Cost recovery for operation and maintenance

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Users pay the cost for operation and maintenance

Accepted as a rule, but not always covering all costs in sewered systems. Poor often cannot afford the fees. Also used for communal facilities that are managed by group of families, paying monthly rates, for example in Nairobi (http://wupafrica.org/toolkit/resources/caseExamples/narrative-form.html). In South Africa differential tariffs are used to support the poor, and no tariff is charged to families using less than 6000 litters of water per month (http://www.joburg.org.za/services/water3.stm). Potential relates to the need to sustain services.

According to the landscaping study, this principle has been identified mainly in water related service delivery approaches. The idea is that actual users pay the cost for operation and maintenance as a contribution to the whole system.

The principle that users should pay for recurrent costs has gained widespread acceptance in recent years, specifically for the rural sector in many countries. In the urban context, users use to pay through regularised billing in many cases. However, tariffs are often set too low (sometimes for political reasons) and generally do not cover the true costs of system replacement over the long-term.

The tariff structures through which cost recovery strategies are put in place, as well as costing mechanisms need better incentives, strategies and support to enhance efficiency (benchmarking, water metering etc.). The -poor needs differential (social) tariffs. In rural Gujarat 25 water user committees have successfully started to set-up operation and maintenance funds. However, most urban and rural schemes in India survive on large operating subsidies. .

This could be the most suitable financial model for service delivery, which could even have a higher impact if also repairs and replacement were accounted and financed.

Partial Subsidies in latrine programmes

Users contribute in cash or kind or pay connection fee.

Good approach to enhance ownership. Also needed for replacement. Some examples of no-subsidy for hardware, but poorest sections may require subsidy. The governments of India and Bangladesh suspended subsidies because they did not reach the poor but then re-introduced them at lower levels (the equivalent of about USD 10) in order to reach the poorest of the poor. Management of subsidies remains a challenge. In Ouagadougou (Burkina Faso): a surtax on water supply is applied by ONEA, an autonomous public water and sanitation company, to subsidize on-site sanitation facilities (25% contribution and supervision of trained masons). 20,000 facilities have been constructed in schools and households. Management of funds presents difficulties, but approach was extended to other towns (http://www.wupafrica.org/toolkit/resources/pdf-files/good_practices/good_practice_Africa.pdf) Good potential to reach the poorer sections of society