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Cambodia Water Action: Phnom Penh Water Supply Authority—Internal Reforms Fuel Performance Upgrade

Cambodia Water Action: Phnom Penh Water Supply Authority—Internal Reforms Fuel Performance Upgrade

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Published by: adbwaterforall on Oct 16, 2012
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Country Water Actions

Country water actions are stories that showcase water reforms undertaken by individuals, communities, organizations, and governments in Asia-Pacific countries and elsewhere.

Cambodia: Phnom Penh Water Supply Authority—Internal Reforms Fuel Performance Upgrade
August 2007

By Maria Christina Duenas Knowledge Management Officer Cambodia’s Phnom Penh Water Supply Authority (PPWSA) transformed from a utility on its last legs to one of Asia’s best and brightest. For a utility to avoid drowning is one thing, to hold its head above water for an indefinite period of time is another. How has PPWSA managed t his feat? THE PERFECT BAD EXAMPLE Today, PPWSA is the epitome of achievement and success. “But back in 1993, we were the perfect bad example,” says Ek Sonn Chan, recalling his early days as PPWSA’s General Director (GD). He wasn’t exaggerating. Fifteen years ago, only 20% of the city was connected to the 70year-old water system, and each connection costs a whopping $1000. “You could have had a water pipe running in front of your house and still not be able to have a connection,” GD Chan said. Nonrevenue water (NRW) topped 72% and revenues collected barely covered half of operational costs. Those connected, just 25% of the coverage area, had water for only 10 hours daily. Employee morale was low and it’s no wonder. Their salary averaged at $20 per month. Nepotism was widely practiced, so many held positions they weren’t qualified for. The top management and its cronies abused power and fanned their vested interests, and employees get away with stealing from the company by illegally installing connections. In short, employees were underpaid, underutilized, unmotivated, and undisciplined. INVESTING IN THE PEOPLE When GD Chan took over the war-ravaged utility, he knew he had a lot of tough, unpopular decisions to make. The first of these was restructuring the management. Corrupt leaders were replaced by younger employees who had the right qualifications. Promising young and dynamic employees were given new authority and inefficient “old timers” were reassigned to more dormant roles. Next came the strengthening of the workforce, and PPWSA’s solutions centered on education, motivation, and sanction. “We set up a training center to respond to inhouse training needs,” says GD Chan, adding that “On the average, our staff receives 12 days of training annually.” Performance evaluations were also conducted every 3 months to ensure that staff can benchmark their performance, work well with the team, and get measurable results. PPWSA also introduced a profit-sharing system that monitors corruption practices of all employees. Top performers were given incentives while poor performers and corrupt employees were weeded out. The decision to fire or hire rests squarely on the shoulders of the GD. These days, employees also have a more compelling reason to perform well. With the exception of the GD and finance director, who are employed by the Government, all 583 staff are employed by PPWSA, which has its own salary structure. From 2001 onwards, PPWSA has increased the salary of its staff by about 20% annually, making them comparable to— and sometimes even better than—private sector remunerations.

Comparison of Median Monthly Salaries of PPWSA and Government Agencies Beneficiaries Deputy General Director Director Chief Office Vice Chief Office Chief of Section Vice chief of section Skilled office staff Skilled employees Skilled workers Workers/Unskilled Workers Median Monthly Salary (US$) PPWSA Government 876 61 758 53 623 50 511 42 425 37 337 34 266 29 213 25 182 23 142 19

PURSUING PERFORMANCE EFFICIENCIES Simultaneous with investing on its people, PPWSA invested on the right materials to smoothen its operations.. “On the hardware side, we started metering all our connections. Then, we upgraded to more accurate water meters. We now use volumetric water meter class C, which has a replacement cycle of 4-8 years,” says GD Chan. To address its NRW problem, PPWSA renewed old pipes using state-of-the-art materials and labor from PPWSA staff. It also gradually eliminated underground tanks and divided the distribution network into 41 zones, each equipped with a pressure and flow rate data transmitter that provides online data for analyzing big leaks in the system. On the software side, PPWSA updated its customer database and introduced fully automated systems for accounting, management, and billing. The computerized billing system replaced often corrupt bill collectors, helping increase PPWSA’s collection ratio to its current 99.9% level. PPWSA also institutionalized performance monitoring, coming up with progress reports and performance indicators on a regular basis and annually subjecting its accounts and procedures to an independent audit. AUTONOMY FEEDS REFORMS PPWSA’s internal reforms wouldn’t have all been possible if PPWSA has not enjoyed a significant degree of autonomy. A 1996 decree by the Cambodian Government granted PPWSA administrative and financial autonomy. This allowed PPWSA to operate as a private corporation, with the freedom to plan, budget, and innovate. In terms of administration, PPWSA is governed by a 7member Board of Directors.1 “The Board meets every 3 months to discuss progress and approve budgets and investment programs. Day-to-day operational and organizational decisions rest on the GD,” says Assistant General Director Visoth Chea. Excepting decisions on tariff, which are ultimately made by the Prime Minister, the Board and General Director have clear authority and parameters for decision making.

For its finances, PPWSA does not get any subsidy from the central government, which works to its advantage as this allows PPWSA to distance itself from political pressures. After paying taxes to the Government, all of PPWSA’s revenues are channeled back into its coffers and divided into investment accounts, totaling roughly $17 million. However, the utility is willing to loan to other government agencies in need and has, in fact, contributed roughly 10% of its profit to the Government in the past 2 years. LOOKING AHEAD Internal reforms, coupled with a supportive Government and informed public, enabled PPWSA to attain and enjoy its current successes—6% NRW, 90% coverage with 24-hour supply, 99.9% collection ration, full cost recovery-based tariffs, and continuing financial growth. But underpinning all these factors is the drive of its number one champion— Ek Sonn Chan. “We dread the time of his retirement,” says Roeun Nary, head of PPWSA’s Human Resource Office. “He is a brilliant leader who is committed to the task, never breaks his promise, and takes good care of his people. We’ve accomplished so much under his guidance.” GD Chan is bent on pursuing his reforms and leading PPWSA to greater heights in the coming years. But he is also training new leaders who can take his place someday. “Our staff is our best resource,” says GD Chan. “We must give the right incentive or punishment as necessary. With the right investment, they can become PPWSA’s champions.” In terms of administration, PPWSA is governed by a 7member Board of Directors.1 “The Board meets every 3 months to discuss progress and approve budgets and investment programs. Day-to-day operational and organizational decisions rest on the GD,” says Assistant General Director Visoth Chea. Excepting decisions on tariff, which are ultimately made by the Prime Minister, the Board and General Director have clear authority and parameters for decision making. For its finances, PPWSA does not get any subsidy from the central government, which works to its advantage as this allows PPWSA to distance itself from political pressures. After paying taxes to the Government, all of PPWSA’s revenues are channeled back into its coffers and divided into investment accounts, totaling roughly $17 million. However, the utility is willing to loan to other government agencies in need and has, in fact, contributed roughly 10% of its profit to the Government in the past 2 years. GD Chan is bent on pursuing his reforms and leading PPWSA to greater heights in the coming years. But he is also training new leaders who can take his place someday. “Our staff is our best resource,” says GD Chan. “We must give the right incentive or punishment as necessary. With the right investment, they can become PPWSA’s champions.” RELATED LINKS Cambodia: Phnom Penh Water Supply Authority: An Exemplary Water Utility in Asia

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1 The Board comprises the General Director, representatives of Phnom Penh’s municipal government, Council of Ministers, PPWSA employees, and 3 line ministries: Industry, Mine, and Energy (MIME); Economic and Finance; and Interior. The MIME representative serves as chairman, and each member has a 3- year term that could be extended as necessary.

*This article was first published online at ADB's Water for All website in August 2007: http://www.adb.org/Water/actions/cam/Internal -Reforms-FuelPerformance.asp.

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