For most residents of Tanzania's commercial capital Dar es Salaam, the announcement of private sector participation in the provision of water was nothing new. Years of decay and neglect have meant that the vast majority have relied on the private sector for their daily supply.
On any given day, young men pushing wheelbarrows stacked high with 20-litre water jerrycans can be seen weaving their way through congested traffic. Another common sight is that of women carrying buckets of water on their heads as they shuttle across the city to and from water points. And, at various corners around the city, water tankers sell it to the needy.
The Dar es Salaam Water and Sewerage Authority, a semi autonomous government agency, has only about 98,000 direct customers in a city of about 2.5 million people.
"The vast majority of people purchase water indirectly from the authority either from vendors or from neighbours with private connections," WaterAid Tanzania, an organisation dedicated to the provision of safe water, sanitation and hygiene to the poor, said in a briefing paper issued recently.
Davis, a consultant company on the privatisation of the water authority, conducted an engineering study in 1997, which estimated that about US $620 million would be required to repair the existing infrastructure and to expand the network so as to reach the unconnected communities.
Davis also pointed out that in 1997 customers to the utility were paying 0.29 shillings (0.029 US cents) per litre while vendors were selling water at prices varying from one shilling per litre, when the supply was good, to 20 shillings when there were shortages.
In addition, of the 268 million litres of water pumped from rivers for daily use by Dar es Salaam residents, more than 43 percent is lost before it even reaches the city, 18 percent leaks through a faulty system and a further 11 percent is lost through illegal taps and non-payers. This, according to WaterAid, meant that the authority was being paid for just 8 percent to 16 percent of the water it produced.
Therefore, there was clearly a need for reform of the water sector. And the reform, which has seen City Water, a private company, sign a 10-year lease contract to manage the billing, tariff collection, operation and routine maintenance, began in earnest in August. Meanwhile, the state utility would rehabilitate and expand the network.
According to WaterAid, this arrangement is sound as the utility would maintain and expand the system with loans. City Water would then collecting revenue from areas where the system has been fixed and use a percentage of the revenue to pay back the loans.
Impact on the poor
Alongside a 30 percent price increase, one of the first announcements that the new company made was a two-tier billing system aimed at keeping the price of water low for the poor. Under this system consumers who use less than five cubic metres of water would pay 30 percent less for their water than those who consume more.
WaterAid said that the proposed 30 percent increase was fair, but alongside the metering programme that City Water would introduce, the increases were likely to be felt especially by the poor who do not have individual connections and have to buy water from vendors who will pass down the price increases.
However, City Water chief executive officer Mike O'Leary said that the new system would be directly beneficial to the poor.
"The fundamental message that we are putting out is that people will get their water cheaper if they support us and the rehabilitation of the system," he said. "Otherwise, they may keep paying a lot more if they keep buying from third party operators."
He said that the vendors would still have a role to play as it would take a while for the network to be rehabilitated and meters introduced, which is not due to begin until January 2004.
WaterAid and City Water agreed that developing more community water points would reduce the price for most of the city residents. O'Leary said this was the only economically viable solution for providing regular access to clean water.
But WaterAid warned that illegal connections were so widespread that the rehabilitation of the network would disrupt the daily activities of several communities.
The state water authority, meanwhile, is confident that with City Water in charge of billing and operations, the public would become more conscious of the value of water and communities would get more involved in the management of supplies.
And, although just $164 million of the $620 million necessary for a complete rehabilitation of the authority's system had been approved, the authority's director of technical services, Boniface Kassiga, was confident that after the initial work had been begun and improvements were acknowledged, further backers would step forward.
"We need to get this existing system back up and running, and then we can talk about expansion," he told IRIN.
Observers in Dar es Salaam, who experience frequent water shortages and leaks, have welcomed the reforms, but believe that the system has so many problems that City Water and the authority would be so busy "fire fighting" that some time would elapse before any real strategic changes were implemented.
And with the controversy and negative publicity that has shrouded the privatisation of some of Tanzania's public services, O'Leary is quick to point out that change would come, but that it would take time.
"There are already some improvements in some areas like Sinza and Mwenge [suburbs], but it will take at least three or four years before people fully see the impact," he said.