AVRL Management Contract Ends in May

ISODEC and its partners in the National Coalition Against Water Privatization (NCAP) say NO to renewal of the Aqua Vitens Rand Contract. They argue that, it has failed, and justifiably so, because the problem bedeviling the water sector cannot be resolved with a management contract. They say prescribing a management solution to an investment problem is an absurdity that must be discontinued at the least opportunity.

Government, at least for now, appears undecided on whether or not to renew the contract, though Public Agenda has picked up signals that it intends to do so under the guise of a so called transition to handing over to Ghanaians. Again, the paper is reliably informed that, currently there are only two expatriate staff on the AVRL management team, with the rest drawn largely from the Ghana Water Company, a pointer to the fact that, Ghanaians after all are capable managers.

Many observers believe the current brand of water reforms is nothing but an imposition of the World Bank. “When the chicken come home to roost, it is Ghana that will be counting the cost of going along with the World Bank’s obsession with promoting private interest in sectors that are and should be the preserve of the state by virtue of the social contract between the state and its citizens” the convener of the Essential Social Services Platform, Leo Shang Quartey explained in an interview with the Public Agenda this week.

Clearly, water sector financing remains a major challenge that confronts the government. In fact the infrastructure that delivers water to most homes in Accra, Tema, Kumasi, and other urban areas are so old and worn out that they require complete overhaul. “It is precisely because the current urban water reforms do not prioritize investments in the sector that, the Aqua Vitens Rand water management contract has failed to resolve the problems it was intended to address” Shang Quartey argues.

The Executive Director of the Integrated Social Development Centre (ISODEC), Bishop Akolgo stating the organization’s position on the financing options available to Ghana, has proposed that financing water in Ghana should be from the national budget.

He explains that, water is not a commodity but a necessity such that its investment cannot be left to the market to be traded. “If you leave it to the market, there is always the likelihood that vulnerable groups will be priced out. Water should be free at the point of delivery because water is life.” He stressed.

Speaking to Public Agenda in Accra, he observed that the budget as it is now is scattered and that government’s hands are tied because there are earmarked items which after they are taken out leaves only 20% for government to spend.

“All other funds are outside the direct control of the finance minister. This situation often forces government to borrow when there is money sitting in some other sectors.”

According to Mr Akolgo, it is necessary for Ghana to agree on a certain expenditure allocation for essential services, and that we must ensure that they all fit within a certain framework. The United Nations Development Programme (UNDP) recommended ratio for assessing government compliance with human development commitments include: public expenditure ratio (PER) at around 25%, social allocation ratio (SAR) at 40%, social priority ratio (SPR) at 50% and human expenditure ratio (HER) at least at 5% as adequate expenditure on human development.

Calculation from 2006 to 2010 budgets of Ghana, according to UNDP indicators shows that PER (25%) was 19.6% in 2006, 23.8% – 2007, 26.4% – 2008, 25.9% – 2009 and 24.3% – 2010.

SAR (40%) within the period is at 58.5%, 44.70%. 37.8%, 49.1% and 43.7%. Also SPR (50%) is at 42.8%, 39.6%, 28.8%, 32.0% and 36.997%, while HER (5%) is at 8.4%, 9.4%, 7.6%, 8.3% and 8.97%.

Mr. Akolgo expressed support for government’s proposal to adopt a one fund approach to the country’s financial management, as it will help government have a quick overview of all cash flows into the state’s coffers. He argues that it will not allow money to be idling somewhere when it is urgently required elsewhere.

The 2009 annual progress report on the implementation of the Ghana Growth and Poverty Reduction Strategy indicates that urban water coverage from 2005 to 2009 was 55%, 56%, 58%, 55% and 56%, respectively, against a yearly target of 58%, showing that Aqua Vitens Rand Ltd (AVRL) failed to meet the target except in 2007.

In the same period under review, rural water coverage figures were as follows; 52%, 53.18%, 54.86%, 57.14%, and 58.9% against a target of 60%. There is some consistency compared to urban water coverage because rural water is now dependent on charity (donor financing), even here, there are constraints.

Since the inception of the management contract with AVRL some five years ago, questions have been raised about the company’s inefficiency. A recent technical audit report of the performance of AVRL has revealed that expansion in infrastructure has not translated into improvement but has been under-utilized, and is mainly an issue of mismanagement. The company, according to this, and other performance audit reports has failed to meet contractual targets, including reducing non-revenue water, stabilizing pressure in the system and improving water quality.

credit: Ama A. Amankwah Baafi