PrintPast Issue: July 2005
New GPOBA Projects
GPOBA has awarded technical assistance for several projects this past quarter. The technical assistance will design Output-Based Aid schemes for projects that will require subsidies ranging between US$0.5 million and US$5 million, and which GPOBA has been requested to fund.
Armenia Water and Sanitation
The government of Armenia would like to reduce its financial support for water supply and sanitation, leaving the sector autonomous and financially independent. Toward that end the government is concluding a lease arrangement with a private operator to improve efficiency, expand service, and ensure affordability for the most vulnerable consumers. GPOBA has approved technical assistance of US$300,000 to help design an output-based aid program that will target assistance to poorer consumers who would otherwise have difficulty paying tariffs as they rise to levels that fully recover costs. The amount of subsidies required will be explored during the technical assistance.
Vietnam Leakage Reduction and System Expansion
In Ho Chi Minh City the World Bank estimates that only about 50-60 percent of households have a direct connection to the water supply system. The system is plagued by inefficiencies due to leaks, poor metering, and illegal consumption. GPOBA has approved technical assistance of US$445,000 for a proposed output-based aid scheme to expand water supply to the poor and reduce leaks in the distribution system. Subsidies needed for the pilot scheme will be estimated as part of the technical assistance.
Mongolia Telecommunications Project
The Government of Mongolia has implemented a telecommunications reform program leading to effective liberalization of all market segments. The Government aims to significantly increase the number of communities and households with telecommunications access. Currently, those living in the capital city and larger cities have access, but many of the rural poor have to travel long distances to use a telephone. GPOBA has approved Technical Assistance funding of US$200,000 to design an output-based aid scheme to provide access to herder communities, and a rural community. GPOBA is also considering providing subsidies for the pilot projects.
Expanded Access to Water Services in Periurban Areas of Manaus, Brazil
In the Brazilian city of Manaus rapid urbanization and lack of proper land use and urban planning have led to sprawling periurban areas, often with no access to water and sanitation. To help bring services to these communities, GPOBA has approved technical assistance of US$385,000 to design an output-based aid scheme for a periurban area in the northern part of the city. Estimated subsidies for the pilot scheme will be explored as part of the technical assistance.
Senegal On-site Sanitation Project
Senegal is faced with widespread poverty and as a result, in Dakar, 30% of the population does not have any excreta disposal systems and open defecation remains a prevalent form of sanitation. The Government of Senegal is implementing a Long Term Water Project with the objectives of increasing access to sanitation services to the poorest segments of the population living in the peri-urban areas of Dakar. GPOBA Technical Assistance of US$175,000 will allow the Government to pilot an OBA approach under the framework of the Long Term Water Project.
Egypt Waste Water Project
In Egypt, about 85% of the population has access to drinking water services, but less than 10% is connected to a wastewater system. Insufficient sewerage connections and lack of waste water treatment pose both a health and environment hazard to the residents of Gharbeya, who belong to the lowest socio-economic strata of the region. In response to this, the Government of Egypt has set itself a target to expand sewerage connections to cover 11% of the population by 2007 and 100% by 2022. GPOBA has approved Technical Assistance of US$275,000 for the initial scoping phase to determine the size of the target market and the possibility of structuring a sustainable OBA scheme.
Read more on these projects here.
New OBApproaches with an Update on a Water Program in Paraguay
In Paraguay constraints on the state water utility and the traditional model centered on water users associations called for a new solution to bring water supply to small communities. So the rural water agency, SENASA, agreed to implement a pilot output-based aid program to attract water companies to small towns, large villages, and periurban communities. The program proceeded in several phases so that it could incorporate lessons along the way. Early pilots had much success, leading to replication in other towns.
New OBApproaches on Measuring Risk
When governments agree to make output-based payments, they assume a liability not unlike that created by taking on debt. With these payments subject to much uncertainty, governments may benefit from estimating both the costs of the commitments and the new fiscal risks they create. If the output-based scheme involves long-term commitments of large and uncertain amounts, quantifying its costs and risks is well worth the effort.
News Flash
The GPOBA Web site now has a new look. Please visit www.GPOBA.org and let us know what you think.
GPOBA has new application forms, tailored to the type of funding required.
A Memorandum of Affiliation has been signed between the Private Infrastructure Development Group (PIDG) and GPOBA effective June 2, 2005. PIDG is a multi-donor arrangement and has established the following initiatives: Emerging Africa Infrastructure Fund (EAIF), Infrastructure Development Company (InfraCo), Local Currency Guarantee Facility (Guarantco), and the Technical Assistance Facility (TAF). PIDG is also affiliated with the Project Development Facility (DevCo).
PIDG and GPOBA wish to collaborate to promote and strengthen each other''''s aims and objectives. For example, GPOBA will work with the TAF (Technical Assistance Facility) to bring together projects for the PIDG initiatives to take forward, in accordance with the Operating Principles of GPOBA and the Operating Principles and Procedures of the TAF
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