More than 45 years of experience

Ecological urban development Lusaka - Consultancy services for the development of a pricing mechanism for sanitation

Project details
Donor organisation: 
Water & Sanitation
Project volume: 
132,720 €
Value of services: 
132,720 €
Start of project: 
April, 2017
End of project: 
October, 2017
Project description: 

The National Water Supply and Sanitation Council (NWASCO) has been established by Government through Act 28 of 1997 to regulate the water providers for efficiency and sustainability of water supply and sanitation service provision. One of the key principles that NWASCO has set out for tariff setting is the financial sustainability of commercial utilities (CU). This entails providing sufficient revenues to cover operation and maintenance costs for a sustainable water supply and sanitation service. Over the years, there has been progress in water supply coverage which now stands at 82.6% at the expense of sanitation coverage which is at 60.5%. In the existing tariff model, CUs are able to report water and sewerage costs separately but cannot fully separate some costs, e.g. overhead costs. Therefore, there is need to identify all costs that cannot be fully separated and devise a mechanism to separate them. To address this there is need to develop guidelines for separating water and sewerage costs with a view to developing a pricing strategy for sanitation.

Service description: 

Development of guidelines

  • Review the various costs categories for commercial utilities with a view to identify overlapping costs;
  • Identify the overlapping costs between water, sewerage and shared assets and identify the best and most accurate way to have a fair split between shared assets: and
  • Develop guidelines which can be used to separate water and sewerage costs.

Modification and improvement of the cost of service model fulfilling the following functions

  • Capture capital investment projects planned by the Commercial Utilities and allow for easy updating;
  • Update existing investment plan guideline for Commercial Utilities; and
  • Support NWASCO in the decision making process on water supply and sanitation service delivery.

Recommendations for a pricing strategy for sanitation service delivery

  • Deduce recommendations for a pricing strategy;
  • Review the current NWASCO tariff and propose a pricing strategy making use of the developed cost separation mechanism and having the least impact on the customer’s affordability and willingness to pay for sanitation service delivery; and
  • Ensure that commercial utilities will reach financial sustainability.

Workshops on use of guidelines and financial model

  • Carry out workshop for the commercial utilities together with NWASCO to ensure the use of the new guidelines and the revised investment plan.

The overall goal of the consultant works is to develop a guideline on how to separate water and sewerage costs that can be used by CUs, and to modify and improve NWASCO’s cost of service model to include capital investments requirement.

The objective of this assignment is:

  1. Develop guidelines for separating costs related to water and sewerage service delivery;
  2. Modify and improve the cost of service model into a financial equilibrium model; and
  3. Develop a pricing strategy for sanitation service delivery.