A Sourcebook - UN-Water

Box 10.6 Co-operative Ownership to Promote Accountability
Cooperative ownership of the utility—that is ownership by its customers rather the government—can increase the
autonomy of the utility, freeing it from political capture, as well as providing better accountability to customers. Water
cooperatives work well in a number of places. A good example is SAGUAPAC, the utility serving Santa Cruz in Bolivia.
Water services in Santa Cruz, Bolivia, are provided by SAGUAPAC—the largest urban water cooperative in the world,
serving approximately three-quarters of a million people and billing close to US$19 million per year. SAGUAPAC’s performs
well by international standards. It has operated in an efficient manner, provided continuous service with water
of good quality from house connections to its members, and has maintained satisfactory financial performance.
Water is available 99.92 percent of the time. Unaccounted for water is 17 percent. SAGUAPAC employs 3.1 staff per
1,000 connections. The working ratio is 0.55. Some 97 percent of connections are metered and collection efficiency is
95 percent. This success is attributed in large part to the utility’s carefully-designed cooperative ownership and governance
structure, which is illustrated below.
The utility is owned by its customers, who vote for the board through a two-tier system of District Boards that choose an
Administrative Board and an Oversight Board. Other governance rules include a ban on politicians serving on the Board.
At the same time, it most be noted that creating cooperatives is not a panacea. Many water cooperatives have not
worked well. Poorly performing cooperatives often have governance structures that make them too political or populist,
or too subject to government control.
ELECTION
PROCESS
GOVERNANCE
STRUCTURE
District 1
Coop. Members
District 1
Board 5
District 1
Delegates 3
District 1
Coop. Members
District 1
Board 5
District 1
Delegates 3
Delegate Assembly (27)
Administration Board (9) Oversight Board (6)
District 1
Coop. Members
District 1
Board 5
District 1
Delegates 3
Co-op Wide District
General Manager
Source: Ruiz-Mier, F. and van Ginneken, M. (2006). “Consumer Cooperatives: An Alternative Institutional Model for Delivery of
Urban Water Supply and Sanitation Services”. Water Supply and Sanitation Working Notes No. 5. World Bank
formance. 27 However, private participation contracts can be costly and difficult to design and tender,
and may not be supported by the government or public.
Make the provider reliant on the public for funds
Where a provider is largely dependent on government for its funding, a practical way to make the
provider more accountable to customers, and more autonomous from government, may be to shift to
a greater reliance on user-pays, as the example SIMAPAG in Mexico illustrates.
Source List 10.1 (beginning on page 115) provides links to resources that have information on these
and other methods for improving provider autonomy and performance.
27
Gassner, K. Popov, A. and Pushak, N. (2007). “An Empirical Assessment of Private Sector Participation in Electricity
and Water Distribution in Developing and Transition Countries”. World Bank.
113