has not been considered at every level of planning and decision-making. People, the end users of the service cannot even participate in the process of tariff determination. There is no specific mechanism for information dissemination and awareness regarding the service delivery. At the same time, NWSC has not even taken initiatives to coordinate with other stakeholders (municipality and other supporting agencies). No regular dialogue, discussion and interaction is taking place with the NWSC Branch Office management team, municipality and with the people as endusers specially in the process of planning and implementation of the activities related to water supply. These are some ground realities that do not create spaces and discourage collaboration and partnership with people and other institutional entities. Consequently, the level of contribution from local people is very low. This can also be linked with increasing arrears and unauthorized usage of water with breakage of transmission main. However, they are enthusiastic to contribute and be part of every initiative for quality drinking water. NWSC Mahendranagar has not integrated sanitation and public awareness as an important component of its services. Its primary focus is only on drinking water supply management. However, various government and non-government organizations such as Family Planning Association of Nepal, District Public Health Office, AIDS program, Tharu Mahila Bikas Manch and other local non-government organizations have been working with different activities on public health, education and economic empowerment. With the increasing public awareness, number of private toilets has been increased. Moreover, peoples participation in case of drinking water is increasing as they are coming up with planning and proposals related to drinking water, sewerage and drainage system. Various community development interest groups are formed in different parts of the municipality. Local level discussion, interaction and formal and informal dialogue is taking place towards taking joint initiative exploring ways and means for sustainable community development. The joint initiatives of Community Development Committee (SamjhanaTolBikasSanstha, AmarsahidTolBikasSanshta, SiddhibinayakTolBikasSanstha and JanakiTolBikasSanstha) can be referred as an indicator of community level initiatives. Significant behavioral changes in regard to people perception are noted on health-hygiene practices. This can be linked with the increasing demand of pipeline water supply which is expensive (costs about NRs.3000) in comparison to the costs of hand34

pump (NRs.2000) for ground water. However, sanitation is still a big challenge as there is no sewerage and drainage system and particular dumping site for solid waste disposal. Social inclusion Existing water supply system does not have any special provision and facilities to socially disadvantaged section of the community. The major caste/ethnic group of the area living within the municipality includes Tharu, Thakuri, Brahmin, Chhetri, Newar and Dalit. Dalit (disadvantaged and secluded groups) population in the area is about 12%. NWSC has no particular consideration to these people. There is no preference and provision applicable on providing private line connection; it serves first come first service basis. Similarly, there is no discount on the connection charge for new line connection and tariff on water usage for this section. The availability of Pubic Stand Posts (PSPs) and public toilets are very limited and not enough for the accessibility of the poor and disadvantaged people in the municipality. There is issue of debate on equal distribution of water, distribution of water in PSPs and its regular maintenance. Some of the harassing situation can also be noted for Dalit on using water from PSPs. Sometimes, they are mistreated and prevented from fetching water from the PSPs as they are regarded as un-touchable castes by the so-called uppercaste people; this is still prevalent in some part of the community. 2.9.3. Financial Aspects Income and expenditure As all other branch offices, the major source of income of NWSC Mahendranagar Branch Office is the water tariff, its fine on delay payment and connection fees from new consumers which is NRs.2, 265 including deposit for meter. The annual income of NWSC Mahendranagar Branch is not quite enough to cover-up its annual expenses. It depends on the annual budget from NWSC central office. The income and expenditure statements of NWSC Mahendranagar give a financial overview of the branch office of last Fiscal Years. Upon consultation of staffs it is revealed that NWSC Mahendranagar Branch Office has been running with operating loss since 2000/01. Further, the loss seems to be increasing in the subsequent years. Lack of increase in the water production and new connections on the one hand and on the other an increase in expenditure on repairing and maintenance are the major factors responsible for degrading financial position of the branch office. Slight increase in income is noted due to increase in the water tariff.
35

3.4.1.1. Arrears Total arrears to be recovered by the office generally consist of delayed or unpaid water bills by the defaulters. The arrears are mainly from the government and public taps. According to the NWSC Mahendranagar till the end of fiscal year, total arrears were about NRs.3,123.5 thousands. This includes arrears from government office with NRs.880.48 thousands and NRs.2243.04 thousands from general public. Water Tariff New tariff regulation is applicable for all NWSC branches from November 2004. Water Tariff Consumption Level Connection with Meter: < 10 m3 > 10 m3 Non-metered connection Rate/month NRs.50 NRs.15/ each additional m3 NRs.360

Table: Water Tariff Structure The applicable tariff for up to 10 m3 is NRs.50, when the consumption exceeds the limit of 10 m3 each additional unit is applicable to the rate of NRs.15 per m3. In the case of non-meter connection a monthly charge of NRs.360 is collected each month. Water tariff is determined by the NWSC Central Office in Kathmandu and it is applicable to all 22-branch offices including Kathmandu. In the process of the determination of the tariff local branch office has no role at all. Budgetary provision and financial transparency Total annual budget of Mahendranagar branch is NRs.4.2 million consisting of (NRs.3.7 million) regular and (NRs.0.5 million) development budget. Out of which, annual maintenance cost is NRs.0.7-0.8 million. All the budgetary payment is transferred through bank check. And two separate bank accounts are maintained for operational and non-operational purposes. All local revenue collected locally is to be deposited in nonoperational accounts. Mahendranagar NWSC cannot use this deposit. The budgetary transfer from Central Office is maintained in operational accounts for all budgetary expenses including administrative, development and operation and maintenance expenditure. Branch office is accountable for its central office for all its revenues and the budget it receives.

36

The branch office has limited rights in regard to expenditure without approval from central office and the limit is NRs.25,000. It needs to take approval to expend above the allocated budget. Internal and external auditing is performed for maintaining the financial transparency. However, annual program budgets are formulated with the limited participation of office staff. The collection of cash against the service charge is reported to NWSC head office. The information on the financial position of the office is not made to other stakeholders including consumers. The NWSC Mahendranagar is accountable to head office in all respects where it is also accountable with the consumers in terms of providing services. Attempts have been made to make the office more accountable to the service delivery including new connection, disconnection, reconnection, water delivery, water charges, due date of meter reading, collection of charges, etc. 2.9.4. Sustainability of the Water Supply System Sustainability of water supply would not be a big issue if it was timely planned and necessary initiatives were taken. Only about 25,000 people have access to drinking water supply system while 70% population of municipality is still deprived of receiving NWSC services. NWSC needs to increase drastically the capacity of the existing system to cover the non-served population. Currently, only two tube-wells constructed in 1992 under Japanese grant are functional. Water production from these two tube-wells is about 4300 lit/min along with 3 pumps. According to the production and consumption record pattern per day, the unaccounted for water (UFW) comes in the range of 31% of the total production. As per the record of NWSC Mahendranagar Branch Office, the total production and consumption per day are as follows: Total Production/day: 648 m3 Total Consumption/day: 447.16m3 Water Loss: 200.84 m3 The quality of the water supplied by NWSC is not to the recommended level of standard, although it is better than the normal ground water. The level of calcium carbonate is extremely high (about 600/ppm) compared to normally recommended range of 150225/ppm. The initial treatment facilities constructed by DWSS in 1973 are no more in operation at present. Current operational treatment facilities with rapid sand filter, prechlorination unit and clear water reservoir were constructed under Japanese grant aid support in 1992. However, some of the treatment facilities such as pre-chlorination plant
37

are not in operation today and therefore chlorination is done manually. Consequently, the supplied water may not be disinfected regularly. Because of high rate of leakage problems and no proper system of sewerage and drainage there is also likelihood of water contamination.

Fig: wate r treatment plant constructed in 1973. Currently, not in operation

Lime incrustation in distribution pipe

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People have collective complaints over NWSC and raises questions of accountability and its efficiency. NWSC Mahendranagar reported to be receiving around 70 complaints per month from consumers. The major complaints are related with leakages from pipe joints, meter blocks, etc. Replacement of meters is taking place with irregularities due to shortage of meters in NWSC, Mahendranagar. NWSC needs to go with immediate and long term planning to sort out its problems. It should work in collaboration and partnership with municipality and other agencies and design a mega project in the long run. And in the short term, NWSC can enhance its capacity working with users to control leakages, reducing unnecessary consumption and encouraging timely payment of bills and settling arrears. However, there are other aspects to be improved and NWSC should give due priority on the following: Replacing pipelines and controlling leakage of water; Taking initiatives to repair non-operating two tube wells; Putting in place operation and maintenance manual to avoid frequent damages of infrastructures Installing treatment plant such as pre-chlorination unit and other additional plant to provide quality water supply. Extension of pumping hours to increase the per capita supplied water and coverage area.

39

SOCIAL
Strengths

INSTITUTIONAL
Significant behavioral changes related to hygienic practices during last years. Womens participation is ignored at all levels of policymaking and implementation. NWSC has no any special considerations to disadvantaged groups.

ECONOMIC
Municipality is making efforts to provide water supply to deprived areas. Centralized planning and administration system in NWSC. Lack of coordination among concerning local stakeholders. The system is not transparent for consumers. Low level of local participation. Integration of public awareness and sanitation as part of the NWSC services. Higher degree of collaboration between NWSC and local institutions.

TECHNOLOGICAL ENVIRONMENTAL

ECONOMIC

Weaknesses

NWSC is facing financial constraints to improve existing system and carry out new projects. Under budgeting to carry out regular operation and maintenance. Lack of provisions for disadvantaged groups in NWSC facilities. Users expressed their willingness to pay for improved water supply services.

Unequal distribution of water due to irregular pressure. Bad condition of some of the pipes and high level of leakage. Risk of supplying water with bacterial contamination due to breakdown of chlorination plant. Repair of nonoperating tube wells. Provision of water supply to the deprived population.

Sanitation coverage is still very low in the municipality. Lack of appropriate sewerage and drain in the municipality.

Opportunities

Formation of community development interest groups, which are coming up with new initiatives.

Mahakali river is a potential source for the expansion of the system.

Threats

High percentage of Mahendraganar population has no access to improved water supply and sanitation facilities.

Unpaid water bills from regular users and public institutions.

Lime incrustations in distribution pipes.

Overuse of groundwater. Many disadvantaged households use public place to defecate.

Table: SWOT ANALYSIS OF MAHENDRANAGAR BRANCH

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CHAPTER: 3 Findings, Suggestions and Conclusion

41

3.1. Suggestions With the overall assessments of the water supply system of Mahendranagar Municipality, some of the conclusive recommendation can be made to enhance its capacity and existing service delivery system. NWSC and Mahendranagar Municipality should focus upon collaboration and partnership building. On top of that, special consideration should be given to the following areas: Special initiative should be taken for proper representation of the consumers in the management of NWSC; Channel of collaboration and partnership should be enhanced with municipality, NGOs and other agencies; Issues of health and hygiene should be incorporated within NWSC and municipality programmatic planning; Financial incentives be offered for the promotion of toilet among the poor and dalit households; More PSPs be established and connection charge and water tariff be reduced for the poor, dalit and ethnic minorities; Public awareness, education and interaction are to be regularly performed in order to held dialogue among NWSC, municipality and people in general. This could be instrumental in partnership building.

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NWSC need to look into and take appropriate measures for the improvements of the following components: Adopt the principles of decentralization by providing more authorities to branch offices; Encourage Branch Manager and other staff in taking decisions independently; Develop Job Description of all staff and encourage the staff members to work according to defined job description; Conduct need-based training for the staff members, and make it a part of regular strategies to enhance the skills of the staff; Introduce computerized accounting system by providing adequate training to staff of Account Section; Update, document and disseminate Management Information System regularly and make it use in management decision-making process; Conduct regular monitoring and evaluation of staff effectively.

3.2. Findings or Lesson learnt The major lessons learned during the assessment process were as follows: Decentralization is necessary to deliver optimum level of output and services. There is centralized structure in the Nepal Water Supply Corporation. All the decisions are taken at the central office, Kathmandu. There is little de-concentration in respect of administrative functions, but there is no financial decentralization at all. As a result, the branch office has to wait for long for any decisions. Moreover, they lack autonomy to function like a corporate organization. This has led to financial loss to the corporation on the one hand and lack of efficient delivery of water services on the other. Peoples participation is the prerequisite for successful operation of a local institution. Apart from the performance, the local development organization needs to involve the local people to the extent possible. Involvement of people as end-users helps sustainable use of resources and their preservation and sustainable management.
43

Public participation and contribution can be ensured if they are properly handled and provided spaces for dialogue and discussion to justify the need of resources and contribution. Ignorance of public participation leads to unequal distribution of the resources and invite anger, unrest and conflict. However, there is no provision for community participation at all in the NWSC system at the local level. This has therefore neglected one of the principles of democracy. Perpetuating exclusion and discrimination could lead either non-participation in all socio-economic and development initiatives or lasting conflict for the share of resources, power and positions. Collaboration and partnership among concerning stakeholders and beneficiaries lead greater amount of capacity and allow working in broader framework. Apart from performance and participation, how effective the governance of an organization is, also depends on the level of partnership that it has built at the local level. In fact, because of the centralized structure, and lack of participation of community and other stakeholders the partnership is lacking in the NWSC system.

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PROBLEMS FACED

Strategies to solve the problems

Extent problem

to

Lessons learned

which the was solved Unpaid bills share large amount still a

FINANCIAL

Delay regular

in

water

Awareness towards efficient the

sense system management

Delay in bill payment is a symptom of inefficient management of the system and dissatisfaction of the users. Lack of participation of local community in decision making process causes lack of ownership sense and careless attitude of users towards the system Centraliztion models restrain the involvement of local stakeholders and the efficient exposure and fulfillment of local needs

bill payment from households and

and a more participatory approach. Incentives as well as penalty sysment would also contribute to foster a more punctual payment

public institutions

INSTITUTIONAL

Policies, programmes and budget decided head leaving management margin to the branch office. in are the office little

Decentralization system would permit to make decisions involvement with the of

Manageme nt NWSC still centralized of is

concerned stakeholders

SUSTAINABILITY

Large proportion unaccounted for (UFW) of due

Program of leakage Problem of control. monitoring Regular has of been solved yet.

Regular monitoring and to be carefully planned in order to avoid UFW. Control of UFW will also reduce the value of nonrevenue.

not maintenance tasks need

water infrastructures

tohigh degree leakages and ageing of the system Table: Problems faced and Solutions

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3.3. Conclusion From the overall analysis of NWSC, it can be rightly said that NWSC is not being able to perform as it should in delivering drinking water service to the public. NWSC has the mandate to upgrade the water network of the country and also to tap alternative sources of drinking water. But NWSC has come a cropper, not only in its attempts to tap alternative water sources, but also in managing the existing water supply network, leading to a severe crisis, as also to controversies. Despite the fact that NSWC is a corporation, it has not been operating on economic and financial principles, and has been marred with poor management. One of the reasons for the anomaly is the intervention from government and politicians in its management. The repercussion of such a weak management, as reflected in poor service delivery, is higher on poor than better off households. In spite of reforms taken place in the corporation in the form of privatization of Kathmandu based water supply, it is still financially unsustainable. Because of its growing deficit, it is urgent that NWSC be run following sound financial principles so as to provide sustainable water supply. So, in this regard, it has to further privatize its other branches for effective management. The tariff structure fixed by the corporation is fixed since decades, resulting low level of earnings with respect to its expenses. This hints that long and sustainable effort is needed to mitigate the loss of NWSC in the coming years. This puts to a great challenge to the Corporation in view of growing cost of water in the days ahead. To make the Corporation financially sound, it is necessary to increase tariff significantly or to pay the loss by the government. The latter option of cost recovery is not a sustainable option. Last but not the least; proper decentralization of authority in rural branches is the most for proper functioning of the corporation as a whole.

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