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Table of Contents

Setting Local Block Tariffs helps the affordability of water to the poor “case study from Yemeni Water Utilities” By Zeyad Shawagfeh Senior Utility Expert Amin Al Mugales DG of Hadjah LC Abdelraqeeb Al hamadi Zabid Utility Manager. Table of Contents .

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Table of Contents

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  1. Setting Local Block Tariffs helps the affordability of water to the poor “case study from Yemeni Water Utilities” By Zeyad Shawagfeh Senior Utility Expert Amin Al Mugales DG of Hadjah LC Abdelraqeeb Al hamadiZabid Utility Manager

  2. Table of Contents • Introduction to Yemeni Water and Sanitation Reform Policy • Legal framework of local tariffs • Overview of Public UWSS • Example of setting local block tariffs from two Yemeni Utilities • Affordability of water to the poor • political unrest in Yemen during year 2011 • Re-construction phase mid 2012 • Looking Forward

  3. Introduction to Water Policy • Cabinet Resolution 237/1997 provides the legal framework of the Yemeni urban water sector reform • Reform initiated to tackle the water crises • Main elements of the reform was decentralization • The main objective under financial viability is local tariffs • Rada’a Principles” that became a key element of the decentralization process of the UWSS • Republican decree of establishing the Local Corporation

  4. Legal Framework of Local Tariffs • Dependence in the Central Government in setting tariffs is no more valid • Increasing block tariffs of not less than 2 but not more than six blocks which is well above the National unified Tariff • Increasing block tariff system has established itself as standard in developing countries. • Blocks are calculated according to the amount of water consumption and the type of customers • Separate tariffs shall be set for each utility for its service area, subjected to the approval of the Board of Director/Advisory Committee (BoD/AC)

  5. Continue • Local Tariffs enhance economic efficiency and encourage water conservation in water scares country • Reflection of costs of future expansion of supply • Social conditions of customer categories is considered • Radaa Principles, utility set its own local cost-recovery tariff, upon approval of the (AC) then the Minster • LC propose water tariff and sanitation service fees and submit them to the Board of Director who act as supreme administrative authority to the (LC) then Minster for final approval

  6. Overview of Public UWSS

  7. Example of setting local block tariffs from two Yemeni Utilities • Factors taken in consideration while preparing tariff concept and design: economic efficiency, fairness, revenues sufficiency, Stability of cash flow, simplicity, Traditional regulation of water supply, and conservation of resources • Problems rises during the implementation of new Tariff: prices effect, difficulties of implementation and realize suitable revenues.

  8. Costs of 1 m3 of billed water against annual O&M costs for the years 1999, 2010 and 2012

  9. Zabid: development over years1999-2010 of revenues against consumers categories

  10. Hadjah: development over years1999-2010 of revenues against consumers categories

  11. Water and Sewerage expenses per poor household using 5 m3

  12. Zabid applied tariff 1999 average /m3 = 57 YRHadjah applied tariff 1999 average/m3 = 104 YR

  13. Zabid applied tariff 2010 average /m3 = 118 YRHadjah applied tariff 2010 average/m3 = 157 YR

  14. Effect of political unrest in Yemen during year 2011 • Severe scarcity of resources • Endangers the water supply of the population • Power cuts • Shortage of fuel • Irregular payments, many customers boycott in not paying their bills • All caused a cost increase in the services • Raising of tariffs or a cross-subsidization from the central government were and still not possible • Water utilities faces increasing difficulties to recover their costs

  15. Re-construction phase mid 2012 • MWE - implementation of different emergency programs • Water crises program – German Support • Support selected water utilities to restore the services through providing materials, equipments and spare parts • Hadjah LC and Zabid Utility are running their businesses with losses • New tariffs proposal to the respective Board of Director and Advisory Committee • Not approved yet.

  16. looking forward • Board of Director / Advisory Committee should be courageous in taking decision in approving new tariffs to maintain the financial viability, keep services • For Verification complete the pro-poor tariff study • Introduce general guideline for the LCs and Utilities to move toward full cost recovery • Adopt energy efficiency program • Conduct study on renewable energy

  17. شكرا لاستماعكمThank you for listening

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