Value and Lessons from Using PSIA Advantages flexibility

Value and Lessons from Using PSIA Advantages: - flexibility on methods and questions (‘non-traditional’ PSIAs); - opportunity for dialogue on ‘difficult’ issues, on incentives, on power and stakeholders, on champions for reform; - recommendations are not only about ‘what’ policies to implement , but also about feasibility: ‘who’ and ‘when’ can implement them; Challenges: - maintaining the dialogue; unclear champion or counterpart; Lessons: - having an ongoing project as platform for implementing recommendations;

Ukraine: Supporting Reforms in WSS through Enhanced Accountability (1) identify the major obstacles to accountability to end users in the water supply sector; (2) define the incentives and disincentives to sector stakeholders to introduce greater transparency and accountability in the sector, and potential champions for such reforms; (3) recommend short- and long-term measures for strengthening citizens’ capacity to demand greater accountability regarding water service.

The status quo: a low-level equilibrium of citizen engagement and providers’ transparency Almost universal water coverage Below cost recovery tariffs Passive consumers No systematic reporting of water quality indicators Municipal services – not a prime area for CSO activity High image of water utilities relative to other service providers

Multiple contracting models … creating confusion among both consumers and providers on roles and responsibilities. model 1 Utility Customer apartment model 2 Utility model 3 Utility Housing maintenance company (zhekh) Home-owner’s association or cooperative Customer apartment model 4 Utility model 5 Unified billing center Customer apartment Utility Single-family house

Multiple billing Models End-consumer meter Utility House or apartment meter Customer house or apartment Building-level No meter Utility Building meter (read by zhekh, head of HOA/ cooperative) Customer apartment Consumption norm Customer house or apartment

A ‘high-performing’ equilibrium requires both the right incentives and capacity for DFGG Incentives (tipping points) Capacity (enabling environment) Performance monitoring cost recovery tariffs Ex. : deterioration of water quality Public information Clear responsibilities

Champions for transparency and accountability

DFGG Roadmap: Short Term A sector information system and benchmarking, making key indicators available to the public Standardized water quality tests and public information on drinking qualities of water Mandatory utility websites Public education on consumer rights and water service indicators Institutionalized feedback from citizens on quality of services.

DFGG Roadmap: Long Term Move to incentive-based regulation expanding the authority of the National Commission for Regulation country-wide Clarify division of responsibilities for water network maintenance Establish clear complaint-handling mechanisms Move to a more robust metering system.