Four lessons that helped Dhaka’s water services turnaround
September 2018
“We were a water-crisis city. It was a very difficult period, and we needed a total turnaround,” said Taqsem Khan, managing director of the Dhaka Water Supply and Sewerage Authority (DWASA).
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Since 2007, Dhaka’s water utility has been turning around its water services without leaving the poor behind. By creating closed hydrologic systems to break the megacity down into more serviceable and manageable zones, otherwise called district metered areas (DMAs), the utility has swiftly rehabilitated networks and connections, is now able to detect and reduce leaks, and delivers pressurized, clean water 24 hours a day to everyone, including the poor.
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The utility’s top management has also adroitly pushed through sensitive but essential reforms, and tested and validated its assumptions about the technical as well as financial viability of connecting slums. DWASA has thus become South Asia’s replicable model of an inclusive, enterprising, and commercially viable urban service utility.
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A major reason for DWASA’s turnaround has been the $212.7 million ADB-financed Dhaka Water Supply Sector Development Program (DWSSDP), under a multi-donor partnership for the entire urban water sector in Bangladesh. The partnership combines sweeping yet pragmatic and phased reforms, innovative technology and management approaches, and a determination to connect slum areas.
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ADB had four lessons in mind to mitigate the risks of investing in DWASA based on valuable lessons from projects implemented elsewhere in Bangladesh. These lessons, along with the many factors that contributed to the transformation of the utility, are cited in the publication The Dhaka Water Services Turnaround. Here are the lessons and how they were applied to the design of DWSSDP:
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Use phased, performance-based funding to motivate executing and implementing agencies to keep projects on schedule.
Disbursements were timed to coincide with the achievement of performance milestones. The program comprised a $50 million program loan disbursed over two tranches to cover sector reforms, and policy conditions and actions; a $150 million project loan to cover infrastructure rehabilitation and construction; and $2.5 million technical assistance grant. -
Prioritize the financial performance and autonomy of local water supply bodies through double-entry accounting systems, separate water supply accounts, staff training, and support for the move to public-limited-company operating models.
Of the two DWSSDP loans, the first required policy, sector, regulatory, legal, and institutional reforms. At the same time, infrastructure works were to be implemented under the second loan. -
Minimize processing and implementation delays by offering fewer contracts and procurements.
The project loan (infrastructure investments) covered only six major contracts for civil works to improve the distribution network. Limiting the number of contracts tended to increase administrative efficiency. Moreover, each one was designed as a performance-based contract, where contractors were paid according to their ability to meet stipulated performance criteria (nonrevenue water reduced to a desired level and continuous supply provided). -
Engage local community involvement through extensive consultations to ensure stronger commitment and smoother implementation.
DWASA contracted with nongovernment organizations with credibility and experience in slum areas to disseminate information about the project, and organized water user groups to manage the new piped water supply networks to be built in their areas and manage collections.
In addition to these, ADB’s design for the DWSSDP combined a policy-based loan to catalyze policy reforms, and a project loan to provide funds for infrastructure investments through an instrument called “sector development program.” “It’s a way of keeping infrastructure projects on time, on schedule, and on target, while leveraging the policy reforms to create an enabling environment,” according to Suzanne G. Barbin, then associate project officer at the South Asia Department (SARD). Urban Sector Group Chief Manoj Sharma, then SARD project officer, added: “With critical knowledge and insights gained from the DWSSDP, we’ve designed and are implementing a similar, highly successful project in Rajasthan, India, that combines infrastructure investments with policy reforms.”
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ADB’s ultimate goal in investing in DWASA was to help unclog the urban economy and improve public health conditions. The unreliable supply of clean water, a basic need for everyday living and industry, was a constraint on growth. But a successful major investment could reduce child mortality and improve general health and women’s productivity, especially by cutting the time and the effort needed to fetch and store water and care for family members with waterborne diseases. A successful investment could also help ease groundwater depletion and reduce the waste from pipe leakage and water theft.
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To learn more about the problems hurdled and the reforms implemented that led to DWASA’s breakthrough, read the 2017 ADB publication, The Dhaka Water Services Turnaround.