Pakistan's Decentralization: Implications and Challenges for Delivering Water and Sanitation Services

1. Pakistan's Decentralization: Implications and Challenges for Delivering Water and Sanitation Services Raja Rehan Arshad Water and Sanitation Program for South Asia

2. Big Bang Decentralization • Local Government Ordinance promulgated on August 14, 2001 • Devolution of political and fiscal authority to elected Local Governments • Decentralization of administrative authority Water and Sanitation Program for South Asia

3. Pre-Devolution Context • Four Provinces • Sind • Balochistan • North-West Frontier Province • Punjab • Districts • Sub-divisions for deconcentrated arms of the provincial government administration and technical line departments • W&S service delivery being a provincial responsibility Water and Sanitation Program for South Asia

4. Major Impediments • Overlap of jurisdictional assignment • More than one technical department responsible for W&S • Public Health Engineering Department, and Local Government and Rural Development Department in rural areas • W&S authorities and/or municipalities in urban areas • Centrally planned system of service delivery • Absence of accountability between the providers and the client Water and Sanitation Program for South Asia

5. Major Impediments (Cont…) • Lack of capacity and appropriate institutional framework for sectoral planning; preparation of financially viable sector investments; and management of demand responsive investments • Absence of strategic vision – in particular the implications of urban and rural transformation for the W&S sector. Water and Sanitation Program for South Asia

6. W&S Service Delivery Situation • W&S systems investments without consideration of O&M arrangements • Centrally financed, operated and managed • In the last decade, move towards community ownership, and operation and maintenance, but old systems still a major liability • Both in rural and urban, public sector water utilities heavily subsidized by the government • In rural areas, cost recovery less than 10 percent • In urban areas, cost recovery between 10 to 40 percent Water and Sanitation Program for South Asia

7. Local Government Ordinance (LGO) 2001 • Creation of approximately 100 district governments and district councils (average population of a district is one million) • Creation of approximately 350 tehsil municipal administrations and tehsil councils (average population of a tehsil is 500,000) • Creation of approximately 7,500 union administrations and union councils (population ranges from 18,000 to 28,000) Water and Sanitation Program for South Asia

8. LGO 2001 (Cont …) • Direct elections have been held only at the Union level • The Deputy Mayor of the Union Council is a member of the Tehsil Council • The Mayor of the Union Council is a member of the District Council • All the union councilors in a tehsil and district elect the Deputy Mayor and Mayor for the respective tehsil and district • The Mayor and Deputy Mayor have to contest on a Joint Ticket (one vote for both) Water and Sanitation Program for South Asia

9. Salient Features of the LGO 2K1 • Complete fiscal authority to each level • However during transition, the province is maintaining some decision making with regards to appointment of staff, setting of tariffs and tax structures, etc. • Rural – Urban divide has been removed • Mega cities (million plus) have become City Districts and the remaining districts are referred to as Common Districts comprising urban and rural areas • District, Tehsil, and Union are not subordinate to one another • Principle of Subdiarity is the main theme • Tax base for each level Water and Sanitation Program for South Asia

10. Salient Features (Cont …) • The new law has: • Decentralized service delivery providers and assets (approximately 30 provincial departments ranging from social services such as health and education to agriculture and soil conservation) • Removed jurisdictional and functional overlap of institutions Water and Sanitation Program for South Asia

11. Salient Features (Cont …) • Introduced a new system of transparency and accountability • Empowered local governments to enter into a range of institutional arrangements – from community owned systems to contracting out and contracting in of services • In order to ensure flexibility district governments can transfer functions to the lower levels Water and Sanitation Program for South Asia

12. Salient Features (Cont …) • The lower levels can assume functions provided they finance them themselves and get appropriate clearances • To strengthen participation two institutions have been created: • Village/Neighbourhood Councils, which will be elected • Citizen Community Boards, which will have to be registered with the district government Water and Sanitation Program for South Asia

13. COMMON DISTRICT ZILA COUNCIL-DISTRICT GOVERNMENT TEHSIL COUNCIL-TEHSIL MUNIPAL ADMINISTRATION UNION COUNCIL-UNION ADMINISTRATION VILLAGE COUNCIL/NEIGHBOURHOOD COUNCIL CITY DISTRICT ZILA COUNCIL-CITY DISTRICT GOVERNMENT TOWN COUNCIL-TOWN MUNICIPAL ADMINISTRATION UNION COUNCIL-UNION ADMINISTRATION VILLAGE COUNCIL/NEIGHBOURHOOD COUNCIL Different Tiers Water and Sanitation Program for South Asia

14. Key Outcomes • Rationalization of agencies responsible for service delivery • For W&S, PHED, LGRDD, Physical Planning and Housing and Urban Local Councils have been merged at the Tehsil level • Removal of the rural-urban divide – creating space to achieving financial and management efficiencies through the creation of regional municipal management units, i.e., the Tehsil Municipal Administration Water and Sanitation Program for South Asia

15. Key Outcomes (Cont …) • Introduction of efficiencies through encouragement of institutional and organizational robustness, in particular the introduction of: • Subsidiarity • Co-Production • Public-Private Partnership • Regional management of services including regional utilities, management of multi-village W&S systems, etc. Water and Sanitation Program for South Asia

16. Key Outcomes (Cont …) • Focusing on direct lines of accountability with a focus on information transparency and localized decision making • Participation of citizens in decision making and service delivery through the Citizen Community Boards (CCB’s), through which 25 % of the development budget has to be spent Water and Sanitation Program for South Asia

17. Key Outcomes (Cont …) • Provincial Finance Commissions have been established for intergovernmental transfers • Criteria includes: • Population • Poverty • Backwardness • Resources • Incentive (Punjab only) Water and Sanitation Program for South Asia

18. Extension of Local Government • Village Councils/Neighbourhood Coucils • An elected body representing the interests of a particular village or neighbourhood • Citizen Community Boards (CCB’s) • Non-profit organizations or stakeholder associations working on development related and social welfare activities Water and Sanitation Program for South Asia

19. Tehsil Municipal Administration (TMA) • Responsible for Municipal Services in rural and urban areas • Other levels of local government have no responsibility and/or role for municipal services except in City Districts, where the District (Metro) level is responsible for macro municipal services mainly (bulk water supply, etc.). Distribution and solid waste is still the responsibility of TMA and/or Union Administration • Average population of a tehsil is 500,000 Water and Sanitation Program for South Asia

20. TMA (Cont …) • TMA has the flexibility to balance decentralized service delivery against economies of scale • Can have multi-village management • Single village management • TMA is responsible for three key components of municipal management: • Sectoral planning • Capital works • O&M Water and Sanitation Program for South Asia

21. CO at non- TMA HQ CO at TMA HQ CO at non- TMA HQ CO at non-TMA HQ CO at non- TMA HQ CO at non- TMA HQ TEHSIL MUNICIPAL ADMINISTRATION ORGANIZATION Tehsil Council Secretariat TEHSIL MUNICIPAL OFFICER General Estab./Admin. Audit Finance Planning and Coordination Infrastructure and Services Regulation • Accounts • Budget • Annual • 3 year rolling • Cost accounting • Revenue • Vigilance • (Detection and prevention of revenue leakages and losses) • Survey • (Revenue base – current and potential) • Spatial (Physical Planning) • Land Use Planning (Land sub-division, zoning, land use) • Development Facilitation/Control • Building Facilitation/Control • Housing, Site Development, Katchi Abadi Amelioration Plans • Coordination and liaison with neighbouring tehsils and unions/VC • Water Supply, Sewerage/Drainage • Sanitation • (Solid Waste) • Roads, Streets and Street Lighting • Fire Fighting • Parks and Open Spaces • Traffic Engineering • Facilities, Markets and Enterprises • Licenses • Regularisation of Tenure of Katchi Abadis • Land including Rights of Way, Drains • (Temporary tehbazari and encroachments) O&M Centres Working Under Chief Officer

22. Nature of the TMA • Body Corporate • Consist of a Tehsil Nazim, Tehsil Municipal Officer, Tehsil Officers, Chief Officers from the offices entrusted to the TMA • No distinction between a rural and an urban area in the law • Can further transfer responsibility to the lower tiers along with transfer of resources • Entire Tehsil space is a Rated Area for Property Tax purpose Water and Sanitation Program for South Asia

23. Nature of the TMA (Cont …) • Can contract out and contract in services • Upper tiers can transfer responsibility to the tehsil along with transfer of resources • TMA continues to be responsible for regulating and monitoring service delivery • Cannot borrow from the capital market • However, upper levels can extend advances or give loans Water and Sanitation Program for South Asia

24. Functions of the TMA • The TMA is exclusively responsible, in the Common District, for planning, capital investments and operation and maintenance of: • Spatial Planning (land use and zoning) • Development Facilitation and Control (site development and building control) • Municipal Services (water, sanitation, solid waste, roads, streets, street lights, graveyards, fire fighting, traffic engineering, abattoirs, parks and open spaces) Water and Sanitation Program for South Asia

25. Composition • All present Town Committees, Municipal Committees and Municipal Corporations • Provincial Government Departments which will be decentralised to the TMA: • Local Govt. and Rural Development Department • Public Health Engineering Department • Housing and Physical Planning (apart from the nucleus for the District) Water and Sanitation Program for South Asia

26. Subsidiarity • Provision has been made in the law for management of service delivery at the lowest appropriate level • Based on mutual consent, a function can be transferred by the TMA to Union Administration and/or Village Councils, along with transfer of corresponding resources Water and Sanitation Program for South Asia

27. Private Sector Participation • Provision has been made in the law for TMA to enter into contracts with the private sector as long as the former retains the responsibility of regulation and monitoring Water and Sanitation Program for South Asia

28. Authority to Restructure • TMA has the authority to restructure the sub-offices to meet the requirements of a particular tehsil • If a TMA transfers O&M responsibility to Village Councils and Union Councils, it will focus on regulatory and monitoring aspects • A primarily urban TMA might want to strengthen its urban centers Water and Sanitation Program for South Asia

29. Multi-Jurisdictional Management • The law allows for Multi-Jurisdictional management of services by Joint Committees of Councils to achieve economies of scale and scope. • Bodies such as Joint TMA Committees • Intra TMA bodies such as Joint Union Committees (across more than one tehsil) Water and Sanitation Program for South Asia

30. Accountability • The Tehsil Council and the Monitoring Committees formed by the Council are responsible for oversight over the TMA • The Union Council can also form committees to monitor the TMA’s work • Village/Neighbourhood Councils and CCB’s can also monitor TMA’s work Water and Sanitation Program for South Asia

31. Defining the Resource Envelope • There is a complete assignment of fiscal authority • TMA’s main tax base (Own Source Envelope) includes: • Property Tax • Transfer of Property Tax • Licence Fee • Rental of Municipal Property, etc. • Intergovernmental transfers from the provincial divisible pool are made as a single line transfer • Property Tax is collected by the district on behalf of the TMA Water and Sanitation Program for South Asia

32. Cont … • Complete fiscal authority allows the TMA to plan both for the long and short term, and to ensure that a hard budget constraint creates the pressure for linking service coverage targets with appropriate service levels Water and Sanitation Program for South Asia

33. Financial Management • The law procedures and bye-laws require the TMA’s to establish cost centers. The costing of services, by sectors and areas, will ensure that the TMA knows the nature and amount of subsidy for each service and will be better able to make choices regarding the level and extent of services Water and Sanitation Program for South Asia

34. Demand Responsiveness • Co-production requirements (CCB’s to contribute at least 20 % cash towards the capital cost) will ensure cost and management sharing of services Water and Sanitation Program for South Asia

35. Situation After 2 Years • Major capacity constraints • Some local governments moving ahead • Innovating new procedures and systems • Increasing OSR many-folds • Improving service delivery • Most local governments are still trying to find their way around Water and Sanitation Program for South Asia

36. Situation After 2 Years (Cont …) • Provincial governments are not allowing local governments to hire/fire • City Districts are feeling the pressure more as there is still some baggage of the old system which they are having to carry, e.g., Water and Sanitation Authorities, etc. Water and Sanitation Program for South Asia

37. Challenges • How to develop appropriate capacity at the Local Government levels? What incentive does the upper level have to build capacity of the local governments? • How to align external assisted projects/programs to the new decentralized framework? • How to minimize recentralization? • How to discourage parallel financing mechanisms and formula Water and Sanitation Program for South Asia

38. Challenges (Cont …) • Does the market respond to the lack of capacity challenge by creating private sector capacity? • Does the new institutional structure allow for cross-sectoral linkages between health, education and W&S? • Does decentralization bring about increased public private partnership? What are the factors that need to be considered? Water and Sanitation Program for South Asia

39. Challenges (Cont …) • How can key sector reforms be facilitated like corporatization of utilities, introduction of regional utilities, interface between local governments and communities/SSIPs? • What incentive does the upper level have to regulate service delivery? • How far will political pressures interfere with demand based service provision in a decentralized framework? Water and Sanitation Program for South Asia