Throughout this MOOC, we have discussed the challenges of providing water and sanitation services in less developed countries. Along the way, we've seen that providing these services at scale in a financially sustainable manner. There's more complicated and challenging than the development community than perhaps you once thought. Indeed, we've been confronted with many failures in the water an sanitation sector. However, I want to conclude the main content of this MOOC with a discussion of what appears to be a resounding success, the reform of the Phnom Penh Water Supply Authority. Before we discuss the reform of the Phnom Penh Water Supply Authority, I want to make sure that you've done two things. First, I want you to have watched the video in thePhnom Penh Water Supply Authority entitled The Connection. And second, I want you to have read the teaching case, Oksung Chung and the transformation of the Phnom Penh Water Supply Authority. You need to have done both of these things before watching the rest of this video. I hope you enjoyed the video about the reform of the Phnom Penh Water Supply Authority and reading the teaching case. Isn't this an inspiring story? Now I'm going to share with you some of my own observations about the Phnom Penh case and update you on a few things that have happened since the teaching case was written, then I'll give you some question about the Phnom Penh case that I'd like you to answer on the discussion forums for this session. I'm going to organize my observations about the case around the steps in our conceptual framework. Let's start with step one, understanding status quo conditions. The Phnom Penh case emphasizes the importance of first figuring out what's going on. Do you remember what Oksung Chung did when he first arrived in the Phnom Penh Water Supply Authority? For a month, he just watched to understand what was going on. What he discovered where there were three groups of employs. As those who work hard, those who work corrupt and those who work disengage. But understanding status quo conditions also involves understanding local politics and specially those the situation facing the poor, unconnected household. The teaching case and video repeatedly emphasize that Oksung Chung, and his staff paid a lot of attention to getting to know local conditions such as how vendors were stealing water from the pipe distribution system at night. This enabled them to craft solutions that were appropriate for this specific time and place. You will recall the Manila Water did something very similar after it took over control of their concession in the East Zone of Manila. They established an organizational structure and culture that enabled them to work with people at the local level to find solutions that addressed local political realities. Step two in our conceptual framework is understanding the dynamic baseline. Oksung Chung spent time getting the data on private water connections. The French expert wanted to put ten people on the job, but Oksung Chung knew that this traditional way of doing things continue with business as usual was just too slow to accomplish wh at he wanted to do. He put 100 people in the job and manage them himself. Step three is to design a policy alternatives. Here, I would emphasize the importance of Oksung Chung on the pricing and tariffs, especially to serve the poor. He knew he had to mobilize more revenues to accomplish his objectives. This requires installing meters and implementing a volume metric tariff. The more water you use, the higher your water bill. Here are Oksung Chung and the downers work together. In fact, he needed the downers on his side during the debates with other stakeholders over tariff increases, but the bottom don't understand the pressure hand to accept wrong conditionalities. He already wanted to install our meters and implement volume metric pricing. The fact that the World Bank in Asian Development Bank may tariff perform a condition that their launch gave Oksung Chung the power that they needed to persuade the opponents to tariff reform. Donor's also helped by insisting on more autonomy for the Phnom Penh Water Supply Authority, something Oksung Chung needed to recruit and retain the best staff. Step five is understanding casual relationships. How the implementation of policy alternatives changes outcomes. In my mind, the most important lessons from the teaching case about causal relationships involve leadership and political change. Oksung Chung needed a strategy to convince parliament and the prime minister to adopt tariff reforms. His strategy was to focus on poor households and to describe how they were struggling with the high cost of water vendors, and poor water quality. He collected 10,000 thumbprints as signatures to demonstrate political support he had from the poor. Again, it was his intimate knowledge of local politics and what was needed to change politicians's minds that led to his success. It was also understanding the cause of relationships between politics, revenues for his organization, increased salaries for his staff and the productivity of the utility. He had to handle the politics of raising tariffs in order to increase revenues in order to retain his staff. Once his staff could afford to stay in their jobs, they could then work to expand connections. This set in motion a virtuous cycle in which more connections led to more revenues and more revenues led to better services, and higher customer satisfaction. Which in turn, made customers happy to pay their water bills. Step six in our conceptual framework is the criteria used to assess outcomes from the policy alternatives. Here, the lesson I take away from the case is the importance on focusing on fairness in serving poor households. Serving poor households was not a problem for the utility to solve, it was Oksung Chung's main objective. In fact, Oksung Chung's value proposition was that he could create high quality, financially sound water utility and serve the poor. This focus on what was good for poor households provided the Phnom Penh Water Supply Authority with both powerful political support and the moral authority to push forward with reform. Now, let me give you a brief update on developments since the teaching case was written and the video was made. In March 2012, the Phnom Penh Water Supply Authority sold 13.5% of its equity to private investors in the Cambodia Security Exchange. The Phnom Penh Water Supply Authority was the first stock to be listed on the Cambodia Security Exchange. By 2016, there were still only three stocks listed. Over 13 million shares of Phnom Penh Water Supply Authority, stock were offered for sale price ranged from $1 to $1.57 per share and initial public offering was over subscribed. In 2014, the Phnom Penh Water Supply Authority had revenues of about 39 million US dollars and net profit was about 11 million US dollars. Shareholders were paid annual dividends in March 2015 of about $2 million. The share price of the time of this dividend was about $1.21, which worked out to a dividend rate of about 2%. In April 2016, the stock price was about $1.25, a 20% decline from the initial public offering. Today, the Phnom Penh Water Supply Authority remains a publicly owned utility with private investors holding a small equity stake. To the best in my knowledge, there is no water regulator. Now let me pause some questions on five aspects of the none pan case. You should address these on the discussion form for the session. Here is the first set of questions. In your opinion, what factors contributed to the success of the Phnom Penh Water Supply Authority reforms? Which of these factors were necessary or essential to the success of the reformed process? Which of these factors of any or combinations of factors do you feel were sufficient to guarantee success? Here's a question on a second aspect of the teaching case. One way that Oksung Chung got lucky was not noted in the case. Some of the individuals who worked for the World Bank another donor on the reform of the Phnom Penh Water Supply Authority were among the most experienced talented water supply professionals in this organization, I think they did a great job. They knew what donors could and couldn't do in such a situation. So, the question is what do you think would have happened to Phom Penh without this donor's support? Here's a question on the third aspect of the case. There were two other possible contributing factors to the success reform of the Phnom Penh Water Supply Authority. First, the rural water supply from the River was abundant and nearby. And second, the cost of constructing piped water networks in Phnom Penh is extremely low. Excavation is easy and the terrain is flat. So the question is if these physical conditions had not been so favorable, do you think the Oksung Chung would have been as successful as he was? Here's a set of questions on a fourth aspect of the case. In our MOOCs, we have discussed various issues related to political economy and the municipal water and sanitation sector like water vending and corruption. These factors often conspire to thwart good faith attempts to improve municipal water and sanitation services. To what extent were these factors at play in Phnom Penh? How is Oksung Chung able to overcome them? What key lesson should policy makers and water utility managers learn from the Phnom Penh experience about addressing rent seeking, and corruption? And here's our last set of questions on a fifth and final aspect of the case. Why do you think the Phnom Penh Water Supply Authority was partially privatized? Was this a good idea? Do you think the company should be returned to full public ownership? If the company continues to have private investors within equity stake, should a water regulator be established? If so, suppose you are the head of the water regulatory authority, what would your main priorities be? What would you try to accomplish? Thanks for watching this video.
