Cost and financing of rural and small towns water services delivery in Ghana

This note presents preliminary results from the WASHCost pilot studies in two districts of Ghana on the cost of service delivery using the Life Cycle Cost Approach (LCCA). The main cost components proposed by WASHCost for the LCC, are: capital expenditure (CapEx), operating and minor maintenance (OpEx), cost of capita (CoC), capital maintenance expenditure (CapManEx), and the expenditure with support cost. The results shown are limited to only CapEx, OpEx and CapManEx due to insufficient data on cost of capital and the support cost. The systems used for the study cover the main technologies for delivering rural and small towns’ water services in Ghana: multi-village piped scheme (MVS), single-village piped scheme (SVS) and boreholes with hand pumps (BHPs) also known as water point sources. These technologies also give an indication of the levels of service: the BHPs provide the basic water supply of 20l/c/d while the piped water schemes provide an intermediate supply which is a mixof house connection (60l/c/day for 20% of users) and public standpipe (20l/c/day for 80% of users). The CapEx per person was adjusted by inflation and compared for the various technologies. The OpEx and
CapManEx adjustment was made for inflation and annualised based on the number of years of operation to get an annual equivalent for the period. The LCC was used to determine the annual cost of water service delivery by annualising the CapEx using an inflation of 15% and a useful life of 20 years and adding the annual OpEx and
CapManEx to obtain the total annual cost of service delivery. The cost of operating and maintaining the systems (OpEx and CapManEx) reveals a wide variation. The OpEx for
piped schemes is generally higher than the CapManEx but in the case of the BHPs it is the reverse. The CapManEx, which refers to expenditure to keep the asset in good shape such as repairs and replacement of parts in the case of the MVS is about 12 times that of the SVS. CapManEx for the SVS is also about 5-7 times that of the point source.
Financing arrangement for water schemes was as follows: ESA 90%, District Assembly 5 %, and community contribution 5 %. However, since 2009 the new government has abolished the community contribution. There are new financing arrangements emerging where the private sector provide all the funding and sell to the community members. The financing and cost recovery arrangements are not yet clear. The financing of Capital Maintenance Expenditure is not clear. Planning and budgeting The Community Water and Sanitation Agency (CWSA) is the government agency that facilitates rural water provision. CWSA prepares the Strategic Investment Plans (SIPs) for the provision of new facilities where the per capita cost figure for planning in the preparation of the SIPs is US$ 45per person. The information provided in the SIP guides project preparation but actual cost of project implementation is established by the market through the bidding process. [authors abstract]

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