Small Municipalities

Transcription

1 Financing SWM Services in Small Municipalities Is an OBA Approach Feasible in the Nepal Context? Nepal is predominantly a rural country, but the rate of urbanization is very high.. 30% 25% 20% % urban population 15% 30% *ADB projections 10% 16% 18% 25% Urbanization rate estimated at >3.5% per year 5% 0% 4% 8% 60s 90s * 2030* 1

2 Rapid urbanization is exacting immense pressure on Nepal s urban environment and municipal managers. The Bank is re engaging in the urban sector in Nepal after almost two decades of absence Urban Government and Development Program/Emerging Towns Project; $25 million ( ) Objective is to improve delivery and sustainable provision of basic services and priority infrastructure The initial target group included six emerging towns which are municipalities and have population between 25,000 and 65,000, based on 2010 population projections Components service delivery improvement (including SWM), socioeconomic infrastructure and institutional development A n important first step of a potentially longer term programmatic engagement by the Bank to support Nepal in its decentralization and urbanization transition. 2

3 SWM services in particular need significant improvement. Recycling Generation 0.33kg / HH / day 65% organic 25% recyclable 10% inert Viable but informal Collection / systematic transport Current exports worth $5.3m /yr 33% of generation Very basic systems Disposal Low service quality Only 4 of 58 Muni. Have sanitary landfills Environmental damage common The institutional framework for SWM is improving but challenges remain.. Evolution of institutional framework for SWM The National Conservation Strategy, 1988 Solid Waste Management Policy for Nepal, 1996 Solid Waste Management & Resource Mobilization Act, 1987 Local Self Governance Act, 1999 The Environment Protection Act and Regulations, 1997 Nti National lub Urban Policy, 1997 A new SWM Act 2011 has recently been passed by the parliament to supersede the SWMRMC Act of

4 Most municipalities are fiscally constrained and ill equipped to deal with the growing waste problem Revenue sources Operating deficit/surplus 100% 80% 60% 40% 20% 0% 11% 4% 23% 31% 29% 39% 40% 35% 27% 24% 2003/ / / / /08 Local Development Fee Local taxes Fees & Fines Property Rental Other revenue Grants Loan Misc. Income Balance forward / / / /09 Tansen Dhankuta Is an OBA approach feasible? 1. The OBA scheme must have sufficient government ownership, and it should support sector priorities 2. An effective monitoring and verification 3. The potential implementer or service provider must be able to handle the technical, financial, and managerial requirements required by the scale and size of the operation appropriately 4. The sector should have a structure that ensures financial sustainability, with any tariffs to include substantial if not total share of operating and maintenance (O&M) expenses 5. Subsidies need to be (a) acceptable and practical within the sector context and (b) explicit, targeted, and performance based. 6. There should be capacity and mechanisms within the market for pre financing. Six Conditions for OBA Source: GPOBA 4

5 Potential application of OBA to enhance financial sustainability in the SWM sector THREE WAYS TO PAY Municipal contributions own revenues, transfers received Beneficiary i charging tariffs, dedicated di dswm taxes External support on a declining scale (transitional subsidy) TIME Questions What is the output? How do you link the output to actual service delivery? How do you verify the output? What triggers the OBA payment? STEP 1: PLANNING AND PREPARATION Simplified Scheme Mechanics Technical assistance provided via SWMTSC supports Municipalities to prepare: 1. SWM service improvement plans and delivery models 2. Plans for collecting Beneficiary Revenue Municipalities develop internal Service Providers or engage external Service Providers according to plans PREPARATION Municipalities develop internal Service Providers or engage external STEP 2: SERVICE DELIVERY & TECHNICAL VERIFICATION STEP 3: FINANCIAL VERIFICATION & PAYMENT Municipalities pre finance required investments Service providers deliver SWM according to agreed terms Municipalities monitor and regulate Service Providers Beneficiary Revenues collected via tariffs, designated sanitation tax, or other means Independent Technical Verification Agent (ITVA) assesses service quality against t scorecard Municipalities account for Beneficiary Revenues collected Independent Financial Verification Agent (IFVA) reviews Beneficiary Revenues collected GPOBA pays matching subsidy grants based on pre agreed multiple of Beneficiary Revenue verified by IFVA s report But ONLY IF services receive passing score from ITVA 5

6 Main contractual arrangements... E ITVA 10 GPOBA TA funder 4 IFVA 1 A Technical 3 assistance SWMTSC MoLD D provider (if required) GoN E 8 Des. Acct. TDF B Fiscal transfer intercept under TDF control (used only if necessary) Contract regulation and performancelinked payment adjustments SWM Service C Provider (s) Beneficiaries 5 SWM Unit Implementing Municipality 2 Main considerations OBA pilot to be implemented within a broader municipal capacity building initiative OBA pilotaligned with existing institutions tions andgo government systemsstems Targeting municipalities with a functioning SWM system and commitment to cost recovery Use of least cost solutions OBA pilot includes enablers for private sector participation Next steps: Design of a technical score card basis for independent technical analysis Financial and economic analysis, including cost of providing SWM services Social/stakeholder assessment Implementation arrangements 6