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EVALUATION
OF COST RECOVERY FOR WATER SUPPLY
ABSTRACT
As
urban areas in Nigeria continue to grow, the need to meet increasing water
demand for the population has become a major problem of concern to Urban
Managers. The State water agency that are supposed to provide adequate and
potable water supply to urban population have records of poor performance. To
achieve the national and state water supply policy objectives of the issue of
cost recovery reforms was introduced, imperatively, however to carry out cost
recovery in our water sectors to provide efficient and sustainable water supply
for the urban needs in a bid to protecting the vulnerable groups is important.
In view of the stringent need to understand the intricate of cost recovery, the
research study on the evaluation of cost recovery for water supply was
instituted, the study evaluates the existing scenario of cost recovery for
water supply service and its implications in Makurdi town with the population
of 503.114. The survey investigation was based on a three settlement groups
namely; high, medium and low residential density which has ten (10) substantive
neighbourhoods settlements as the sampling framework in where a sample of 326
households was sampled (representing 0.3%sample size of the 95,577 total
households in Makurdi) the sample size was drawn across the three settlement
hierarchy named above which are served by the Water Board. Therefore, a
systematic random sampling was used to administer questionnaires. Another
sample of 1 questionnaire template was administered to the water board to
source out information on their opinion pertaining cost recovery. The results
obtained shows that the cost recovery for the operation and maintenance
(O&M) of water supply in Makurdi urban area was only 43% and 57% of the
cost recovery enquired during water supply and provisioning in the study area
were not recovered by the water board. From the 43% of the cost recovery for
water supply in the study area out of which appreciable percentage, precisely
22.7% is recovered from the vulnerable groups (i.e. low and medium income
earners), while 77.3% of the cost is recovered from high income earner. Also,
59.2% of the households have their houses connected while 40.8% were not
connected to official networks but depend on public taps and other sources. In
addition, the result of the willingness and ability to pay for% water supply,
by the households is 49% while those not willing to pay are 51% this express
the challenge and stiff opposition cost recovery practice is experiencing in
Makurdi. More so the result of the implications of cost recovery policy shows
that, the standard of living and expenditure level of the vulnerable group i.e.
low income earners is grossly affected. The study proposed prepaid metering
system and/or cross subsidy in the tariff regime arrangement based on the
selected cost recovery model and recommend strong political will and commitment
from government to promote cost recovery for water supply system, establishment
of management regulatory committee o taskforce for cost recovery in water
supply. In view of the fact that there will be increase in tariff due to the
new reform which some households may be unable topay for water supply, sector
targeting measures, geographic targeting measures and social targeting measures
are recommended. Basically the measures is targeting the poor such as low-cost
options of obtaining water supply through the public stand posts and commercial
distribution outlets. Finally, the research has provided useful insights as to
the way forward for cost recovery for water supply commercialization in
Nigeria, and that there is no one-model-suits-all approach to cost recovery for
water supply. Each country must therefore design a framework most suitable to
its environment.
CHAPTER
ONE
BACKGROUND
OF THE STUDY
1.0.
Introduction
The
state of cost recovery in Nigeria has remained a matter of concern given the
importance of cost recovery in the economic wellbeing of the entrepreneurs and
the growth and development process of the economy. Unfortunately, cost recovery
for water services has no consensual recommendation across the world. While
some international organizations from the developed world tend to recommend it
as being essential for the financial sustainability of water utilities (OECD,
2006), that is not the case for some worldwide reaching organizations such as
the United Nations, which is more concerned with the impact such a principle
would have on the poor, leading it to recognize the role that subsidization may
have on the improvement of population provision levels in water supply and
sewage drainage and treatment (UNDP, 2006. This may be due to the fact that in
developed countries, the water outlays represent a very small portion of the
average household income, whereas in developing countries the implementation of
full cost recovery would put greater stress on households‟ budgets.
The
provision of clean water to consumers entails a cost both in terms of initial
capital outlay and ongoing operation, maintenance, management and extension of
services. However, because of poor planning of cost-recovery, a lack of
government funding and inadequate tariff rates, the ability of water services
sector to recover costs is often limited even for routine operation and
maintenance. This has led to problems in providing sustainable water services
to poor communities.
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