CORPORATIZING DHAKA WATER SUPPLY AND SEWERAGE AUTHORITY, BANGLADESH by Iffat Yesmin Mannan A thesis submitted to the School of Environmental Studies In conformity with the requirements for the degree of Master of Environmental Studies Queen’s University Kingston, Ontario, Canada (January, 2009) Copyright ©Iffat Yesmin Mannan, 2009 Abstract Efforts to commercialize water supply and sanitation in Dhaka, Bangladesh, have been pushed vigorously by internal and external proponents of neo-liberalism. The thesis takes a critical look at these developments and analyzes the role of multinational finance institutions in this process. In particular, it looks into the role of these finance institutions in funding reform projects to corporatize Dhaka Water Supply and Sewerage Authority (WASA), examining the impacts on end users, especially marginalized sections of society. The thesis describes how, in the process of corporatization, Dhaka WASA is and will continue to be more assertive in its commercial orientation than it was previously. The paper also studies a highly touted ‘successful’ co-operative model for revenue management called Program for Performance Improvement (PPI), seen by some as an alternative to privatization. I argue that the model in fact emerged as a consequence of the commercialization efforts of neoliberal reforms and that the revenue management model has created an isolated business unit with a reclusive management that undermines the egalitarian objectives of the water utility as a public service entity. ii Acknowledgements This research could not have been completed without the many people who directly and indirectly supported and helped me throughout the past two years. First and foremost, I would like to thank my supervisor, David McDonald, for his dedication and input throughout, and also for the warm welcome his family provided. My committee members, Dr. Heather Jamieson and Dr. Gary VanLoon for their feedback and input, particularly in the beginning stages. I would also like to thank Dr. Peter Hodson for supporting my admission into the MES program, and Karen Toppings for helping me throughout in the process of settling in this new country, Canada. I also want to thank all those who agreed to be interviewed for this research and those who provided documents, reports and other information; without them this research would not be possible. Thanks especially to Ekram and Shamim for their help in securing appointments for interviews at Dhaka WASA. A special thanks to Dr. Pamela Welbourn for her continuous support. To my fellow classmates you have made my experience in Canada worthwhile, thank you Peter, Estelle, Kevork and Colleen you guys are wonderful and special thanks to Paul for saving me from drowning even with a life jacket on, in Lake Ontario. And thank you to the kind and generous people of wonderful city of Kingston. The family— especially my father who encouraged me to travel to Canada for studies and my Mom— your phone calls and warm support helped me keep going. I am truly blessed to be around you people in my endeavor for higher studies. iii Table of Contents Abstract ............................................................................................................................................ ii Acknowledgements ......................................................................................................................... iii List of Figures ................................................................................................................................. vi List of Tables ................................................................................................................................. vii Chapter 1 .......................................................................................................................................... 1 Introduction and Methodology ........................................................................................................ 1 1.1 Overview of Research ............................................................................................................ 1 1.2 Research Purpose, Approach and Objectives ........................................................................ 4 1.3 Thesis Organization ............................................................................................................... 6 1.4 Methods and Methodology .................................................................................................... 6 1.4.1. Interview Process ..................................................................................................... 7 Chapter 2 ........................................................................................................................................ 10 Contextual Overview ..................................................................................................................... 10 2.1 Introduction .......................................................................................................................... 10 2.2 Corporatizing Public Resources ........................................................................................... 11 2.3 Corporatized Service Units .................................................................................................. 14 2.4 The Larger Trend toward the Commodification of Water ................................................... 19 2.5 A Contextual Overview of Commercialization ................................................................... 21 2.6 The United Nation’s Model of Regulatory Framework ....................................................... 26 2.6 Corporatization in Bangladesh ............................................................................................. 28 Chapter 3 ........................................................................................................................................ 34 Corporatizing Dhaka Water Supply and Sewerage Authority ....................................................... 34 3.1 Introduction .......................................................................................................................... 34 3.2 The History of Dhaka WASA: Reforms Underlying Commercialization ........................... 35 Source: Talukder, SH. (2006) ................................................................................................ 37 3.3 Legislative Changes in the WASA Act 1996 ....................................................................... 44 3.4 Fitting Dhaka WASA into a Public Limited Corporation Model ........................................ 55 3.4.1 Cost Recovery ................................................................................................................... 57 3.4.2 Regulatory Commission .................................................................................................... 64 3.4.3. Dividing Dhaka into Smaller Hydraulically Isolated Districts ........................................ 70 iv 3.4.4 Performance Based Remuneration .................................................................................... 72 3.4.5 Public Awareness Campaigns and the Increased Cost of Water ....................................... 73 3.4 Conclusion ........................................................................................................................... 73 Chapter 4 ........................................................................................................................................ 75 Case Study: Revenue Management Model of Employees Co-operative ....................................... 75 4.1 Introduction .......................................................................................................................... 75 4.2 The Background of the Program for Performance Improvement Model ............................. 78 4.3 The Terms and Conditions under which the PPI Operates .................................................. 87 4.4 An Alternative to Privatization? ....................................................................................... 107 3.5 Conclusion ......................................................................................................................... 110 Chapter 5 ...................................................................................................................................... 113 Conclusion ................................................................................................................................... 113 5.1 Introduction ........................................................................................................................ 113 5.1 General Conclusions .......................................................................................................... 113 5.2 Recommendations .............................................................................................................. 114 References .................................................................................................................................... 115 Appendix- A: Ethics Approval .................................................................................................... 121 Appendix B: Interview Guide ...................................................................................................... 122 v List of Figures Figure 2.1 Generalized Institutional Framework for Corporatized Water and Sanitation. ............ 27