Better water and sanitation services through a consumer rights based contract

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The joint UNDP/World Bank programme has been helping to tackle Albania’s water and sanitation problems, through the stimulation of and support to the cooperation between the Consumer Protection Commission (CPC) and the Water Regulatory Authority (WRA). Jointly they have develop a "model contract" between the providers of water and sewerage services and their customers. The contract protects the immediate interests of consumers, by integrating the provisions of the consumer protection law, while at the same time protecting the water and environmental resources of Albania, by including relevant clauses of the country's water and sewerage code.

The innovative aspects of this useful experience are multiple: 1) the use of a consumer rights approach to address issues related to access and quality of water and sanitation; 2) the adoption of a multi-thematic approach, which combines the consumer rights and the water management themes; 3) the use of the contract between water companies and consumers as a means to educate both parties on their rights and obligations, with respect to environment protection; 4) the use of the contract as an entry point to improve the quality of water and sanitation services.

Challenge or Opportunity Addressed and Short Background

Access to safe water and adequate sanitation are among the strategic priorities of the government of Albania. The recent decentralization and commercialization of water supply services have pushed water prices up but improvements in water supply services are lagging behind. For instance there are persistent issues related to frequent water cuts, the quality of water and the measurement and billing of water. The discharge and treatment of wastewater are major problems since the necessary infrastructure is lacking and there are very few wastewater treatment plants in the country. The recent upward trend in water prices has resulted in strong consumer dissatisfaction. Increases in prices cannot continue to be justified unless there is an improvement in service quality. However, in Albania the link between prices and service quality appears to be broken - the challenge is to restore this link.

The programme is supporting a stronger consumers' voice and promoting dialogue between consumers and water companies as a means to improve the quality of services. With respect to this useful experience, the programme adopted a multi-thematic approach combining two themes: consumer rights and sustainable water management.

Consumer protection in Albania is still at an embryonic stage. Water companies have a monopoly position in the regions of the country while consumers are little aware of their rights and are poorly organized. Only a few of the 56 Albanian water companies have a contract with their customers. These contracts generally neither integrate the provisions of the country's consumer protection law nor those of the recently adopted water supply and sewerage code which regulates the quantitative and qualitative provision of water and the environmentally appropriate disposal of wastewater. The absence of water contracts or poorly formulated contracts opens the way to all sorts of violations of consumer rights (such as inaccurate measurement of consumption and/or over-billing) and /or results in practices which negatively impact on the environment.

In an effort to address these problems, the programme stimulated and supported cooperation between the CPC and the WRA to develop a "model contract" between the providers of water and sewerage services and their customers, which integrates the provisions of the consumer protection law and those of the water and sewerage code. The contract was formulated in such a way as to clarify and educate both parties on their rights and obligations, protect consumer rights and encourage a more responsible behavior with respect to the environment. It is expected that, ultimately, the contract will result in better quality water and sanitation services, higher consumer satisfaction and better environment protection.

The process for the preparation of the model contract was as important as the final product since it involved cooperation and consultation with all the concerned stakeholders in order to ensure understanding, ownership and commitment. Cooperation between the CPC and the WRA was essential as each institution brought its own perspective, knowledge and expertise with regards to two themes i.e. consumer protection and sustainable water management. The most important stakeholders in the consultation process were the water companies and the consumer associations because of their conflicting interests. The Ministry of Public Works and Transport and the Ministry of Environment were naturally among the key actors in the process.

The model contract was approved by the National Regulatory Commission of the Water Regulatory Authority on 4th February 2011.

Strategy or Approach Chosen

The basic premise on which the programme's strategy was based was the need to restore the link between prices and quality of water services. Several possible entry points were considered such as, building the capacity of local authorities to oversee the water companies which are now their property following decentralization, improving the monitoring and benchmarking of the water companies by the Ministry of Public Works and Transport or strengthening the institutional capacity of the Water Regulatory Authority. However, other donors and even the World Bank led component of the programme are already addressing all of the above issues.

The UNDP led component of the programme has a strong consumer protection orientation. Price and service quality issues are consumer issues and it was felt that tackling them also from a consumer protection perspective would strengthen the holistic nature and effectiveness of donor support in the water sector. The programme cooperates with both the CPC and the WRA. The WRA regulates the water sector and co-authored Albania's water and sewerage code while the law on consumer protection explicitly stipulates that the inter-ministerial CPC is responsible for protecting consumer rights with respect to public utility contracts. The two partners welcomed the idea of working together on a "model" water contract. This cooperation, stimulated, facilitated and supported by the Economic Governance programme could be considered as a success in a context characterized by frequent inter-institutional competition.

The main challenge during implementation was to make the water utility companies and the consumer association agree on certain clauses of the contract since the two parties have potentially conflicting interests. For instance, the consumers are interested to have a more frequent and thus more accurate measurement of their water consumption while the water companies are interested in reducing the related costs. Intensive work with the water companies, and particularly the association which represents them, as well as with the consumer associations was essential.

Results and Impacts

The model contract was only recently approved by the National Water Commission (February 2011). Its introduction in the water companies will be soon initiated with the support of the programme. As its name says, the programme is a "governance" programme that seeks to strengthen systems, institutions and individual capacities. Better systems, institutions and individual capacities should ultimately result in better development outcomes and progress towards the achievement of the MDGs. However the development outcomes take time to materialize and at this stage the programme can only report on its governance results.

  • Systemic Result 1: Cooperation between national institutions established
  • Systemic Result 2: Model contract formulated, approved and about to be introduced in all the 56 Albanian water utilities thus making a difference in the lives of 3 million Albanian consumers (national impact)
  • Expected development Result 3: Improved quality of water and sanitation services, better consumer protection and environment protection

Insights and Continuation

  • Consumer rights can also be a very relevant entry point to address water issues.

The model contract will be introduced in all the 56 water companies of Albania and will therefore have a national impact by making a difference in the lives of 3 million Albanian citizens and to the country's environment. The Water Regulatory Authority and the Joint Programme will work together not only to introduce the model contract in all the water companies of Albania, but also to explain its content to both parties through regional workshops.

The next steps that are planned are regional workshops bringing together water companies and consumers in order to explain in detail the clauses of the contract and in this way maximize the educational effect on both parties, be it with respect to consumer rights, water standards or environment protection.

Potential for Replication and Scale up

The experience is replicable in other transition or developing country contexts where some progress has been made in terms of the adoption of consumer protection legislation and the establishment of consumer protection institutions. It is also particularly replicable in countries where considerable priority is given to the development and strict regulation of the water and sanitation sector. There is little doubt that the importance of consumer issues and the introduction of water and sanitation standards in Albania are linked to its status as potential candidate for accession to the EU and the need to start complying with EU directives in this area.

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