Case studies

Water Solutions

Case 12: Employee Cooperatives in Water: The Case of Dhaka WASA

Introduction

In this case in Bangladesh, an innovative worker-driven public water management plan offered a clear and preferable alternative to plans preferred by the World Bank. However, the new management system is at risk of imitating the inefficiencies of privatized providers, leaving nagging questions about how to avoid such risks. ********* In the early 1990s, Dhaka Water Supply and Sewerage Authority (WASA), in Bangladesh, was struggling to meet water demand, a struggle that stemmed in part from rising unaccounted-for water losses and poor performance in revenue collection. To meet growing demand, and to reduce dependence on groundwater, Dhaka WASA decided to build a surface water treatment plant. Dkaha WASA water pump. Photo credit: J CassellThe World Bank’s proposed loan to Dhaka WASA for this project was conditional on a privatization study, and experimental privatization of revenue billing, collection and other activities. Employees of Dhaka WASA, especially members of the Dhaka WASA Employees’ Consumers Supplies Cooperative Society Ltd. (ECSCSL), resisted these conditionalities, largely out of fear of job losses. After discussions with representatives of government, Dhaka WASA management and the World Bank, it was decided that only one zone would be privatized and one would be given to the employees’ cooperative, experimentally, for one year. The private company and ECSCSL started in September 1997. In 1998 the monitoring committee found that ECSCSL had out-performed the private company in revenue collection increases and “unaccounted-for water” reductions. Subsequently, Dhaka WASA asked ECSCSL to take over two of its other seven revenue zones, and since then ECSCSL has been working under the Program for Performance Improvement (PPI). Most of the workers at the PPI are on deputation from Dhaka WASA. Part of the reason for their success, it would seem, is the substantial increase in salaries paid by Dhaka WASA. It would also appear that slum dwellers have benefited from the Employees’ Cooperative model, as workers will undertake normal water connections in informal houses, which Dhaka WASA rules do not normally permit. At the beginning of each financial year Dhaka WASA management sets a zone-wide target for billing, collection and reduction of non-revenue water. The Employees’ Cooperative has met the target every year, in part by simple changes such as ensuring that consumers receive bills monthly rather than bimonthly (as was the case in Dhaka WASA–operated zones), and this has resulted in steady increases in revenue incomes. Higher incentives and attractive salary packages for the workers compensate for the heavy workload and fewer holidays. Workers are under continuous pressure to meet targets, and PPI management reserves the right to deport employees back to Dhaka WASA. PPI management also recruits people from the private sectors outside of Dhaka WASA, typically from specific revenue zones. However, an independent study of the Cooperative conducted in 2004, on the initiative of the Dhaka WASA Board of Directors, reveals that the management authority of Dhaka WASA tends to underestimate financial targets in the Cooperative zones with a view to helping out the PPI program. Moreover, the PPI model gives rise to a conflict of interest among revenue workers within Dhaka WASA, as PPI workers receive a salary up to three times as high as that of workers doing the same job in Dhaka WASA. As a result, the cost of revenue collection in the PPI zone has almost doubled – suggesting that success in the PPI zone may be more statistical than real. The PPI model for cost recovery may be an alternative to full privatization, as it saves the jobs of public service workers. However, it may also be a step towards privatization, preparing the way for a more fully corporatized and marketized system of water services. public service workers. However, it may also be a step towards privatization, preparing the way for a more fully corporatized and marketized system of water services.

Questions

  • What values should inform public water management? How should we promote both more democratic control of water, and transparency and accountability in these systems?
  • At what point does a public water management system cross the line and become “corporatized” or “marketized”?

Notes and Links

For more information, see the Dhaka WASA website.