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Water Supply of Phnom Penh: A Most
Remarkable Transformation
by Asit K. Biswas
Distinguished Visiting Professor, Institute of Water Policy
Lee Kuan Yew School of Public Policy, Singapore; and
President, Third World Centre for Water Management,
Mexico
and
Cecilia Tortajada
Visiting Professor, Institute of Water Policy
Lee Kuan Yew School of Public Policy, Singapore;
Scientific Director, International Centre for Water; and
President, International Water Resources Association
September, 2009
ii TABLE OF CONTENTS
PREFACE 1
INTRODUCTION 5
DEVELOPMENTS UNTIL 1993 6
Socio-economic Development Plan, 1996–2000 13
PROGRESS SINCE 1994 14
National social and economic progress 14
Phnom Penh Water Supply Authority 16
URBANIZATION 17
UNACCOUNTED FOR WATER 21
WATER PRICING AND COST RECOVERY 23
ACCURATE DATA ON WATER CONSUMERS 32
METERING 33
WATER FOR THE ABSOLUTELY POOR 33
FINANCIAL SUSTAINABILITY 39
PPWSA: AN OVERALL PERFORMANCE AUTHORITY 43
LESSONS LEARNED 46
CONCLUDING REMARKS 50
BIBLIOGRAPHY 51
ACKNOWLEDGEMENTS 54
ANNEX I 55
iii
LIST OF TABLES
Table 1. Status of Water Supply to Phnom Penh in 1993 7
Table 2. Population serviced by PPWSA in 1993 9
Table 3. Average annual water production in m3/day 19
Table 4. Socioeconomic survey of water supply in Phnom Penh 26
Table 5. Progressive tariff structure of PPWSA, in riels m3 27
Table 6. Categories of customers, 1997 to 2008 34
Table 7. Status of metering, 1993 to 2008 34
Table 8. Indicators, 2003–2008 42
Table 9. Billing and collection ratio, Average for the year, 1993–2008 42
Table 10. Economic and performance indicators of PPWSA, 1993–2008 48
Table 11. Production and distribution data, 1993–2008 49
Table 12. Access to water and health indicators for Cambodian urban centres 49
iv LIST OF FIGURES
Photo 1. Situation of water supply in Phnom Penh in the 1980s 8
Figure 1. Per capita GDP for Cambodia in constant dollars, 1993–2008 15
Figure 2. Population of Phnom Penh, 1993–2008 18
Figure 3. Expansion of area supplied with water, 1993–2008 18
Figure 4. Per capita water use, 1993–2008 20
Figure 5. Volume of water produced at source (m3), 1993–2008 20
Figure 6. Volume of water treated (m3), 1993–2008 21
Figure 7. Unaccounted for water, Phnom Penh, 1993–2008 24
Figure 8. Availability of water in hours per day, 1993–2008 30
Figure 9: Number of customers, 1993–2008 29
Figure 10. Average household water bill per month USD, 1993–2008 29
Figure 11. Billing ratio, quantity billed/total production in percentage 31
Figure 12. Bill collection ratio, number of bills collected/total bills, in percentage,
1993–2008 31
Figure 13. Bill collection ratio, amount collected/amount billed, in percentage,
1993–2008 32
Figure 14. Number of metered connections, 1993–2008 35
Figure 15. Number of functional meters, 1993–2008 35
Figure 16. Number of defective meters reported, 1993–2008 36
Figure 17. Annual and cumulative water connections to poor households, 1999–2008 38
Figure 18. Distribution of annual operating expenses 40
Figure 19. Number of accounts served per employee, 1993–2008 40
Figure 20. Average cost per m3 of water sold, USD, 1993–2008 41
Figure 21. Amount billed in US dollars, 1993–2008 43
Figure 22. Amount collected, US dollars, 1993–2008 44
Figure 23. Net profits of PPWSA, 1997–2008 44
Figure 24. Total pipe network lengths in km, 1997–2009 45
1
PREFACE
A major problem facing the water profession is the absence of comprehensive,
independent, reliable and objective analyses of urban water management systems of the
developing world. What is mostly available at present are analyses carried out by the staff
members of the utility themselves, or by international funding institutions that have
provided funds to the utilities for the construction, rehabilitation and/or strengthening.
These analyses, at least to the independent observers, are suspect since the general
perception often is that such analyses often exaggerate the successes and downplays the
shortcomings. Thus, there is an urgent need for objective and independent analyses of
such utilities in order to find out what aspects are working and why, what are not working
and why not, and what are the constraints they are facing and if such constraints can be
realistically overcome within a reasonable timeframe because of political, institutional,
economic, legal and social reasons. Regrettably, such analyses are simply not available
Because of lack of such comprehensive analyses, it has been difficult even to identify
which are the models of urban water management that are working well for a reasonable
period of time, and what lessons other urban centres of developing countries, which are
planning to improve their performance, can learn from such experiences. Based on their
boundary conditions and specificities of good models analysed, other urban centres can
decide upon their potential replicability, albeit with appropriate modifications to suit their
own special conditions. In our view, no one single model of urban water management
will be suitable for all developing countries. Developing countries are not homogenous,
and are at different stages of economic, social, legal and institutional development. In
addition, at least in terms of water supply, climatic conditions may vary quite
significantly from one city to another, even within a single medium-to-large size country,
and the availability of water infrastructure is seldom similar. Under these conditions,
there is no question that one size does not fit all, and solution-in-search-of-a-problem
approach will mostly fail, as has been the experience in throughout history.
Thus, what is needed at present are objective, accurate and critical analyses of several
cases of urban water management in developing countries which are working reasonably
well for a sustained period, and a clear understanding of the reasons behind their
successes. If 8–10 such good case studies are available, other urban centres of the
developing world could consider these different models and then they could decide which
model, or mix of models, is likely to be most applicable to their cities. Having selected a
specific model, or mixing the appropriate qualities of several good models, they could
come out with solutions that could satisfy their own requirements. However, most
unfortunately, independent and objective analyses of such good models that are working
are not available at present.
We have been considering preparation of a portfolio of a community of good practices of
urban water management from various developing countries, or former developing
countries, which the world should take note of. However, because of paucity of time, we
have not been able to develop such a portfolio. The present case study of Phnom Penh is
our first attempt to analyse an urban water supply system in considerable depth.
2
In order to conduct this independent analysis, two visits were made to Phnom Penh. The
first visit for a prolonged period was to understand the current and the past developments,
both national and geopolitical, which influenced the functioning of the Phnom Penh
Water Supply Authority (PPWSA). During the first visit, all the relevant personnel of
PPWSA, including the Director General and all his senior staff, were intensively and
extensively interviewed. We also interviewed the only person in the staff of the PPWSA
who worked in the institution during the Khmer Rouge regime.
We further interviewed customers of PPWSA (especially the poor living in the slums, as
well as industrial and commercial establishments) to obtain their views and perceptions
of the quality of services they receive from the Authority. We also had intensive
discussions with the staff members of the major development agencies like the Asian
Development Bank, World Bank and Japan International Cooperation Agency, local and
international NGOs and academic and research institutions. We further interviewed
senior staff members of various Cambodian national and sub-national institutions dealing
with water. All these gave us a good understanding of the past and the current situations.
The first visit was used to collect all the necessary data for analysis. We made it very
clear to the PPWSA management during our first meeting with the General Director of
PPWSA and his senior staff that the analysis would be scientific and objective based only
on facts, figures and analyses. The objective of the study was neither to “praise or to
bury” PPWSA but rather conduct an independent review of what they have achieved and
what lessons, both positive and negative, can be learnt from the Phnom Penh experience
which may be of interest to other urban centres of Asia as well as in other continents.
We were very pleasantly surprised by the reaction of the General Director who requested
us to be as critical as possible in our analysis so that PPWSA can improve further. He
also specifically instructed his staff not only to provide all the data which we may request
but also any other data which we may not have requested but which in their view may be
useful to us for a better understanding of the situation. We were very surprised to receive
more than 90% of the data we requested within 24 hours, and the rest within 48 hours. In
nearly five decades of development evaluation, we have never encountered such a
situation before. It not only made clear the PPWSA has a remarkable management
information system in place, but they are confident of what they are doing, and proud of
the results they have produced.
After this first visit, the data we obtained were carefully analysed in terms of their
intercomparability and reliability. As a result of this analysis, we are confident that the
data we received were genuine and reliable. It should be noted that this analysis
exclusively relied upon primary and up-to-date data. We did review available information
on the Phnom Penh water supply from other sources, including the Asian Development
Bank and the World Bank, but we found these data extremely limited, incomplete, mostly
out-of-date and a few times, in our view, even erroneous. Thus, we decided to limit our
entire analysis only on primary data sources.
3
After our analysis, we sent PPWSA our draft report, without conclusions, and requested
them to review our work as critically as possible and give their comments. During our
second visit to Phnom Penh, we reviewed these comments and the report with the
PPWSA staff. During this visit, we received additional updated figures, and some factual
corrections.
The analysis was finalised after this second visit. We have no doubt that this report is
now the most updated, complete, objective, accurate and independent analysis of PPWSA
available.
A comprehensive study like this could not have been prepared with the full support and
cooperation of the PPWSA staff. We very much appreciate the confidence placed on us
by the General Director who ensured that no data was confidential and we had access to
the most sensitive information. We thus are most grateful to Mr. Ek Sonn Chan, the
General Director, and Dr. Chea Visoth, Assistant General Director for their unstinted
support during this entire study. Deputy General Directors Sem Bun Heng and Long
Naro, Directors Ros Kim Leang, Sin Kheng Lin, Roeun Nary, Samreth Sovithia and Khut
Vuthiarith, Chief of Training, Huot Sok Heng, and Chief of Laboratory Koa Heng
generously gave their times to explain various issues and provide whatever information
we requested. Sin Ham, only staff member still with PPWSA form the time Khmer
Rouge gave us an excellent briefing as to how water supply of Phnom Penh was run at
that time. We very much appreciate the time they spent with us for this study.
Three other people were very helpful for this study. They are Tan Sokchea, Director,
Potable Water Supply Department of the Ministry of Industry, Mines and Energy, and
Nhean Tola and Hayashi Eiichiro of the Japan International Cooperation Agency. Their
views and insights of PPWSA were of fundamental importance to us.
We also met with numerous other individuals and institutions, among which were Neth
Barom, Vice Rector of Royal University of Phnom Penh, Som Kunthir and Cheav
Channy of the Seam Reap Water Supply Authority, Dararath Yem of the Cambodia
Development Policy Institute, Eric Sidgwick and Nida Ouk of the Asian Development
Bank, and Veasna Bun of the World Bank. All this assistance is gratefully acknowledged.
Dr. K. E. Seetharam and Mr. Tan Cheon Kheong, Institute of Water Policy, Lee Kuan
Yew School of Public Policy, Singapore, were also most helpful for this study.
Ms. Thania Gomez of the Third World Centre for Water Management who drafted all the
diagrams used in this report directly from the primary data sources.
Without the support of all these personalities and their institutions and countless other
people that we talked with, this comprehensive analysis simply could not have been
completed.
The analysis, however, is exclusively ours. We take full responsibility for the quality of
the analysis as well as the opinions expressed in this report. It is based exclusively on
4
primary data sources. This is the first several objective and independent case study of
urban water systems in the developing world that we plan to carry out in the future.
Asit K. Biswas
Distinguished Visiting Professor, Lee
Kuan Yew School of Public Policy,
Singapore, and
President, Third World Centre for Water
Management, Atizapán, Mexico
Cecilia Tortajada
Visiting Professor, Lee Kuan Yew School
of Public Policy, Singapore, and Scientific
Director, International Centre for Water,
Zaragoza, Spain
5
INTRODUCTION
In terms of available water resources, Cambodia is very well endowed. It has a high
annual rainfall (up to about 3,000 mm in the highlands), three major rivers (Mekong,
Bassac and Tonle Sap) and their many tributaries, and excellent sources of groundwater
both in terms of quantity and quality. Until the late 1960s, the urban water services in
Cambodia were quite reasonable, certainly better than what existed then in many of its
neighbouring countries. The residents of Phnom Penh had an uninterrupted 24 hour water
supply of reasonable quality, which was better than many centres of its neighbouring
countries.
The situation, however, changed dramatically by the late 1960s, when considerable
political turmoil took place, and which continued unabated for the next two decades. The
situation worsened during the 4-year rule of the Khmer Rouge, who captured Phnom
Penh on April 17, 1975. Khmer Rouge attempted to make Cambodia a classless society
by forcing people to work in agricultural communes. The radical ideology included
isolating the country from all types of external influences. Among some of the changes
they instituted were the following: all forms of banking, finance and currency were
abolished; no religious practices were allowed; schools, factories and hospitals were
closed, and all private properties were confiscated. Educated and trained people were
openly discriminated against, and many such people were killed. It is now estimated that
some 1.4 to 2.2 million people died because of the Khmer Rouge atrocities, nearly half
were executed and the other half died due to starvation and diseases which resulted
directly from its ill-conceived policies.
Khmer Rouge government was ultimately dislodged by the Vietnamese forces, and
Phnom Penh was captured on January 7, 1979. Khmer Rouge retreated to the Western
part of the country and continued to control some areas near the Thai border for about a
decade. Despite its reversal in Cambodia, Khmer Rouge retained its UN seat until 1993,
supported by most of the Western governments.
The social, political, economic and institutional turmoil took their toll on all the
development sectors of Cambodia during the decades of the 1970s and the 1980s, and
urban water management was no exception. The country started to recover from this
prolonged nightmare, demographically, economically, and institutionally only from about
the early 1990s. During the period of the Khmer Rouge government, the entire socialeconomic-institutional fabric of the country was destroyed.
All forms of social services in the country, ranging from education to health, became
totally dysfunctional, and all urban infrastructures were grossly neglected during these
two lost decades in the country. There were no new investments in water or another type
of infrastructure, nor were they maintained and operated at minimally acceptable level.
Skilled people were simply not available to properly maintain and operate the existing
urban water system: they were either forced to relocate in rural areas for agricultural
activities, or were killed. All available records of the urban utilities were destroyed.
Because of such prolonged atrocities, the availability of skilled manpower declined very
6
dramatically. By the 1980s, urban water management practices in all Cambodian cities,
including Phnom Penh, were in terrible shape.
DEVELOPMENTS UNTIL 1993
Even after the fall of the Khmer Rouge government and their well-documented atrocities
which must have been well-known to the western intelligence services, the Khmer
government managed to retain support from the West, even after they were ousted from
power.
This is not surprising since the American President Gerald Ford declared on 23 April
1975 the end of the Vietnam War. Saigon was captured on 30 April 1975, and the fact
that Vietnam moved into Cambodia to get rid of a murderous regime did not go well with
the West. The geopolitics of the cold war, defeat in the Vietnam war, and the entire false
logic of the Vietnam war in terms of the domino theory meant that the Western powers
were sceptical of the real motive of Vietnam of its move into Cambodia, even though it
was well-known that the Khmer Rouge was provoking Vietnam by its repeated border
incursions and shelling of the border towns of Vietnam.
From a Cambodian perspective, after the nightmare of the Khmer Rouge regime was
over, a major expectation of the people was that the world would help them after the
genocides practiced on a massive scale. Instead of this help, Cambodia received double
whammy in terms of trade sanctions which lasted well over a decade. This ensured that
the people who had suffered on an immense scale continued to suffer because of the trade
sanctions.
In retrospect, and most surprisingly, the Khmer Rouge continued to retain Cambodia’s
seat in the United Nations under the name of “Democratic Kampuchea” until 1982, and
then under the “Coalition Government of Democratic Kampuchea” until 1993. The
Khmer Rouge government was repeatedly supported by the Western powers to retain its
UN seat. Margaret Thatcher, the British Prime Minister said that “there are amongst the
Khmer Rouge some very reasonable people and they will have to take part in a future
government in Cambodia”. Sweden was one of the first Western countries to break rank
and withdrew its support to the Khmer Rouge.
The water supply system of Phnom Penh was built over the years. The first treatment
plant was built in 1895 under the French colonial rule at Chrouy Changwar peninsula,
and had a capacity of 30,000 m3/day. Water was abstracted from the Mekong River.
Some six decades later, the second treatment plant was constructed at Chamcar Morn,
with a capacity of 10,000 m3/day, and it used water from the Bassac River. A decade
later, in 1966, a major one was constructed on the banks of the Sap River at Phum Prek,
with a capacity of 100,000 m3/day.
In March 1960, after Cambodia gained independence from the French Colonial rule,
Régie des eaux became a separate entity, compared to a combined earlier operation of
7
water and electricity as one institution. However, it remained a government-owned
utility, and was placed under the authority of the Phnom Penh municipality.
When Khmer Rouge was in power during 1975 to 1979, the water utility, for all practical
purposes was not operational. This was the darkest period in the history of PPWSA.
During the period 1980 to 1992, the company became operational again when people
were allowed and able to return to the city. During the early stages of this transition,
Phnom Penh municipality was responsible for providing water to its inhabitants, as was
the case before the Khmer Rouge regime was in power. However, after 5-year’s of total
neglect, the water supply system simply could not cope with the demands, nor was the
institution in a reasonable shape to provide requisite water services. Thus, the public did
whatever was needed to obtain their daily water requirements. Thousands of public
underground tanks (Photo 1) and unauthorized connections were made which further
contributed to the steady deterioration of the performance of the water supply system.
With the destruction of the civil society of the Khmer Rouge, and the ensuring political
turmoil and the resulting trade embargo that was imposed on Cambodia, the conditions of
the urban water supply to the city declined precipitously because of destruction of
facilities, neglected maintenance, lack of spare parts, equipment and other materials,
shortage of electricity supply, absence of experienced personnel in all spheres, and funds.
As a result, the total production capacity from the three treatment plants declined by
some 55%, from 140,000 m3/day to 63,000 m3/day by 1992. These figures are shown in
Table 1. Not only water supply deteriorated in terms of quantity but also quality of water
provided left much to be desired. This erratic and unacceptable level of service delivery
became a major social and health problem for the city.
Table 1. Status of Water Supply to Phnom Penh in 1993
Treatment Plant Phum Prek Chamcar
Morn
Chrouy
Changwar
Treatment Capacity (m3/day)
100,000 10,000 30,000
Water Production in 1993 (m3/day)
56,000 7,000 0
Water Source
Sap River Bassac River Mekong River
Year of Construction
1966 1953 1895
8
Photo 1. Situation of water supply in Phnom Penh in early 1980s
9
Of the three water treatment plants, Chrouy Changwar was destroyed in 1983 and Phum
Prek and Chamcar Morn were well past their economic lives, and were deteriorating
rapidly. By 1993, urgent rehabilitation of the treatment plants were needed, and the
Cambodian Government requested the Japanese Government for assistance to rehabilitate
systems.
Institutionally, PPWSA was in a limbo. From January 1988 to June 1991, Phnom Penh
Water Supply Authority was supposed to be managed and administrated as an
autonomous public enterprise. However, it lost significant amount of money each year
continuously, as a result of which its autonomous status had to be suspended in June
1991. It was then placed again under the administrative and budgetary control of the
Phnom Penh Municipal Authority.
Only in 1986, the necessary authorization was received by the Authority to collect fees
for water consumed. By 1992, PPWSA was spending 1.3 billion riels1 each year, out of
which electricity costs took the lion’s share, at 0.98 billion riels. The institution recorded
an annual deficit of 809 million riels, which meant that nearly two-third of its expenditure
had to be subsidized by the Phnom Penh municipality. This was not surprising since bill
were issued to only about 24,000 households (about 43% of the total households). Only
2,800 of these bills were based on metered consumption (even the reliability of these
metered readings left much to be desired because of widespread corruption), and the rest
were somewhat crudely estimated. Furthermore, the bills issues were not even properly
collected: bill collection ratio was around 19%. Domestic water tariff was 166 riels/m3.
Major public sector customers like the army and the various government departments, or
influential people like the ministers never had to pay their water bills.
During this period, there was widespread reselling of water by the households that were
fortunate enough to receive any water. The cost of water from such sales, and from the
private vendors, was several times the price of water supplied by the PPWSA. It was
well-known that even the then Director General of PPWSA also sold water to his
neighbours for private benefit, even though such senior officers were not billed for any
water.
The population of the city and its neighbouring suburban areas, and the area serviced by
PPWSA during this period are shown in Table 2.
Table 2. Population serviced by PPWSA in 1993 (Source: PPWSA)
Total Serviced
City
402,070 215,000
Suburban areas
280.866 0
Total
682,936 215,000
1 Exchange rate then was $1.00=2,500 riels
10
Under these conditions, and well after the Khmer Rouge government was deposed, only
external assistance Cambodia received was of emergency relief type only to rehabilitate
parts of its water supply system to a basic level. This was possible only to areas where
roads and security conditions were considered reasonable. This was because of the trade
embargo, and the then government of Cambodia was not a member of the United
Nations. Not surprisingly, no attention could be given to the quality of the water services,
or how these could be improved. Nor could there be any long-term development plans to
improve the water services of the country.
The socio-political turmoil of the 1980s affected PPWSA in various direct and indirect
ways. For example, the trade embargo imposed on Cambodia during the 1980s severely
restricted the options available to it to obtain material and equipment from the
international markets. The problem was especially severe since the country had no
indigenous manufacturing capabilities like production of pipes to convey water. Because
of the non-availability of materials and equipment, either essential rehabilitation of the
urban water systems could not be done. Even when some rehabilitation could be carried
out, the quality of work left much to be desired, lack of technical capacity and proper
equipment made the problem worse. For example, leaks were plugged by driving wedge
which needed a much bigger hole to be made in the pipes. Furthermore, no maps were
available as to where the pipes were buried: they were lost during the Khmer Rouge rule.
Knowledge and technology available to the staff to operate and managed the system were
very primitive.
PPWSA was also in bad shape in institutional terms. Years of centralized, top-down
management had contributed to the development of a culture of inefficiency, bureaucratic
mindset, corruption and conformity. The staff did the least possible work that was
needed. It is estimated that 80% of the staff worked less than two hours per day. Salaries
were very low and the working environment was poor, as a result of which there were no
incentives for improving their performance. In a sense, most of the staff did what
benefited them the most at personal levels, rather than what needed to be done for the
benefit of the institutions and the citizens.
Institutional arrangements also left much to be desired. PPWSA was run as a government
department with no administrative, operational and financial autonomy. It was an integral
part of the Municipality of Phnom Penh, and thus was in total control of the Governor of
the city. It needed continuous municipal authorization for all its operational expenditures.
Getting any authorization was a time-consuming process, during which the situation
deteriorated even further. Whatever revenues the PPWSA earned were consolidated with
general municipal funds, and thus there was absolutely no incentive to run it on a
business-like basis. It received no regular information on the income it generated (even
though these were not substantial), or any pressure, or incentive, to become economically
self-sufficient, at least in terms of operation and maintenance costs. Its budget came from
the overall budget of the city of Phnom Penh. Nor were there any legal and regulatory
frameworks available to carry out its function.
11
The capacity of PPWSA up to 1992 was very poor in all senses. For example, the
institution had only three technicians who could connect water meters. Because of this
inefficiency, the cost of connecting water meters was exceedingly high, around $150 per
meter (compare this to the current cost of around $30 per meter). The meter readers and
bill collectors were illiterate, and mostly kept the money they collected. In any event,
many of the meters installed were deep underground, and were invariably flooded and
thus never could be accurately read.
Most of the staff of PPWSA never paid their water bills. In fact, many often sold water to
their neighbours. Some of the major public sector consumers of water, like the army,
never agreed to have any water meter installed, nor pay their bills for water consumed.
Thus, the government departments, ministers and the rich people seldom paid for water.
A survey of who were its customers was initiated in 1994. This survey was initially
expected to have been carried out by a French consulting company with French financial
assistance. However, when the General Director realised that this 2-year contract would
provide information only on ½ of one district, he requested the Mayor of Phnom Penh to
give him 100 people to complete the task in one year. Since there were many people who
were underemployed in the municipality, the Mayor promptly provided the requisite 100
people, who had to be trained to conduct the survey properly. To the great credit of the
PPWSA, its management not only trained these people but also completed the survey
within one year. The French company, when it realized that with only 10 people they
could not compete with the PPWSA team in terms of completing the work they basically
stopped their work.
The survey found out that there were 13,901 households in Phnom Penh who were
getting water but receiving no bills. Equally, there were thousands of people who were
receiving and paying their water bills, but they never received any water!
In other words, by the early 1990s, PPWSA as an institution and its overall management
were dysfunctional, as a result of which the consumers received a very poor service and a
low level of service delivery.
One of the first institutions to provide emergency assistance to the Cambodian water
sector was Oxfam, a non-governmental organization. When the Khmer Rouge
government finally lost its UN seat in 1993, certain Western governments and
international institutions like the World Bank and the Asian Development Bank began to
provide aid to Cambodia. The initial sizeable aids came from France and Japan, who
together provided some $5.2 million, primarily in terms of grants, to rehabilitate Phnom
Penh’s water supply systems. It was followed by a Technical Assistance project by
UNDP and World Bank to support capacity building in terms of training, skill
development and conduct of some studies. This project also had some limited funds
available to buy essential spare parts and equipment.
With external support, the PPWSA started to make rapid progress. To put the situation in
a proper perspective, in 1992, it had only five engineers, and most of its staff members
were even incapable of reading meters accurately. Situations were even worse in the
12
provincial towns, which could provide only very intermittent and unreliable water
services. The quality of treated water was invariably poor, and some towns even
distributed simply raw water, without any form of treatment, to the households. Not
surprisingly, people had very little confidence on their prevailing water supply services,
and many citizens opted for alternative options to secure their daily water needs (National
Policy on Urban Water Supply and Sanitation and Rural Water Supply and Sanitation,
2003).
The lack of clean water and poor wastewater management practices, took a heavy toll on
the people of Cambodia during this period. In the mid-1990s diarrheal-diseases were
endemic in the country, infant mortality rates were some of the highest in the world (115
per 1,000 live births), as were the morbidity rates. Water-related diseases accounted for
nearly 30% of all hospitalizations. Socio-economic conditions in provincial cities were
even worse than those of Phnom Penh. Unaccounted for water in Phnom Penh routinely
exceeded 80% during the late 1980s, and the pressure of water was simply too low to
have any form of a half-decent, functional water supply system that could be used
adequately by its residents.
A common practice during the early 1990s were for the staff to gather in front of the
PPWSA building, and catch the consumers who came to obtain any type of service, or to
complain about non-delivery of services. The staff members made private deals with the
consumers, at the cost of institutional disorder as well as its credibility and reputation. A
standard practice for the staff was to provide a connection from the main pipe since the
pressure from the system was very low. Only a connection from the main pipe proved to
have some value in terms of receiving some water. The going rate for providing an illegal
connection from the main pipe was $5,000, equivalent to more than two years of salary of
the staff member concerned. Thus, at a personal level such a practice was most
beneficial. However, at a corporate level it was a disaster, no matter how it is viewed.
The pressure of the system was so low that most households received no supply of water,
even though they were connected to the system. People collected the water from the
“well” which was below the break (see Photo 1). Such leakages further reduced the
pressure of the system and its efficiency deteriorated even further. The water supply
situation was simply untenable and deplorable, not only in terms of quantity of water that
could be provided to the customers of the PPWSA but also of their quality and the
reliability of the system. Under these conditions, the city had serious health and
environmental problems in its hands.
The situation in PPWSA in 1993 could not have been any worse! Not only did the
institution did not have minimal technical, administrative and managerial capacities to
provide basic water services, but also had no funds to even carry out the basic functions
that are considered to be absolutely essential for any water utility. For example, it had no
alum to treat water even to a minimum standard. Whatever alum was available, these
were promptly stole by the staff and sold in the market. The institution had no money to
pay its electricity bills. However, this was not really an important consideration since
electricity was provided by the public sector, which did not have to be paid! The alum
13
had to be bought from the private sector, which would not sell it to PPWSA since they
had no money to pay for it. The General Director had to go out and approach various
donors if they could provide funds to buy alum. The Japanese Government finally agreed
to provide $50,000 (for just the year 1993) so that PPWSA could buy alum and chlorine
from the open market.
The institution, for all practical purposes, was bankrupt, morale of the staff were at rock
bottom, and corruption was rife. Most of its staff was either demoralized and/or making
money through corrupt practices since their salaries were exceedingly low, often about
$15–$20 per month, which was simply inadequate to maintain a family in a reasonable
manner.
Socio-economic Development Plan, 1996–2000 – In 1996, the Government of Cambodia
published its first Socio-Economic Development Plan for the period 1996–2000. This
first 5-year Plan gave high national priority to improve water supply and sanitation
facilities. It explicitly recognized the importance of clean water supply and sanitation to
alleviate poverty, improve health conditions, and provide a better quality of life for all the
Cambodian people. This Plan allocated $83.2 million for water supply and $12.3 million
for sanitation for Phnom Penh. This total allocation of $95.5 million for the city
represented nearly 60% of the national funding for the water supply and sanitation
sectors: the rest of the country received the balance of the allocation of 40%.
The Plan proposed that PPWSA should became a sustainable commercial entity, which
should be financially self-sustaining and recover the full cost of providing water to its
domestic and industrial customers. In other worlds, PPWSA would become an
autonomous public entity, which would work on a commercial business-like basis. The
initial objective of the Plan was to provide clean water to at least 70% of the domestic
consumers of the city and most of the industrial and commercial concerns.
In terms of policy support for the Plan, a milestone law was passed on 17 June 1996
entitled Law on the General Status of Public Enterprises (No. 0696/13). This new Law
provided for the very first time in the country, a new legal framework for operation,
management and supervision of all public enterprises. Even though the institutions
became legally independent and received financial autonomy, they were placed under a
Government Ministry (tutelle), or an appropriate public authority, and were subject to
various state controls. All public enterprises were controlled by the appropriate
representatives of tutelle ministry, who were represented in their Board of Directors. In
addition, they were further controlled by a State Controller, who was nominated by the
Minister of Economy and Finance. The Controller reported to their ministry regularly to
ensure that each public enterprise was complying with its legislative and regulatory
obligations, and appropriateness of any transaction which could have financial
implications. The Law, however, did not mention how differences of views between
tutelle Ministry and MOEF could be resolved, should such a situation arose.
On 4th December 1996, the Cambodian Government promulgated a landmark Decree
No. 52, which established PPWSA as a public enterprise which must operate according to
14
commercial norms. An unofficial translation of this Sub-Decree can be seen as Annex I.
Among its important requirements were the following.
 PPWSA must organize, manage and operate all its activities independently in
accordance with commercial business requirements (Article 4);
 It could have an independent financial compensation package for its staff, as long
as it is approved by PPWSA’s Board of Directors (Article 101);
 General Director has the authority to hire and fire staff (Article 14);
 General Director must submit to the Board of Directors an annual plan each year
before 1st October, which must include (Article 20):
 investment and financing plans;
 operational budget;
 price of water and other services to ensure the total revenue is adequate
to cover its operational expenses; and
 state support to PPWSA for the loss in its public services delivery.
The General Director is appointed for a 3-year period, but can be reappointed to any
number of additional terms thereafter. The General Director is appointed by the Prime
Minister, after receiving the nomination from its tutelle ministry.
On 4th April 1997, the Minister of Economy and Finance, in a letter to the World Bank,
reconfirmed the views of the Cambodian Government on its new policies for the water
supply and sanitation sector. Minister Keat Chhon reconfirmed the following:
 Water and sanitation would be managed as economic goods in the future.
 Increase in availability of all water and sanitation services would be dependent on
the demand from the users. This demand-driven approach would contribute to
economic efficiency and sustainability of the operations.
 PPWSA should become a financially self-standing commercial entity capable of
supplying water that would meet WHO requirements for water quality.
 Level of tariffs would be critical for autonomous commercial operation of water
utilities. Accordingly, tariffs would be set at level that would recover cost in order
that water undertaking becomes commercially viable and cost-efficient. Tariffs
would be revised periodically on the basis of rational commercial criteria.
PROGRESS SINCE 1994
National social and economic progress – Cambodia started to make progress since 1989,
when private property rights were reintroduced, price control system was abolished, and
the investment regime was liberalized. However, political and economic progress started
only after January 1992, when President George Bush, Sr., lifted the 16-year trade
embargo against Cambodia. The Paris Peace accord was signed in 1992, and this led to
an UN-sponsored election in September 1993. These developments were most positive
for Cambodia’s future social and economic development.
15
As the country left behind its civil war and international trade embargo, transformed
successfully from an one-party to multi-party politics, and made a successful transition
from an isolated, subsistence economy to an open market economy, its economic and
social performance improved as well. From 1994 to 2006, annual average growth in gross
domestic product was 8.4%, a remarkable high figure. In fact, during 2004–2006, its
annual GDP growth rate averaged 11.4%. By 2006, its external developments were
positive. Its gross international reserves increased to record high of US$1.1 billion in
2006. Consumer price inflation the same year declined to 2.8%, and foreign direct
investment increased to a record US$475 million. The improvements in per capita GDP
in constant dollars are shown in Figure 1.
50
100
150
200
250
300
350
400
450
500
Pe r c
ap ita
G
D
P
in c on st an t d
ol la rs 1993 1995 2000 2005 2008
Figure 1. Per capita GDP for Cambodia in constant dollars, 1993–2008
Income and consumption levels of all Cambodians have increased since 1994. People
living under the poverty line fell from 47% to 35% during the period of 1994 to 2004.
Health indicators also improved. For example, infant mortality rates were reduced from
95 per 1000 live births in 2000 to 66 in 2005. Child mortality (under 5) decreased from
124 deaths per 1000 live births in 2000 to 83 in 2005. Viewed from any direction,
improvements in such social and economic indicators were most positive.
On the negative side, such improvements were somewhat skewed: the wealthier part of
the society benefited much more than their poorer counterparts. For example, between
1994–2004, per capita consumption in 1993/94 constant prices showed that it had risen
by only 8% for the poorest fifth of the population, compared to 45% among the richest
fifth. Such pronounced differences between the income and consumption levels in society
may contribute to social and political instabilities in the future. There is also danger that
such inequities may contribute to an institutional mindset that may systematically favour
the rich over the poor in terms of privileges, protection of human and property rights and
formulation and implementation of water policies. The progress in PPWSA should be
viewed and judged within this overall social and economic and political development of
16
the country.
Phnom Penh Water Supply Authority – The United States lifted the trade embargo against
Cambodia in 1992, and the Royal Government of Cambodia was established the
following year after the successful election that was supervised by the United Nations.
Shortly thereafter, the Cambodian Government could request help from the various
multinational and bilateral aid institutions to rehabilitate its battered urban water systems
and to formulate a future long term plan.
In 1992, immediately after the trade embargo on Cambodia was lifted, the French
provided a grant aid to improve the distribution network. It was promptly followed with
another French grant in 1993 to improve water supply facilities of the city. In 1993,
UNDP provided a grant for technical assistance for the rehabilitation of the water utilities
of Phnom Penh and Sihanoukville that was administered by the World Bank. These were
the earliest foreign assistance to improve the water supply of Phnom Penh.
Among these early requests was one to the Japanese Government, in 1993, for technical
assistance for the rehabilitation of the existing water supply system of Phnom Penh and
draw up a future water development plan for the city. In response to this request, the
Japanese Government agreed to carry out a study to develop a Master Plan and
Feasibility Study of the Phnom Penh water supply system. This study was carried out by
Tokyo Engineering Consultants in association with Nihon Suido Consultants on behalf of
the Japan International Cooperation Agency. The study team arrived in Phnom Penh in
February 1993, and within a short period of 10 months completed the final report and
delivered it to PPWSA.
In retrospect, this study turned out to be a very important and useful study, which served
as a road map for the next several years for the PPWSA. The plan was developed in close
consultation and discussion with the Authority, and thus was acceptable to it. This plan
became the “blue print” for development for the utility for the subsequent years. All the
projects supported by the other donors had to fit in properly with this framework as well
as comply with its overall philosophy. It thus provided an excellent basis for donorcoordination, albeit indirectly. JICA provided a grant of $25 million, in 1995, to improve
the water supply facilities under Phase I and II, and, another $21.326 million grant in
1997 for the Phase II of this project. Other major donors who provided financial and
technical support to PPWSA, from 1997, included the Asian Development Bank and the
World Bank. However, these were loans to the Authority and not grants, as was the case
for the initial financial support.
Based on our analysis, we believe that formulation of this Plan, and its subsequent
implementation by PPWSA and all the other concerned donors, and the continuing
association of JICA on a long-term basis (this continues even now) to provide assistance
to PPWSA on different aspects of water supply, including infrastructure development and
management and capacity building, have been an important ingredient for the subsequent
success of PPWSA. However, as will be seen from the later part of our analysis, it was
only one of the several other important components which have contributed to the
17
remarkable and steady improvements in the performance of the utility.
URBANIZATION
In terms of urbanization, Phnom Penh is truly a unique case which has affected the
provision of all types of services, including water. Up until late 1960s, it was a “normal”
town, getting to grips with decades of French colonial rule and then independence. The
population of the city was growing steadily, both due to natural causes as well as ruralurban migration. In contrast with the other ex-colonial capital cities of Asia and Africa,
this growth rate was not spectacular. It was manageable. However, with Khmer Rouge in
power, and its strict policy of forcing urban residents to relocate to rural areas for
agricultural activities, it became the only city in recent memory, if not in the entire
history of mankind, which became massively depopulated almost immediately because of
ideological reasons. For example, due to the Khmer Rouge atrocities, the population of
Phnom Penh in 1979 was estimated to have declined to about 122,800.
With the fall of the Khmer Rouge, the population started to trickle back to Phnom Penh.
After a period of time, the rate of return of the former residents increased. When the
situation stabilized, like all other Asia urban centres, urbanization process started and
gradually accelerated. The increase in population of Phnom Penh is shown in Figure 2.
However, there was an important difference in population increase of Phnom Penh after
the Khmer Rouge era. Many people from Phnom Penh were killed and thus they did not
come back. After the traumatic experience, many families decided not to return to Phnom
Penh but settle elsewhere in the country. This loss of population was more than made up
by the soldiers who were posted in Phnom Penh and who brought their families and
extended families to the city from the interior of the country. These migrants had never
lived in an urban context, and were more self-reliant. They managed to live without a
regular supply of water as was the case when they were living in rural areas. They neither
expected, nor received, water from the PPWSA in those years.
In terms of supplying water to the residents and the industrial users of Phnom Penh,
PPWSA faced two critical challenges. First was to restore a reasonable service delivery to
a limited geographical area, which initially was considerably smaller to what was the
situation before the Khmer Rouge took place. As PPWSA started to succeed, especially
after 1994, its service delivery area has constantly expanded and drinkable water
delivered has increased. This is shown in Figure 3, which indicates the area to which
water was be provided between 1993 to 2000 primarily by the pipe replacement and the
rehabilitation of the overall supply system. This was for a rather limited geographical
area. During the 2001–2008 period, and especially after the spectacular success of
PPWSA in providing clean drinkable water supply on a 24-hour basis, its service area has
constantly expanded to include new areas, including the suburbs of Phnom Penh. Its
service is still expanding.
18
100
300
500
700
900
1100
1300
1500
Po pu la tio
n in th ou sa nd s 1993 1995 2000 2005 2008
Figure 2. Population of Phnom Penh, 1993–2008
Figure 3. Expansion of area supplied with water, 1993–2008 (Source PPWSA records)
19
The current plan for a financially healthy and managerially capable PPWSA is to expand
its water supply area even further progressively. This will mean not only expanding its
existing pipe network more extensively, but also adding new water treatment plants in
order that supply of water can be expanded to meet the growing demands. Along with
these requirements, it will have to maintain, and wherever possible even enhance its
efficiency of water delivery, have access to increasing investments funds, and still
provide water to every household in Phnom Penh, rich or poor, and continue to be
profitable. It will be a difficult task to achieve. However, on the basis of its recent
performance, there is absolutely no reason why it should not be able to achieve all these
objectives.
In 2008, the annual volume of treated water produced was a little over 85.5 million m3,
which was more than enough to meet PPWSA’s needs. However, with increasing per
capita water use from a somewhat lower base of the earlier years, and increase in its
service area, the daily water production has to be increased to 300,000 m3/day to meet the
anticipated demands to 2013. This increase can be met by increasing the capacity of the
Chrouy Changwar plant by 65,000 m3/day by 2013. The steadily increasing annual
treated water production of PPWSA between 1993 and 2008 is shown in Table 3.
Table 3. Average annual water production in m3/day (Source: PPWSA records)
Year Actual production
(m3)
Average Daily
Production (m3/day)
Max. daily Production
(m3/day)
1993 19,586,000 53,660 No data
1994 25,483,000 69,816 No data
1995 31,651,000 86,715 No data
1996 34,486,000 94,482 No data
1997 39,184,171 107,354 116,646
1998 39,983,794 109,545 113,116
1999 40,622,401 111,294 117,837
2000 39,801,167 109,044 117,586
2001 37,763,547 103,462 103,978
2002 41,793,679 114,503 115,362
2003 46,871,146 128,414 144,405
2004 56,775,305 155,549 182,124
2005 61,857,961 169,474 190,367
2006 79,623,204 193,488 211,605
2007 79,400,031 217,534 240,349
2008 85,513,649 234,284 258,571
Progressive increases in the daily per capita water use in the city of Phnom Penh are
shown in Figure 4. Volumes of water produced and volume of water treated annually
during the period of 1993 to 1998 are shown in Figure 5 and 6.
20
Figure 4. Per capita water use, 1993–2008 (Source: PPWSA records)
10
20
30
40
50
60
70
80
90
100
Cu bi c m et er s (m ill
io ns )
1993 1995 2000 2005 2008
Figure 5. Volume of water produced at source (m3), 1993–2008 (Source: PPWSA
records)
10
30
50
70
90
110
130
150
170
190
Li tre
s/ da y 1993 1995 2000 2005 2008
No Data
21
10
20
30
40
50
60
70
80
90
100
Cu bi c m et er s (m ill
io ns )
1993 1995 2000 2005 2008
Figure 6. Volume of water treated in m3, 1993–2008 (Source: PPWSA records)
UNACCOUNTED FOR WATER
A major problem in 1993 was very substantial losses due to unaccounted for water: it was
well over 70%. Reducing unaccounted for water within a short timeframe where several
tasks had to be done almost simultaneously required a strict system approach. No water
supply can be kept at a reasonable and affordable level, if the income from the customers
does not cover the costs of providing a good service, especially when nearly threequarters of the water supplied yielded no revenue whatsoever. Thus, a strict regime was
planned and implemented which had several interrelated components.
No significant unaccounted for water reduction is possible without the cooperation and
support of a dedicated, competent, motivated and home staff. During the early 1990s, as
noted earlier, the quality of staff in PPWSA left much to be desired. Not only the staff
was demoralized, but they had good reasons to be demoralized, with poor governance,
below subsistence pays, lack of discipline, absence of any incentives and pervasive
corruption. Lethargy, poor working practices and “could not care less” attitudes to the
fate of the water consumers were the prevailing norm. The work culture had to be
changed by enforcing strict disciplines in a sensitive, fair and transparent manner. This
was a difficult task since the rest of public sector employees in Cambodia were in a
similar boat, and behaved in a very similar manner. In fact, most of the public sector
companies still continue to behave in a somewhat similar way at present.
Changing institutional culture was not an easy task. It had to start with the senior officers
who had to become the role models. Earlier, one of the perks of the job was that the
employees of PPWSA received free supply of water. This practice was stopped promptly.
Staff members not only had to install meters but also had to pay their water bills in full,
like any other citizen, and within the stipulated time period. Otherwise, they were treated
22
the same way as those who were delinquent with their bills.
Ensuring discipline and honest behaviour from the PPWSA staff took some time, but
with strict enforcement of rules and a “carrot and stick” approach proved remarkably
successful. Initially, there were some stiff resistances. For example, some senior staff
continued with corrupt behaviours, or were not interested in obeying the new rules and
discipline. One staff member felt that since he came from a powerful family, and thus he
was untouchable, and could do whatever he wanted to do. When he was dismissed for his
consistent poor performance and corrupt behaviour, he threatened to sue and kick up a
fuss. With overwhelming evidence against him, he finally backed down and was
dismissed from PPWSA without any further incidence. The fact that a politically wellconnected person could be dismissed for corrupt practices promptly, in a fair and
transparent manner, sent an important message to the rest of the PPWSA staff. All the
staff members realized that there were new working rules where if they abused their
power, especially in terms of corrupt practices, like providing illegal connection, or
incorrect meter readings, or for accepting financial contributions for any unofficial
purpose, they would be dismissed immediately.
Simultaneously, other rules were also put into place, and were strictly and fairly enforced.
For example, if a meter reader of an area did not, or could not, find an illegal connection,
but one of his colleagues did, the colleague received a reward and the meter reader was
penalized. Public was made aware of the problem of illegal connections. Those customers
found to have illegal connections were heavily penalized, and anyone who reported an
illegal connection was rewarded. Inspection teams were set up to search for, find and
eliminate illegal connections.
As a result of these actions, the number of illegal connections discovered dropped from
an average of one per day to less than five per year by 2002. At present it is highly
unusual to find even one illegal connection.
All these efforts proved to be immensely successful in reducing unaccountable for water.
The process was further helped by incentives for good performance. For example,
between 1994 and 2004, salaries of PPWSA staff increased by more than 10 times. Since
2004, salaries for good performers have steadily been increased each year. Since it is now
possible to have a good and reasonable lifestyle with the current PPWSA salary, and
disciplines are strictly enforced in a fair and transparent manner, the corrupt practices of
the past have now basically disappeared from the PPWSA as an institution. Viewed from
any direction this has been a most remarkable achievement, especially in a developing
country like Cambodia, where none of the other public sector institutions can even
partially match the performance and efficiency of PPWSA.
Elimination of underground tanks also received considerable attention. Most of these
tanks had been connected to the distribution networks after the fall of the Khmer Rouge
regime since the supply was erratic and the pressure was too low to supply water to
numerous households. People returning to Phnom Penh after the Khmer Rouge atrocities
had no option but to construct such tanks because it was the only way to obtain their daily
23
supply of water. There were 1,945 such underground tanks in Phnom Penh, on which the
PPWSA had no control on the water consumption of the people who used such tanks.
Equally, it was also very difficult to control the quality of water in such tanks, which
numerous households were using.
After the PPWSA decided to determine the magnitude of the problem posed by these
underground tanks by a survey conducted in 1994, it took a policy decision to close all
such tanks as quickly as possible, and provide every household that depended on such
tanks to draw water through individual house connections. When this was not possible for
a few specific cases, a caretaker was nominated for each such tank, and was provided
with a meter. The caretaker was considered to be a local vendor-cum-retailer, and had to
pay the PPWSA for the total water consumption from the tank at the prevailing domestic
rate. He then collected the funds from the consumers, which gave him some net income
after paying for the water to the PPWSA. All these underground tanks have now been
closed.
In 1996, the PPWSA started to rehabilitate its network with funding support from the
Asian Development Bank, World Bank and the Governments of France and Japan. The
rehabilitation process was completed by 2002. It included construction of a new 16-km
water transmission line with the support of the Asian Development Bank. In addition, a
maintenance and repair team was organized on a 24-hour standby basis. The public was
encouraged to report all leaks, which were promptly repaired.
With all these ameliorative measures in place, the PPWSA started to progressively
control and manage its unaccounted for water. By 2008, it had successfully managed to
reduce the unaccountable for water to only about 6.2%. This represented a phenomenal
decline from 72% losses in 1993. This meant that Phnom Penh’s unaccounted for water
declined by 91% in only 15 years. It has been one of the most remarkable achievements
of Phnom Penh (Figure 7), a level of improvement that no developed or developing
country has managed to achieve in recent history. This level of current loss is many times
better than London, which has been exclusively private hand for over two decades and
also Barcelona, Paris, New York or Los Angeles. The steady decline in the level of
unaccounted for water for Phnom Penh between 1993 and 2008 is shown in Figure 7.
WATER PRICING AND COST RECOVERY
The uniform global experience has been that if the consumers have to receive a 24-hour,
uninterrupted, and reliable water service, they have to pay for this service. Water is
mostly considered to be a human right, even though no convention exists at present that
stipulate such a right. There is no universal agreement that water is a human right, since
some important countries have opposed this concept. Be that as it may, currently there is
a global convention that stipulates explicitly that food is a human right. Even then, food
is not free: people must pay for it. Thus, irrespective of whether water is considered to be
a human right or not, there is no question that consumers will have to pay for a good and
reliable service: otherwise free water will invariably lead to a third-grade and
24
unacceptable service. What is needed is that the tariffs paid and the social support
systems that are in place in each country must ensure that poor have access to adequate
quantity and proper quality of water (Biswas, Rached and Tortajada, 2008).
0
10
20
30
40
50
60
70
80
U
na cc ou nt ed fo r w
at er a s pe rc en ta ge o f w at er s up pl ie d 19
93
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
Figure 7. Unaccounted for water, Phnom Penh, 1993–2008 (Source: PPWSA records)
The Government of Cambodia decided in the 1990s that water was an economic and
social good, and thus a responsible, financially viable and socially sensitive tariff
structure should be in place so that the PPWSA could have adequate income to be
financially self-sufficient: the institution would have to be run in a business-like way. The
Government explicitly made this financial commitment to both the Asian Development
Bank and the World Bank when it sought loans from these two institutions for
modernizing and restructuring PPWSA, and for rehabilitation of its old infrastructure and
construction of new ones. This commitment has been noted earlier.
While many other countries have made similar commitments earlier, the difference in the
case of Cambodia was the actual implementations of this commitment. In many other
countries, once the loan is received by the governments concerned, they often have
ignored, or backslided on their earlier commitments for mostly flimsy reasons. The real
reason often is very short term political gains, at the cost of long-term serious damage to
the financial health of the utilities concerned and its efficient management.
To the credit of the Cambodia Government, the PPWSA has been left to operate as an
independent business-like institution without any political interference, within the checks
and the balances that were stipulated in the landmark Decree No. 52 of 1996 (See Annex
I). This does not mean that this Decree is perfect (in fact it needs updating and resolution
of several anomalies), but by and large the Cambodian Government has kept its
commitments, which in the field of water supply within the context of any developing
country has been somewhat unusual.
With its autonomous structure and dynamic leadership of the present General Director,
25
PPWSA has operated as an independent, business-like institution, with a social
conscience, since 1994. Since no institution can remain independent and autonomous,
unless it is financially self-reliant, very correctly the PPWSA decided to maximize its
income by:
 Reducing unaccounted for water very significantly so that much of the water
produced can be sold to the consumers (discussed before);
 Fixing a tariff structure and implementing it fully with a social conscience;
 Prepare and continually update a roster of customers on a reliable basis;
 Completely restructuring the billing system so that that the bills can be produced
and delivered on time;
 Improve the bill collection ratio with appropriate incentives, with disincentives of
late or no payment; and
 Increase the annual profits of the PPWSA by becoming increasingly more and
more efficient on a progressive basis.
Since all the above requirements have been accomplished at present, the PPWSA has
undergone a remarkable metamorphosis to become a new, efficient and functional
institution that is very different from the institution it used to be in 1993. From a nearbankrupt and totally demoralized institution, it has transformed itself to a viable and
vibrant institution that can be compared very favourably with most of world’s best
performing water utilities, in developed or developing countries. It has developed a new
mindset, modus operandi and a team spirit that sets it apart from most of the world’s
other utilities, especially in the developing world. The fact that this was accomplished
within only one decade indicates, as we have argued earlier, that providing clean and
drinkable water supply to everyone in all the cities of the third world having more than
500,000 inhabitants is not a rocket science. The knowledge, experience and technology
have been available for years: what has been missing is dynamic leadership and political
will, especially in terms of support and non-interference in the policies and day-to-day
management of the utilities.
In order to achieve higher revenues and thus financial self-sufficiency, PPWSA embarked
upon a five-prong concurrent strategy. One of the most difficult components of this
strategy to implement was to increase the tariff of water so that all costs could be
recovered without generating any social or political unrest. This was done by ensuring
that its customers first witnessed and appreciated a much better quality of reliable service
before the tariffs were increased.
The initial tariff plan that was proposed by the Asian Development Bank and
subsequently adopted by PPWSA, proposed three increases in 7 years, along with
continuous improvements in service delivery. This process was designed to ensure there
was no sudden huge jump in tariffs which the consumers would find economically
difficult and thus reluctant to pay. This could even have become counterproductive on a
long-term basis and could have made future tariff increases socio-politically difficult.
26
With the enthusiastic endorsement of the higher tariff by the Asian Development Bank
who conducted a socio-economic survey of Phnom Penh in terms of the consumers
willingness and capability to pay higher tariffs, and equally strong support from all
donors like the World Bank, and equally strong political backing from the Prime
Minister, the Finance Minister and the Governor of Phnom Penh, the first increase in the
tariff was introduced from 1st June 1997. This increase along with other steps
concurrently taken by PPWSA to improve the efficiency of its operation practices,
immediately doubled the income of the PPWSA.
The increase in the tariff was very carefully planned. First, a socio-economic survey of
the water supply situation was carried out for the city of Phnom Penh. This survey
included collecting information on how much consumers were paying for water from
private vendors, and what where likely to be their reactions if these vendors were
replaced by the supply from the PPWSA. This survey showed the willingness and
capability of the consumers to pay a higher tariff than the one they were charged by
PPWSA before, provided the consumers received a significantly improved service. The
results of this survey are shown in Table 4.
Increasing tariff was also a difficult and complex process in political and institutional
terms. The PPWSA had to initiate a request for tariff revision through its tutelle ministry.
However, in order for it to be implemented, it ultimately requires the approval of the
Prime Minister.
Table 4. Socioeconomic survey of water supply in Phnom Penh (ADB, 1996)
Category I Category II Category III Items
Households
connected
Water sold by
neighbour
Water sold by vendors,
and collected directly
from rivers and wells
Percentage of households 42% 16% 42% (16% from
vendors)
Average income (riels/month) 1,375,000 325,000 1,020,000
Average consumption
(m3/month)
37 14 20
Average cost/m3 (riels) 280 2,652 2,124
Total water cost riels/month 10,360 37,128 42,480
Water cost as % of income 0.8% 11.4% 4.2%
Proposed average tariff (riels/m3) 575 400 450
Total monthly water expenditure
(riels/month)
21,275 5,600 9,000
Water cost as % of income 1.5% 1.7% 0.9%
Proposed average tariff (riels/m3) 575 400 450
Total monthly water expenditure
(riels/month)
21,275 5,600 9,000
Water cost as % of income 1.5% 1.7% 0.9%
The tariff was calculated on the basis of the guidelines provided in the National Water
Policy. It was calculated after considering the total expenses of the PPWSA, including
27
operation and maintenance costs and the depreciation of all its assets. Under the National
Water Policy, the utility is expected to recover all its operating costs with tariffs, as well
as the depreciation of all its assets, except land which generally increase in value over
time. The value of its assets has to be revised every five years. The second increase in
tariff was introduced in 2001. The changes in the tariff structure from 1983 are shown in
Table 5.
Table 5. Progressive tariff structure of PPWSA, in riels m3 (Source: PPWSA records)
Until 1983: Free water for every household
1984: 166 riels/m3 (domestic and commercial)
1993- June 1994: 166 riels/m3 (domestic)
515 riels/m3 (industrial)
July 1994-May 1997: 250 riels/m3 (domestic)
700 riels/m3 (industrial)
June 1997: Block tariff rates were introduced. All connections were metered
Domestic tariffs (m3/month)
0–15: 300 riels
16–30: 620 riels
31–100: 940 riels
>100 : 1,260 riels
Industrial tariffs (m3/month)
0–100: 940 riels
101–200: 1,260 riels
201–500: 1,580 riels
> 500: 1,900 riels
Governmental institutions (m3)
Flat rate: 940 riels
2001: Domestic tariffs (m3/month)
0–7: 550 riels
8–15: 770 riels
16–50: 1,010 riels
>50: 1,270 riels
Commercial tariffs (m3/month)
0–100: 950 riels
101–200: 1,150 riels
201–500: 1,350 riels
>500: 1,450 riels
Government institutions (m3)
Flat rate: 1,030 riels
28
The third increase in tariff that was recommended by ADB was not necessary within the
7-year period. This was because ADB grossly underestimated the improvements in the
efficiency that PPWSA had managed to achieve continually up to now. PPWSA has
become a far more an efficient organization than ADB had expected, as a result of which
further increases in tariffs was considered simply not necessary. The ADB
recommendation was based on its actual experience in other Asian cities. However, the
PPWSA vastly exceeded the potential historical efficiency improvement anywhere in the
world. To our knowledge this feat has not been repeated by any country during the past
decade.
It was not such a difficult choice for the public, who witnessed significant improvements
in water delivery, including quality of water, to pay for the vastly improved service,
especially as they considered the increase very reasonable, and this within their capacity
to pay. This included the poor, whose water bill actually declined by a factor of 5 to 6, for
a vastly improved service. As a result, for all practical purposes, the private water
vendors have disappeared from the PPWSA area. Vast majority of the people, including
the poor, had no objection to pay a higher tariff for a significantly improved service that
was safe and reliable.
By 1995, there was a 24-hour uninterrupted service available in Phnom Penh (Figure 8)
which has remained the same in spite of increasingly average water demand per capita
(Figure 4), and also higher number of customers (Figure 9). This also meant that the
average monthly household bills in Phnom Penh increased significantly between 1995
and 2000, and thereafter have increased only incrementally (Figure 10).
2
4
6
8
10
12
14
16
18
20
22
24
Ho ur s/ da y 1993 1995 2000 2005 2008
Figure 8. Availability of water in hours per day, 1993–2008 (Source: PPWSA records)
29
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
Figure 9. Number of customers, 1993–2008 (Source: PPWSA records)
1
2
3
4
5
6
7
8
9
10
U
S
do lla
rs 1993 1995 2000 2005 2008
Figure 10. Average household water bill per month, USD, 1993–2008 (Source: PPWSA
records)
While it was comparatively easy to convince the general public to pay a higher tariff, it
was a different situation with respect to the army installations, government offices and
senior officials of the government and the army. They had not historically paid any water
bill and not surprisingly, they wanted this free service to continue indefinitely. The army
initially refused to have any meter installed to measure its actual water consumption and
then billed for it. However, with strong support from the Prime Minister who publicly
proclaimed in 1997 that every person and institution must pay their water bills promptly
to ensure good service delivery. This transition process, however, was not without
30
incidents. For example, an army officer even put a gun at the General Director’s head and
asked him to back off. Fortunately, he did not, and the army officer blinked first. It was
unquestionably a most harrowing experience at a personal level, but ultimately it firmly
established the elementary principle that every one must pay water bills.
Increased and higher per capita water consumption has meant that average household
water bill has also increased with time. This is shown in Figure 10. However, since the
first 7m3 of water is highly subsidized, and the next 8m3 are subsidized, the poor
households, could economize their water use, and stay easily within the WHO guideline
which that recommends that water bills should not exceed 5% of their incomes. The
implications for the poor will be discussed later.
The payment process was helped by some disincentives for not paying the bills or for late
payments. If the customers do not pay their bills within the stipulated time, they first
receive a warning note which advises payment within a 15-days deadline. If they still do
not, they receive a final warning note informing them the date on which their water
supply would be disconnected, if they still do not pay, initially by locking up the supply
valve. If still they do not pay, on the stipulated date, they are disconnected, and asked to
come to PPWSA to discuss their problems. Nearly 70% of the households come, discuss
the problem and a solution is found. Reconnection to the water supply is an expensive
process, since they have to pay first their outstanding water bill, plus a penalty of 1% per
day for their delinquent bills, and a reconnection fee, at this stage which is 60,000 riels.
About 30% of the delinquent accounts have their pipe connection cut because of nonpayment of the bills. After this stage, the reconnection fee increase to 100,000 riels.
The customers receive their water bills every two months. The bill collectors receive an
incentive for collecting higher percentage of the bills. For example, higher the percentage
of bills collected, higher the bill collectors get paid. However, if a bill collector collects
less than 97% of the bills for three consecutive periods, the person is either penalized, or
even dismissed. This system is working quite well because of its transparency and the
system of incentive and disincentives that are in place, which are strictly enforced.
Figure 11 shows the billing ratio in terms of quantity of water that was billed as a
percentage ratio of total volume of water that was produced between 1993 and 2008. It
shows that in 1993, less than 30% of water produced was billed. By 2005, with very
significant reduction in unaccounted for water, over 90% of the volume produced was
billed. The situation now is even better. Now, over 93% of water produced is billed.
Figure 12 shows the bill collection ratios in terms of number of bills collected, compared
to the total number of bills produced, between1993 and 2008. Figure 13 shows bill
collection ratios in terms of the amount collected and the amount billed. Both shows bill
collection is close to 100% from about 1999, more than double of the rate at what it was
in 1993, only six years earlier. This again is a most remarkable achievement.
31
0
10
20
30
40
50
60
70
80
90
100
R
at io 19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
Figure 11. Billing ratio, quantity billed/total production in percentage (Source: PPWSA
records)
0
10
20
30
40
50
60
70
80
90
100
(%
) o
f b
ill
s co lle
ct ed 19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
Figure 12. Bill collection ratio, number of bills collected/total bills, in percentage, 1993–
2008 (Source: PPWSA records)
32
0
20
40
60
80
100
120
(%
) o
f a
m ou nt c ol le ct ed 19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
Figure 13. Bill collection ratio, amount collected/amount billed, in percentage, 1993–
2008 (Source: PPWSA)
ACCURATE DATA ON WATER CONSUMERS
For any functional and efficient water utility, it is essential to have a data base of its
current users of water which must be accurate. Without such an accurate data base of the
consumers, it is simply not possible to collect revenue from the water users. In addition,
this data base need to be kept continually updated, which means keeping relevant
information on the people who move into the city, people who move houses within the
city, and also people who leave the city. Such a list is always dynamic, and needs to be
continually updated to ensure correct and appropriate billing.
During the Khmer Rouge regime, as noted earlier in this report, all the information on the
PPWSA customers and other relevant appropriate information were destroyed. After the
fall of the Khmer Rouge government, no accurate data base was established as to who
were the actual consumers of the water supplied by PPWSA. In order to establish a
proper data base in 1994, nearly 100 PPWSA members visited all the houses of the city
to record if they were receiving water or not. The process took one year to complete.
The results were revealing. The survey found that 12,980 households which were
ostensibly connected to the system but were not. They were being billed for the phantom
water, and surprisingly many were paying their bills even though they never received any
water. In contrast, they were 13,901 customers who were connected and receiving water,
but were not in the list and thus were not being billed. They were receiving free water.
The French Government gave a grant which enabled PPWSA to establish a fully
computerized up-to-date data base, which became fully operational in 1996. The
computerized system was further improved in 2001 to handle all financial transactions
and operations at PPWSA. By 2003, a comprehensive financial management information
33
system was in place which enabled PPWSA to have immediate access to the latest and
historical financial data and its revenue collection status in real time. An indirect benefit
of this automated system has been that corruption and abuse of power were, for all
practical purposes, eliminated. In addition, the Authority has continued to improve its
overall financial management practices steadily with time.
The increased in the number of customers between 1993 and 2008 are shown in Figure 9.
The growth and also the reduction of the different categories of customers are shown in
Table 6.
METERING
In order to ensure that a transparent and fair system exists, it is essential that all the
connections should be measured in terms of their water consumption. Only after each
connection is metered, the consumers can be sent an accurate bill which directly reflects
the amount of water they consumed during a specific period.
In 1993, only 3,391 connections, out of a total of 26,881 connections, were metered. In
other words, more than 87% of the connections received an estimated bill, which often
had no linkage to the quantity of water that was actually consumed. With a policy
decision to move to a system of all metered connections as soon as possible, the number
of meters installed increased steadily, and the number of unmetered connection started to
decline. By 2001, all the connections were metered. The annual progress in terms of
metering is shown in Table 7. In addition, overtime, more accurate Class C meters
replaced less reliable Class B meters, which further increased the credibility and income
of PPWSA.
The steady increases in the number of metered connections are shown in Figure 14. As
the geographical areas within which the PPWSA provides water have increased steadily
in recent years, so have the number of the metered connection. The number of functional
meters is shown in Figure 15, and the numbers of defective meters reported and replaced
annually is shown in Figure 16.
WATER FOR THE ABSOLUTELY POOR
As should be evident from the earlier discussion, the issue of providing clean water to the
poor or the rich simply could not be considered prior to the 1994 period. There were
simply no reliable water services available, either for the rich or for the poor. Thus, the
first task of the new management of the PPWSA was to ensure a reasonably reliable
water supply system which could be provided to the people, irrespective of whether they
were rich, middle class or absolutely poor. Hence, the primary focus and concern of the
PPWSA at this initial stage had to be the rehabilitation of the water system in order to
ensure a functional supply system which could then be distributed to the people.
34
Table 6. Categories of customers, 1997 to 2008 (Source: PPWSA records)
Categories 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Domestics 34,621 43,777 51,938 57,117 64,168 76,755 92,148 105,981 121,426 132,287 140,728 152,972
Commercial 6,791 6,983 7,952 9,313 10,229 11,279 13,040 14,947 16,175 18,738 20,690 24,486
Government 407 374 373 417 427 466 528 559 614 635 659 693
Wholesaler 234 199 156 111 73 45 33 17 34 47 54 36
RDE-
wholesaler
60 74 60 58 48 26 28 18 17 17 20 13
Total 42,113 51,407 60,479 67,016 74,945 88,571 105,777 121,522 138,266 151,724 162,151 178,200
Table 7. Status of metering, 1993 to 2008 (Source: PPWSA records)
Description 1993 1994 1995 1996 1997 1998 1999 2000
Total connections 26,881 27,623 28,654 32,404 42,113 51,407 60,479 67,016
Metered connections 3,391 5,370 15,203 27,724 39,639 49,162 60,096 66,905
Non-metered connections 23,490 22,253 13,451 4,680 2,474 2,245 383 111
Description 2001 2002 2003 2004 2005 2006 2007 2008
Total connections 74,945 88,571 105,777 121,522 138,266 151,724 162,151 178,200
Metered connections 74,945 88,571 105,777 121,522 138,266 151,724 162,151 178,200
Non-metered connections 0 0 0 0 0 0 0 0
35
0
20
40
60
80
100
120
140
160
180
200
Th ou sa nd s 1993 1995 2000 2005 2008
Figure 14. Number of metered connections, 1993–2008 (Source: PPWSA records)
0
20
40
60
80
100
120
140
160
180
200
N
um be r o
f f
un ct io na l m
et er s in th ou sa nd s 1993 1995 2000 2005 2008
Figure 15. Number of functional meters, 1993–2008 (Source: PPWSA records)
36
0
1
2
3
4
5
6
7
8
9
10
Th ou sa nd s 1993 1995 2000 2005 2008
Figure 16. Number of defective meters reported, 1993-2008 (Source: PPWSA records)
Once the supply was restored to a reasonable level, the issue arose how can water be
supplied to the absolutely poor which the PPWSA could justify economically and the
poor could afford the services they received. The first approach was to determine specific
communities of the poor people, who would then elect community representatives to
whom PPWSA would sell water, and who, in turn, were expected to resell water to their
respective communities at a recommended tariff which was considered appropriate for
the poor in terms of affordability. The installation of the community water pipes were
initially funded mostly by the NGOs. Hence, during 1995–2000 community
representatives were supplied with water. By the end of 1998, there were 53
representatives of the poor communities, with an average total consumption of 15,500
m3/month, representing slightly over 1% of the total volume of water sales of the
PPWSA.
The system did not perform as was initially expected because of two reasons. First, the
community representatives mostly sold water to the poor people at 10 to 20 times the
subsidized rate PPWSA sold water to them. Second, PPWSA received very little income
for the water sold through the community representatives. The main beneficiaries of the
system turned out to be the community representatives themselves, who pocketed the
difference between the two prices.
During the experimental period, the PPWSA also realized another important factor.
Initially, it expected that the poor may steal water as a result of which its net UFW rate
would remain high. Accordingly, meters were installed far from the poor households,
which increased the installation costs. In 1999, PPWSA realized that even if the poor
stole water, which they did not, their individual consumption rate was so low that the
resulting losses were unlikely to be significant.
37
In March 1998, PPWSA received a soft loan from the World Bank, a part of which was
explicitly earmarked for the provision of clean water for the poor. In order to comply
with both the World Bank loan covenants and the Royal Government’s policy for poverty
alleviation, PPWSA decided to stop using the community representatives and supply
water to the poor households directly. However, the poor households had to fulfill three
requirements:
1. They must have clear and identifiable address and must be registered at the
municipality;
2. They must pay 10% of the total connection fee and a refundable deposit with the
application; and
3. They must pay the rest of the connection fee through favourable installments,
over a period of 10, 15 and 20 months, at an annual interest rate of 8.5%.
A task force was created very specifically for the implementation of this pro-poor
scheme, which was also charged with the responsibility of processing and approving the
applicants, and also implementing the installment payments for the connection charges.
This arrangement did not work very well, primarily because the necessary information
was not properly disseminated to the poor households. Thus, in 1999, only 101 house
connections to the poor could be made under this scheme. In contrast, for the city as a
whole, 12, 059 house connections were given that year.
In 2000, two work teams were formed for better dissemination of information to the poor
households of Phnom Penh. They were also responsible for implementing the entire
programme. It improved the number of water connections to the poor families to 474 that
year, an improvement over the previous year, but the numbers were not considered
satisfactory.
Accordingly, in 2001, the PPWSA carried out a survey of the views of the households
that had received the connections and also those that did not about its “water supply for
the poor” programme. This survey identified two fundamental problems:
1. Poor families found it financially difficult to pay connection fees in 10 monthly
installments, and
2. People were still not aware of the programme and its potential benefits.
At present, because of a grant by the International Development Association (IDA) and
also an annual grant of 50,000 Euros from the City of Paris, PPWSA has a much more
generous and affordable programme for the absolute poor. Depending on the poverty
levels, poor households are entitled to receive subsidies of 30%, 50%, 70% or 100% of
the connection fee, depending upon their financial conditions. These conditions are
jointly evaluated by a committee of PPWSA, with direct help from the local
communities. In addition, those households that consume a maximum of 7 m3/month, had
to pay only 60% of the real cost of providing water. This new policy helped the poor
households to save 130,000 to 380,000 riels each year.
38
As a result of these improvements in the pro-poor policies, the number of poor
households that were connected to the system has steadily increased each year. Figure 17
shows the number of poor households (both cumulative and annual) that have been
connected each year, from 1999, to the Phnom Penh Water Supply System.
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
Figure 17. Annual and cumulative water connections to poor households, 1999–2008
(Source: PPWSA)
During the study period, we visited several very poor households in a slum area of
Phnom Penh who started to receive water from the PPWSA less than two years ago.
Their memories of the situation that prevailed before they began to receive water from
PPWSA were fresh. We interviewed them directly and asked them detailed questions on
the benefits and the costs of receiving water from the PPWSA.
Earlier they bought water from private sector vendors. The vendors were primarily
neighbours who had some land, and used a pump to extract groundwater and then sell to
whoever needed water without any treatment. The four very poor households we
interviewed, we estimated their monthly water expenditures before they started to receive
24-hour piped water through direct house connections. In all the four cases, their average
monthly household water expenditure has declined by nearly 80%. In addition, all the
four households felt that the quality of water they are receiving now is much better than
when they obtained the supply from the vendors. Also, earlier the supply was not reliable
in the sense that the vendors were not always available when water was needed. Thus,
many times they had to wait hours before they could receive any water.
When the PPWSA started supplying water to this very poor area, they not only reduced
their water bill by an average of 80% but also provided an uninterrupted 24-hour supply
to the houses of good quality water. All the households interviewed expressed their full
satisfaction with the services provided by PPWSA, the financial benefits they received
because of a cheaper, reliable water supply of better quality and also the overall
39
convenience. They feel that the price they are being charged for water by the PPWSA is
“very reasonable”.
We also interviewed the water vendors who could no longer sell water. The pumps are
still there but they are not being used. They were somewhat philosophical about their loss
of business. However, paradoxically, they felt water price of the PPWSA was on the high
side, and thus should be reduced. This is in spite of the fact that used to sell water to their
former customers 4 to 5 times the current price.
FINANCIAL SUSTAINABILITY
On the basis of the current evidence, the financial sustainability of the PPWSA can be
summarized by one word: excellent! There is no question that it is in rude health in
financial terms. According the latest audited statement from its auditors, Price,
Waterhouse Coopers (2009), its operating revenue for the 2008 financial year was
91,587.65 million riels, on which it made a profit of 30,577.58 million riels. After paying
income tax of 6,141.35 million riels (20% of the profit) to the Government of Cambodia,
it made a net profit of 24,436.24 million riels. To our knowledge, it is the only publicly
managed water utility in the developing world which has consistently increased its net
profit since 1993, and also has paid consistently higher income taxes every year to the
government. In fact, according to the audited report of 2008, the PPWSA had actually
made a loan of 2 million dollars (equivalent to about 80 million riels), in 2005, to the
Electricité du Cambodge, which was fully repaid in 2007. In 2008, the PPWSA gave
another loan to the Pursat Water Supply Authority for 675.44 million riels to finance the
construction of the main water supply network in the Kandiang district of the Pursat
Province. The unsecured loan is subject to a 5% interest per year, and would be
reimbursed to the PPWSA in 120 monthly instalments, after the construction of the
network is completed in 2009. The financial and technical performance indicators of
certain selected parameters, between 2003 and 2008, are shown in Table 8. This table
indicates the remarkable transformation that PPWSA has achieved during the 15-year
period between 1993 and 2008.
The main components of the operating costs of the PPWSA at present are for electricity
(44.97%) and chemicals needed for water treatment (10.73%), on which it has no control
(Figure 18). The electricity costs are dictated by the Electricité du Cambodge, and the
chemical costs are determined by the world market prices. Salaries, wages and
allowances for the staff account for another 32.16% of the annual expenditure. While the
Authority is becoming increasingly efficient in terms of its staff performance (for
example, the number of accounts served per employee has dramatically improved
between 1993 and 2008, as shown in Figure 19), the Authority must pay decent financial
packages to its staff in the future to recruit and retain a highly motivated staff.
40
Figure 18. Distribution of annual operating expenses (Source: PPWSA records)
0
50
100
150
200
250
300
350
1993 1995 2000 2005 2008
Figure 19. Number of accounts served per employee, 1993-2008 (Source: PPWSA
records)
We thus expect that the average cost of per m3 of treated water sold will continue on its
upward path, as has been the case between 1995 and 2008 (Figure 20). While there is no
question that PPWSA will continue to make efficiency gains through the use of improved
Power
consumption,
44.97%
Administrative
expenses, 5.91% Training, 0.19%
Salary, 16.21%
Allowances, 11.54%
Maint. of product facil.
Distrib. network, 5.08%
Wages, 4.41%
Maint. of vehicle and
machinery, 0.97%
Chemicals for water
treatment, 10.73%
41
technology, continuous staff training and improved financial management and technical
practices, these gains are likely to be limited in the future. However, we have every
reason to believe that the PPWSA will be able to keep its tariff structure under control,
certainly well below the national inflation levels because of continuous efficiency
improvements in all fronts.
0
1
2
3
A
ve ra ge c os t i
n U
S$
1993 1995 2000 2005 2008
Figure 20. Average cost per m3 of water sold, USD, 1993–2008 (Source: PPWSA
records)
In terms of billing ratio (consumption/production), this has increased from an estimated
28% in 1993 to consistently over 90% from 2005 (Table 9). The percentages of bills
collected, both in terms of number of bills and the total amount, are also now over 99.5%
(Table 9). Similarly, unaccounted for water has progressively declined from nearly 72%
in 1993 to slightly over 6% in 2007 and 2008 (Table 9). It may be difficult for PPWSA to
go much below this level, especially as in the future the network will become older and
thus maintenance complexities and expenditures are likely to increase steadily to
maintain UFW to around 5 to 6% level. Even it manages to maintain its UFW levels to
around 6%, which is the current level, it will still be a remarkable achievement, since we
are not aware of even a single city anywhere in the developing world which has managed
to reduce, let alone maintain, UFW at 6% level. In fact, it is currently assumed that if
such urban centres can keep their UFW levels at around 20%, they are considered to be
performing quite well. The UFW levels of the PPWSA are already at 1/3rd of this cocalled “good practice” level.
42
Table 8. Indicators, 2003–2008
Description 2003 2004 2005 2006 2007 2008
Production capacity 46,884,806 56,876,980 61,409,719 70,623,204 71,319,197 85,386,803
Water invoiced 39,015,489 48,996.980 56,170,008 65,479,777 66,935,386 80,101,498
Unaccounted for water 16.78% 13.85% 8.53% 7.28% 6.15% 6.19%
Average tariff per m3 987.01 965.00 976.18 990.52 997.69 1002.14
Average cost per m3 896.93 849.23 863.08 903.93 781.63 746.37
Number of bills 102,193 121,252 138,266 151,724 162,151 178,200
Acct. receivable (day) 24 26.04 27.07 25.61 22.82 28.67
Debt service ratio 0.73 2.19 2.29 2.66 3.04 3.18
Return on revenue 17.31% 16.46% 17.85% 26.62% 24.66% 23.88%
Return on net asset 4.23% 4.57% 5.50% 4.69% 6.06% 6.96%
Table 9. Billing and collection ratio, Average for the year, 1993–2008 (Source: PPWSA records)
Description 1993 1994 1995 1996 1997 1998 1999 2000
Billing ratio
(consumption/production)
28* 38* 40* 41 42.23 41.87 51.50 64.53
UFW (%) 72* 62* 60* 59 57.77 58.13 48.50 35.47
Percentage of bills
collected
40* 45* 50* 70 97.24 97.92 98.94 99.47
Percentage of amount
collected
50* 58* 73* 90 88.51 88.45 95.76 95.23
Description 2001 2002 2003 2004 2005 2006 2007 2008
Billing ratio
(consumption/production)
77.15 78.48 82.99 86.14 91.47 92.72 93.85 93.81
UFW (%) 22.85 21.52 17.01 13.86 8.53 7.28 6.15 6.19
Percentage of bills
collected
99.64 99.72 99.77 99.80 99.78 99.76 99.79 99.85
Percentage of amount
collected
97.82 97.20 104.13 97.10 102.20 99.38 100.43 99.58
*estimated
43
With such efficiency gains, amounts billed (Figure 21) and amounts collected (Figure.
22) have become almost the same during the post-2000 period. This has meant that net
profit of the Authority has progressively increased every year since 1998 (Figure 23). As
the PPWSA increases its geographical area of coverage, more and more consumers join
the system. Per capita consumption has also increased. If the Authority improves its
current level of performance, there is absolutely no reason why it would not increase its
net profit steadily. Possible political interference can of course quickly reduce its
performance levels. At the current stage of development, however, it is highly unlikely
that there would be political interference in its management, especially as it is the only
public sector utility that has been consistently delivering good services to the people and
also has been concurrently increasing its profit each year.
0
5
10
15
20
25
M
ill
io ns , U
SD
1993 1995 2000 2005 2008
Figure 21. Amount billed in US dollars, 1993–2008
PPWSA: AN OVERALL PERFORMANCE ASSESSMENT
In retrospect, if any independent and objective observer had been asked to make a
realistic forecast on the future prospect of a near bankrupt, demoralised and a corrupt
institution like the PPWSA, in 1993, the most optimistic individual would probably have
said “not very much”. At best, the Authority would be able to improve its performance
incrementally, and would manage to provide water of uncertain quality to some of the
inhabitants of Phnom Penh, for a few hours every day. In 1993, the most optimistic
prognosis would have been to expect PPWSA to become an average south or southeastern Asian water utility in one decade, whose performance would still continue to be
dismal but somehow manage to provide basic water services to its people. In other words,
the best one could have anticipated was that, by 2003, PPWSA would become an average
water utility of the region, with a mediocre, or even less than mediocre, performance.
44
Figure 22. Amount collected, US dollars, 1993–2008 (Source: PPWSA records)
0
5
10
15
20
25
30
Pr of its
in m ill
io n ria
ls 19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
Figure 23. Net profits of PPWSA, 1997–2008 (Source: PPWSA records)
Instead, the actual achievements of the PPWSA have confounded everyone, including its
most ardent supporters and the donors. In only one decade, the institution has turned
around 180 degrees, with a completely different mindset, a team spirit that is seldom
observed in any utility (water, gas or electricity) in any developing country, and a “can
do” attitude which is very refreshing to observe. From 1994, and in every year since that
time, the Authority has made very significant progress, year after year, in all the
0
5
10
15
20
25
M
ill
io ns , U
S
D
1993 1995 2000 2005 2008
No Data
45
indicators of technical, managerial and financial performance. It has continuously
expanded its network (Figure 24), improved its management and operating efficiency,
and has become financially self-sufficient, and has progressively increased its net annual
profit after paying appropriate income taxes to the Cambodian Government like any
private sector institution.
200
400
600
800
1.000
1.200
1.400
1.600
1.800
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
Ju ne 2
00
9
N
et w or k le ng th s (k m )
Figure 24. Total pipe network lengths in km, 1997–2009
Year to year improvements in its production, distribution and financial indicators are
shown in Table 10. This table indicates that within the 15-year timeframe, PPWSA has
increased its annual water production by 437%, distribution network by 557%, pressure
of the system by 1260%, and customer base by 662%. During the same period, it has
reduced unaccounted for water losses, from 72% of treated water produced in 1993 to
only 6.19% at present. By judicious use of incentives and sanctions for its staff with
transparent policies that were consistently implemented, and a strong and determined
focus on capacity building for all its staff, the number of accounts served per employee
has increased by 671% during the same period.
Table 11 shows periodic improvements in relevant economic and financial indicators
during the 1993 to 2008 period. It shows that during this period, the number of metered
connections has gone up by nearly 5255%, and the number of accounts handled per
employee has increased by 671%. Even though people are now paying for the water they
actually consume, per capita daily water consumption has nearly doubled. This must have
improved the health and the environmental conditions of the people very significantly.
Viewed from any direction and from any perspectives, it is indeed a sterling improvement
in overall performance by any modern utility in only 15 years. This record of
improvements in such a short period, to the best of our knowledge, is unrivalled by any
utility anywhere in the world, either in a developed or a developing country.
46
It is essential that the success of Phnom Penh be replicated in other urban areas of
Cambodia. The economic and social costs to other Cambodian urban centres because
they are not receiving clean and drinkable water supply are now quite high. Table 12
shows the various health and social indicators for Phnom Penh and 5 other major urban
centres of the country (Cambodia Socio-Economic Survey, 2004). It shows that the
situation in Phnom Penh is very significantly better than other urban areas, often very
significantly. This does not mean that there is one-to-one relationship between
availability of clean water and many social and health-related indicators, as many have
claimed. For example, inhabitants of Phnom Penh are richer and more educated than in
other parts of Cambodia, which could partly explain as to why the indicators for Phnom
Penh are better. However, there is no question that an important reason for this difference
is because Phnom Penh now has a good and reliable water supply system, which other
Cambodian cities do not. By improving the current situations in terms of water supply in
other urban areas of the country, the quality of life of life of the Cambodian people could
be improved very significantly.
LESSONS LEARNED
The three important questions that arise from this outstanding transformation that took
place within less than a decade are the following:
1. What were the enabling conditions that allowed the PPWSA to make this
remarkable transformation?
2. Can the PPWSA continue to improve its performance over the long-term?
3. Can the performance of the PPWSA be replicated in the rest of the urban areas of
Cambodia, and also in other developing, or even developed, countries?
In our view, the main reasons as to why the PPWSA succeeded are two. First, the
Cambodian Primer Minister had the good sense to select a competent and charismatic
leader for the PPWSA. Second, there has been absolutely no political interference as to
how the General Director decided to perform his tasks. On the contrary, when at difficult
moments the PPWSA needed strong political support, the Prime Minister unhesitatingly
provided this support. For example, when it was necessary to establish the principle that
the rich and the powerful people and the governmental institutions must pay their water
bills, the PPWSA received strong political support from the Prime Minister. The Prime
Minister made it clear that unless water bills are paid promptly, irrespective of the power
and/or richness of a person, or an institution, water supply would be cut off. Thus,
leadership of the utility, as well as political non-interference in running the utility, with
strong political support whenever needed, in our view, have been the most important
reasons for the success of the PPWSA.
By selecting a good and competent leader, by giving him a free hand to carry on with his
tasks, by allowing the leader time to understand the problems of the Authority, and then
plan and implement a realistic strategy to improve the system, were the most important
conditions that have contributed to the remarkable success of the PPWSA.
47
As we have noted earlier, providing clean and drinkable water to an urban areas is not a
rocket science: knowledge, experience and technology have been available for years.
Availability of adequate technical, management and administrative capacity is not an
issue. These can be developed within a limited period of time, as the PPWSA has shown
Availability of funds is not an insurmountable issue. In fact, donors are competing with
each other to provide the PPWSA with whatever funds it needs. All donors want to be a
part of a success story, especially as so few of them have been truly successful in the area
of urban water supply from anywhere in the developing world. The competition between
donors to provide funds has ensured that PPWSA can negotiate the best loan conditions
that it can receive from a donor which would be the most favourable to Cambodia.
The current General Director had a vision, which was not only correct but also he could
implement. First, he got rid of the corrupt and the incompetent people from the Authority.
Second, with the good people left over and recruitment of new and younger staff, he
made continuing investments in building and updating capacities in all areas and also at
all levels. This has been a continuing process. All staff members were provided with
good financial packages so that they could have a decent standard of living. These
financial packages have allowed PPWSA to attract and retain good staff members.
Simultaneously, there have been serious and immediate sanctions for the staff for
engaging in corrupt behaviour, including speedy dismissals after a transparent, fair and
quick review of individual cases. This practice has ensured that corruption in the
Authority has become history.
Third, the unaccounted for water was reduced very significantly as soon as possible in
order that water that was “lost” before could be used the people and also generate income
for the Authority.
Fourth, the consumer base was increased as rapidly as possible, along with an accurate
data base of all the households that had connections. This has been consistently kept upto-date. Metering, accurate billing and prompt bill collection were made essential
requirements.
Fifth, the poor consumers were looked after so that they could afford to pay their water
consumption. WHO recommends that the water bill for the poor should not exceed 5% of
their income. For the PPWSA, the average water bill for the poor is well below this 5%
ceiling. In fact, the water expenditure of the poor declined by nearly 80% compared to
what they were paying to private water vendors before they were connected to the city’s
water system.
48
Table 10. Production and distribution data, 1993–2008 (Source: PPWSA records)
Indicator 1993 1994 1995 1996 1997 1998 1999
Annual Production (m3) 19,586,000 25,483,000 31,651,000 34,486,000 39,184,171 39,983,794 40,622,401
Distribution Network (km) 280 296 309 321 344 435 455
Supply Duration (hours/day) 10 10 24 24 24 24 24
Supply Pressure (bar) 0.20 0.50 1.00 1.00 1.50 1.50 1.50
Number of Customers 26,881 27,623 28,654 32,404 42,113 51,407 60,479
Bill Collection Ratio (%) 40 45 50 70 97 98 99
UFW (%) 72 62 60 59 58 58 48
Indicator 2000 2001 2002 2003 2004 2005 2006 2007 2008
Annual Production (m3) 39,801,167 37,763,547 41,793,679 46,871,146 56,775,305 61,857,961 70,623,204 79,400,031 85,513,649
Distribution Network
(km)
496 555 766 921 1,077 1,237 1,370 1,460 1,556
Supply Duration
(hours/day)
24 24 24 24 24 24 24 24 24
Supply Pressure (bar) 1.50 1.50 2.00 2.00 2.00 2.00 2.00 2.00 2.50
Number of Customers 67,016 74,945 88,571 105,777 121,522 138,266 152,696 162,151 178,200
Bill Collection Ratio (%) 99.50 99.60 99.70 99.80 99.80 99.80 99.80 99.90 99.90
UFW (%) 35 23 22 17 14 8.53 7.28 6.15 6.19
49
Table 11. Economic and performance indicators of PPWSA, 1993–2008 (Source: PPWSA records)
Indicator 1993 1995 2000 2005 2008
Population of Phnom Penh 941,876 985,701 1,114,479 1,313,851 1,325,681
Per capita GDP for Cambodia (constant dollars) 267 280 280 350 400
Average cost of water sold (m3 in USD) --- 0.093 0.217 0.245 0.251
Number of metered connections 3,391 15,203 66,905 138,266 178,200
Per capita water use (1/day) --- 89 132 146 160
Average household water bill (USD/month) --- 1.82 5.14 5.31 5.87
Unaccounted for water (%) 73 60 35.47 8.53 6.19
Amount billed (1000 USD) --- 1,181 6,184 15,114 21,406
Amount collected (1000 USD) --- 862 5,509 15,446 21,317
No. of accounts served per employee 45 61 140 264 302
Table 12. Access to water and health indicators for Cambodian urban centres (Source: Cambodia Socio-Economic Survey, 2004)
Urban centres Access to piped
water (% of
population)
Diarrheal incidence
(% of population)
Infant mortality
(per 1000 live
births)
Child mortality
(per 1000 live births)
Poverty incidence
(% of population)
Battambang 8.0 2.4 68 40 33.7
Kandal 6.7 4.2 35 27 22.2
Pailin 6.3 2.9 33 26 No data
Phnom Penh 83.7 2.2 16 13 4.6
Siem Reap 0.9 3.8 41 30 51.8
Sihanoukville/Kep/Koh Kong 15.2 10.7 48 15 23.2
50
Finally, continuous planning for the future was made mandatory, from increasing
production of treated water to enlarging the network progressively, in order to account for
a higher number of customers, both domestic and industrial.
By concurrently focusing on all these issues, the PPWSA has managed to achieve its
vision, which mostly all urban centres of the developing world have found impossible to
reach. While conceptually there is no reason as to why other urban centres cannot make
such rapid progress, they all face significant governance constraints. For example, in
countries like Mexico, the average stay of a utility manager is around 18 months. It is
impossible for any new manager to understand the system and then develop and
implement a plan within such a short period. In India, for all major cities, the heads of the
utilities are officers belonging to the Indian Administrative Service, who basically keep
the chairs warm for next 2-3 years. Unless a competent utility manager is selected on the
basis of merit, and the person is given adequate time to show results, countries like India
or Mexico will be able to solve the water problems of their major cities in the foreseeable
future. The constraints are mostly institutional and governance-related issues, including
regular political interference in the work of the water utilities. Thus, there is absolutely no
reason as to why the Phnom Penh experience cannot be replicated in different parts of the
world, assuming the governance practices of the utilities can be dramatically changed.
As to the sustainability of the PPWSA in terms of continuation of its outstanding
performance, only time can tell. The choice of the leader of the PPWSA is a political
process. If the next leader of the PPWSA will be carefully and properly selected,
sustainability of its success would not be an issue. In our view, there are at least two good
“leaders in waiting” within the organisation who can easily sustain the current results of
the present General Director. However, it is always difficult, if not impossible, to predict
the results of any political process which would select the next General Director.
Our guess is that since the PPWSA is only functional, efficient and profitable public
sector enterprise in Cambodia, its political masters will think twice before selecting the
next leader. Our experience consistently all over the world has been that it takes a long
time to build a successful institution like PPWSA with a good, dynamic and charismatic
leader. However, destroying a functional and efficient institution is an easy task: it can
effortlessly accomplished in about two years! Thus, the future sustainability of the
PPWSA will depend on the selection of its next leader. If a good leader is chosen,
sustainability of PPWSA should not be an issue. We are reasonably optimistic that this
will be the case.
CONCLUDING REMARKS
The experience of PPWSA has been a salutary example for the urban centres of the
developing world in terms of good governance. Many reasons are given by the water
utility managers, political leaders and many members of the water profession at present
as to why it has not been possible to provide clean, drinkable water to the urban centres
of the developing world. Among these have been physical scarcities of water, lack of
51
availability of investment funds, inability of the poor to pay for water, lack of expertise,
and many more. In our view, all these are only excuses to hide the real and fundamental
reason of this shortcoming, which is very poor leadership and governance of the urban
water sector nearly all over the developing world. Phnom Penh has very clearly shown
how it can be achieved under the most difficult circumstances within less than one
decade.
Unless the urban water governance practices are improved very significantly, as it has
been the case of Phnom Penh, universal access to clean drinking water will remain an
unachievable dream, even if hundreds of billions of dollars are made available to this
sector each year with no strings attached. One is reminded of William Shakespeare:
“The fault, dear Brutus, is not in our stars,
But in ourselves, that we are underlings.”
BIBLIOGRAPHY
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and Drainage Project (Loan 1468-CAM) [SF] in Cambodia”, Asia Development Bank,
Manila, 43 p.
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Directors on a Proposed Loan to the Kingdom of Cambodia for the Phnom Penh Water
Supply and Drainage Project, September 1996, 66 p.
ADB/JBIC/World Bank, 2004, “The Role of Policy Planning and Coordination in Asia’s
Infrastructure Development”, East Asia and Pacific Infrastructure Flagship study
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for the Middle East and North Africa”, Routledge, Abingdon, 191 p.
Chan, Ek Sonn, 2007, “Getting the Fundamental Right”, PPWSA, Phnom Penh, 9 p.
(mimeo)
Chan, Ek Sonn, “Bringing Safe Water to Phnom Penh City”, PPWSA, Phnom Penh, 14 p.
(mimeo)
Chan, Ek Sonn, Water Supply in Phnom Penh from Poor to Better Operation to Serve
Peoples, First Southeast Asia Water Forum, 17–21 November, 2003, Thailand, 6 p.
Chea, Visoth, 2008, “Efficient Water Supply Systems: A Case Study of the Phnom Penh
Water Authority, PPWSA, Phnom Penh, 6 p. (mimeo)
52
Dany, V., Visvanathan, C., and Thanh, N. C., 2000, “Evaluation of Water Supply System
in Phnom Penh City: A Review of the Present Status and Future Prospects”, International
Journal of Water Resources Development, Vol. 16, No. 4, pp. 677–689
GKW Consult, January 1996, “Water, Technical Assistance Phnom Penh and
Sihanoukville”, Draft Terminal Report, Submitted to UNDP and World Bank for Project
CMB/91/007, GKW Consult, Mannheim
Japan International Cooperation Agency, Japan’s ODA to Phnom Penh Water Supply
Authority (1993–2009), Draft, JICA, Phnom Penh
Japan International Cooperation Agency, Ministry of Industry, Mines and Energy Phnom
Penh Water Supply Authority, The Study on the Master Plan of Greater Phnom Penh
Water Supply (Phase 2) in the Kingdom of Cambodia. Final Report, Volume III,
Supporting Report Part A, February 2006,
Japan International Cooperation Agency, 2009, Results of Exit Survey on Customers’
Perspective on PPWSA (Draft), Date of Survey, November 12 to 21, 2009, JICA, Phnom
Penh
Kingdom of Cambodia, February 7, 2003, “National Policy on Urban Water Supply and
Sanitation, and Rural Water Supply and Sanitation”, Unofficial Translation, 26 p.
Makathy, Tep and Kidokuro, Tetsuo, 2007, “Phnom Penh Water Supply: An Exemplary
Water Utility in Asia”, International Development and Regional Planning Unit,
University of Tokyo, Tokyo, 8 p. (mimeo)
Nippon Koei and Nihon Suido Consultants, September 1999, “The Study of Water
Supply System for Siem Reap Region in Cambodia”, Interim Report, Japan International
Cooperation Agency, Tokyo
Phnom Penh Water Supply Authority, Summary of Key Financial Indicators, 2008–2023,
PPWSA, Phnom Penh, 5 p.
Phnom Penh Water Supply Authority (PPWSA), 2009, Report of Clean Water Supply to
the Poor, May 2009, PPWSA, Phnom Penh
Phnom Penh Water Supply Authority (PPWSA), Financial Statements for the year ended
31 December 2008, June 19, 2009, PPWSA, Phnom Penh, 36 p.
Phnom Penh Water Supply Authority (PPWSA), “Improvement in the State of PPWSA,
1993–1999, PPWSA, Phnom Penh, 13 p.
Phnom Penh Water Supply Authority (PPWSA), “Improvement in the State of PPWSA,
1993–2000”, PPWSA, Phnom Penh, 13 p.
53
Phnom Penh Water Supply Authority (PPWSA), From 1993 until Now (2004): Case
Study, PPWSA, Phnom Penh, January 2004, 12 p
Phnom Penh Supply Authority, Monitoring Ratio (Performance Indicators), 1996–2008
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Study, PPWSA, Phnom Penh, July 2002, 12 p.
Royal Government of Cambodia, 2006, “National Strategic Development Plan”, Phnom
Penh
SAFEGE, 1995, “Assistance aupres de la regie des eaux de Phnom Penh pou le reduction
des pertes et l’amelioration de la gestion commerciale, Rapport Final, Government
Francais, SAFEGE
SAFEGE, December 1995, Contract D’assistance a la regie des eaux pour l’amelioration
de la gestion commeciale et l’exploitation du reseau de distribution, Financement:
protocole de don du Government Francais, SAFEGE
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Evidence from Benchmarking”, Note 23, Public Policy for the Private Sector, World
Bank, Washington D.C.
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on Phnom Penh Water Supply System in the Kingdom of Cambodia, Final Report, Vol.
1, Summary, Nov. 1993, report to JICA, Japan
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1993, “The Study on Phnom Penh Water Supply System in the Kingdom of Cambodia”,
Final Report, 3 Volumes
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Water Supply Project”, Report No. 17026-KH, Urban Development Sector Unit, East
Asia and Pacific Region, World Bank, Washington, D.C., 132 p.
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Supply Policy”, Infrastructure Sector Unit, East Asia and Pacific Regional Office, 42 p.
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Terminal Report, January 1996, GKW Consult
54
ACKNOWLEDGEMENTS
The funding for this independent evaluation came from the Institute of Water Policy, Lee
Kuan Yew of Public Policy, Singapore.
55
ANNEX – I
Unofficial Translation
Royal Government of Cambodia
No. 52
Sub-Decree
On Establishment of Phnom Penh Water Supply Authority (PPWSA)
Royal Government of Cambodia has seen
 The Constitution of the Kingdom of Cambodia
 The Royal Decree dated September 24, 1993 on the Appointments of the First and
Second Prime Ministers
 The Royal Decree dated November 1, 1993 on the Establishment of the Royal
Government of Cambodia
 Royal Kram No. 02 xx 94 dated July 20, 1994 on the Arrangement and Functions of
the Cabinet of the Government of Cambodia
 Royal Decree No. 1094-83 dated October 24, 1994 and Royal Decree No. 1094-90
dated October 31, 1994 on the Re-arrangement of the Composition of the Royal
Government of Cambodia
 Royal Kram No. 0196-08 dated January 24, 1996 on the Establishment of the Ministry
of Interior
 Royal Kram No. 0196-18 dated January 24, 1996 on the Establishment of the Ministry
of Economy and Finance
 Royal Kram No. 0696/03 dated June 17, 1996 on the General Guideline for the
Establishment of the Public Enterprises
 Request of the Senior Minister and Minster of Economy and Finance
 Consent of the Cabinet of the Minister
Deciding
Chapter 1: General Provision
Article 1: PPWSA is the public economic enterprise defined in article 26 of Royal Kram
No. 0696/03 dated June 17, 1996 on the General Guideline on the Establishment of the
Public Enterprises. PPWSA is the legal entity with financial and administrative autonomy.
PPWSA is under the management of the Phnom Penh Municipality and has its
headquarters in Phnom Penh.
PPWSA must implement all the articles of this sub-decree. For the necessary activity
that is not stipulated in this sub-decree, the management of PPWSA must follow the
Royal Kram No. 0696/03 dated June 17, 1996 on the General Guidelines for the Public
Enterprises and other existing commercial laws and regulations.
Article 2: PPWSA has the mission to produce and distribute the water for general and
public uses in the Phnom Penh Municipality.
56
To achieve this mission, PPWSA will allow making all necessary commercial and
financial operations and fixed assets as following.
 Production and distribution of the water in the Phnom Penh Municipality and
downtowns areas surrounding Phnom Penh
 Expansion, increase and rehabilitation of the production and distribution system
 Commercial operation of the existing water or produced water
Article 3: The agents of PPWSA have the rights to access to the public places or private
residents as needed for the installation and repairing of the water pipes, technical
controlling of the production and distribution facilities and the recording of the quantities
of the water usage.
The agents must dress in clear organizational uniforms and show their organizational
identification cards during their missions.
Article 4: In its operation, PPWSA must follow the same principles and practices legally
applied for the commercial entities. In this context, PPWSA must have the great
autonomy to manage its activities for the efficiency and development.
Article 5: PPWSA must pay all taxes defined in the existing laws and regulations.
Article 6: The initial capital of PPWSA should be defined by the initial balance sheet
jointly agreed by the Ministry of Economy and Finance, Phnom Penh Municipality and
PPWSA.
When this sub-decree comes to effect, PPWSA has exclusive rights on behalf of the
state on all recorded properties in its inventory list.
Article 7: The employees of PPWSA must be managed by a separate regulation
approved by the Board of Directors.
In the transitional period, the Board of Directors of PPWSA will decide the measures for
such management by its first meeting.
When the separate regulation is in place, all PPWSA employees will not be longer the
civil servants of the state.
Chapter 2: Administrative Management
Article 8: PPWSA must be governed by the Board of Directors composing of the
following members:
 Representative of the Phnom Penh Municipality 1 person
 Representative of the Ministry of Economy and Finance 1 person
 Representative of the Ministry of Interior 1 person
 Representative of the Ministry of Industry, Mine and Energy 1 person
 Representative of the Ministry of Public Work and Transport 1 person
 PPWSA’s Employee Representative 1 person
 General Director of PPWSA 1 person
57
The representative of the Phnom Penh Municipality needs to serve as the president of
the Board of Directors.
All the members of the Board of Directors must be appointed by the sub-decrees in
accordance with the proposals of the member-related line ministries/agencies.
The PPWSA’s Employee Representative must be elected by votes of the PPWSA’s
employee.
Article 9: All the members of the Board of Directors must be Cambodian nationality
(Khmer), have the full civic rights and are not used to be the substantial punishment by
the law and court. Moreover, the members of the Board of Directors must be selected
from the active officials of the government who have at least five years of working
experience or the non-civil-servant citizen with the age not more than 65 and with
sufficient experience and high skills in economics or law. The tenure of the members of
the Board of Directors is three years and this duration can be renewed.
Within their tenures, the members of the Board of Directors are not individually or
commonly liable. In case a member commits the serious mistake, he/she will be
removed any time by the sub-decree.
Article 10: The Board of Directors has the full rights to decide all matters of PPWSA and
the rights to submit or approve all legal documents subjective to the existing laws
relating to public enterprises.
The Board of Directors has the following duties:
 Approve the enterprise’s plan as stipulated in article 19 of this sub-decree
 Regularly evaluate the planned results and recommend the correcting measures
 Approve the annual balance sheet and activities report of the enterprise
 Approve, on the proposal of the General Director, the organizational chart, internal
regulation of the enterprise, guideline, and salary scale of the employee in accordance
to the existing laws and regulations
 Provide the agreement on the contacts and treaties in which PPWSA is legally the
party in accordance to the related existing laws and regulations
 Approve sales, purchases and rents of all kinds of fixed assets or shareholders and
approve the medium to long-term liabilities of PPWSA in accordance to the existing
laws and regulations
 Approve the establishment, opening and closing of the PPWSA’s offices and agencies
everywhere based on its judgment
Article 11: The meeting of the Board of Directors can be called by the president or the
proposal of at least four members. Such meeting should be held at least one per three
months.
The acting president can be selected from the members of the Board of Directors.
The Board of Directors will discuss all the issues in its jurisdiction. The agenda of the
meeting and the related documents must be informed to all members of the Board of
Directors and the state observer in 10 days in advance of the meeting.
58
The meeting of the Board of Directors can only be held with the presences of at least
50% of the total number of the board members. In the case the quorum for such meeting
is not met, the president needs to re-call for the meeting at least in next 15 days to
discuss the same agenda. The latter meeting will not require the quorum.
All decisions of the Board of Directors can be considered valid only it is made with the
majority of the approval of the members at the meeting. In the case the equal voice
between the approval and disapproval exists, the vote of the president is used for the
decision.
Article 12: All the decision of the Board of Directors must be recorded in a report that
will be shared with the parental line ministries/agencies, the state observer and other
related institutions within 15 days after the meeting as stipulated in article 25.
The report of the meeting must be approved officially by the next meeting of the Board of
Directors and must be copied and kept in archive of the organization in accordance to
the administrative procedure. The original version must bear the signatures of the
president of the meeting and a participating member.
Article 13: The General Director manages the daily operation of PPWSA. The tenure of
the General Director is three years defined by the sub-decree of his/her parental line
ministry/agency.
Article 14: The Board of Directors transfers all the necessary authority to the General
Directors for the daily operation of the enterprise in accordance to the existing law and
guideline of the Board of Directors.
In this context, the General Director:
 Prepares all the documents for the approval of the Board of Directors and implement
all decisions of the Board of Directors. The General Director will report regularly to the
Board of Directors about the activities of PPWSA
 Has the responsibility for the technical, administrative and financial management of
PPWSA
 Represents the PPWSA to all third parties in the civil, administrative and court letter in
accordance to the existing laws and the decision of the Board of Directors
 Has the rights to select, appoint, remove or fire and the rights to order the agents or
employee of PPWSA in accordance to the existing laws and the decision of the Board
of Directors
 Has the rights to transfer part or whole of his responsibility to his subordinates for
signing in accordance to the guideline of the Board of Directors
 Implement all tasks assigned by the Board of Directors.
Article 15: Financial dividend for the General Director and the honorable allowance for
the members of the Board of Directors must be defined by the related parental line
ministries/agencies and the Ministry of Economy and Finance based on the proposal of
the Board of Directors.
Article 16: The engagement in and implementation of the contracts of PPWSA must be
in accordance to the existing laws and procedures.
59
Chapter 3: Financial Management
Article 17: PPWSA has its own account using Riel currency in accordance to the
accounting regulations of Cambodia and following the Generally Accepted Accounting
Standard (GAAS). The annual financial fiscal year starts from January 1 and finish in
December 31.
Balances and the management of the accounts are verified by the Board of Directors
before March 30 of the next fiscal year using financial reports submitted by the
specialized accountant who is the financial inspector.
Balances and the management of the accounts as well as the financial reports of the
financial inspectors must be submitted for the approval of the Ministry of Economy and
Finance within 15 days from the date the Board of Directors reviews the documents.
Those documents will be sent further to the parental line ministries/agencies for their
comments in accordance to article 16 of the Royal Kram No. 0696/03 dated June 17,
1996 on the Guideline on the Establishment of Public Enterprises.
Article 18: The financial inspector must be appointed by the Board of Directors for twoyear tenure. This period can be extended. The financial allowance for the financial
inspector must be defined by the Board of Directors and is considered as the operational
cost of PPWSA.
The financial inspector must produce the report providing the opinion on the
transparency and regularity of the accounts in every fiscal year. The report reflects the
realities of the financial and asset situation of PPWSA.
All the time, the financial inspector can check and control the accounts and can ask for
all necessary documents and financial reports for such purpose. When the financial
fraud or irregularities is found, the financial inspector must report immediately to the
president of the Board of Directors.
The financial inspector can attend the Boad’s meeting based on the invitation of the
president of the Board of Directors.
Article 19: Every year before October 1, the Board of Directors must provide the
approval on the enterprise’s plan based on the proposal of the General Director. After
the approval of the Board of Directors, the proposal will be sent for the approval of the
parental line ministries/agencies and the Ministry of Economy and Finance.
The enterprise’s plan must consist of:
 Investment plan and its financing plan
 Operational budget of the enterprise
 Prices of the water and other services of PPWSA to ensure the revenue of the
enterprise sufficient for covering its operational expenses (excluding the
depreciations) and ensuring its financial balance
 Criteria for measuring the economic and financial results of PPWSA
 Subsidy by the state to PPWSA in order to support the loss in its public service
delivery
60
Article 20: The source of financial inflow of PPWSA can include
 Principal capital provided by the state
 Contribution or state subsidy or contribution from other public entities
 Gifts or private contribution with the primary agreement of the Board of Directors
 Liabilities
 Revenues from the operation of the enterprise
 Revenues from sales or rent of the current and fixed assets
Article 21: Expenditures of PPWSA include
 Current expenditures
 Investment expenditures
 Payment of the liabilities
 Other expenses occurred to PPWSA in its operation
Article 22: PPWSA can have the current account at the commercial bank and use this
account based on its need.
Article 23: When there is the decision of the Minister of Economy and Finance, within
and not more than five year period, the net profit of PPWSA must be transferred to the
reserve account for the strengthening of the financial ability of PPWSA.
Article 24: The medium to long-term liability transactions of PPWSA for its operation or
investments must be agreed in advance by the Minister of Economy and Finance.
Chapter 5: Relationship with the Government
Article 25: Within 15 days after the approval of the Board of Directors, PPWSA must
send to the minister in charge of the Council of Ministers and the ministers of the
parental line ministries/agencies and the Minister of Economy and Finance the following
documents:
 Meeting report of the Board of Directors
 Enterprise’s plan as stipulated in article 19 of this sub-decree
 Operational report, balances and account management of PPWSA
 Controlling report of the financial inspector
Article 26: The Minister of Economy and Finance can suggest the government to
appoint one state observer to PPWSA. That official can participate in the Board’s
meeting and can provide comments on all points in the agenda of the meeting but does
not have the rights to vote. The state observer must perform his/her mission in
accordance to the article 20 to 25 of the Royal Kram No. 0696/03 dated June 17, 1996
on the Guideline on the Establishment of Public Enterprises.
Article 27: PPWSA has the rights to disconnect the supply of the water or other services
of its private customers and public institutions that fail to pay the water bills to PPWSA
on time.
61
Chapter 5: Final Provision
Article 28: The unfair relationship of the PPWSA and its customers and all unlawful
activities of the customers that damage the enterprise particularly the loss of the water,
illegal connections etc., must be dealt by the existing laws and regulations.
Article 29: The co-ministers of the Council of Ministers, the co-ministers of the Ministry
of Interior, the Minister of Economy and Finance, the Government Delegate for Phnom
Penh Municipality must implement this sub-decree effectively from the date it is singed.
Phnom Penh, December 19, 1996
First Prime Minister Second Prime
Minister
Prince Norodom Ranarith Hun Sen
[Signatures]
Proposed by H.E. Keat Chhon, Senior
Minister, Minister of Economy and
Finance
[Signature]
CC: -Royal cabinet
-Secretariat of National Assembly
-Secretariat of Royal Palace
-Cabinet of First Prime Minister
-Cabinet of Second Prime Minister As stipulated in Article 29
-Archive

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