A Sourcebook - UN-Water

• Regulatory decisions that seem inconsistent
• Unexplained wealth of regulatory officials
• Utilities paying for trips or other entertainment for regulatory officials.
7.2 Government or Provider Decision Making
The locale of corruption risk is influenced by where key decisions are made that affect the flow of
value within the sector (illustrated by Figure 4.1 on page 31). The discussion of corruption risk in Sections
5 and 6 assumed a state-owned company—that is, a utility that is incorporated as a company but is
owned by the government.
The state-owned company model is one of several forms of organizational control of public utilities.
Other options include:
• A government Ministry or Department
• A statutory body (or “parastatal”)
• A mixed-ownership company, with some shares owned by the government, some by a private
investor.
Where water services are provided by a government department, the day to day management of
the water utility is the responsibility of officials within the government. The relevant Minister may be directly
involved in key decisions, not just on matters of capital investment but possibly also on the ongoing
operation and management of the utility.
Where the utility operates as part of the government, rather than as a corporatized unit, the location of
corruption hot spots shifts accordingly. The provider level “hot spots” discussed in Section 5 are linked to
government officials and the responsible Minister, rather than utility managers (and employees).
7.3 Level of Government
In many countries, water supply services are a municipal responsibility, rather than a national one.
In general, whether the utility operates at a national level or a municipal level does not significantly
affect the pattern of corruption hotspots as illustrated in Figure 4.1. The key difference is the level of
government at which decisions affecting the utility are taken. Where a water utility operates at a municipal
level then, in general:
• Where decisions for a national utility would be made by government officials, they are instead
made by local government officials
• Where decisions for a national utility would be made by the relevant Minister, they are instead
made by the mayor.
For example, for a national water utility planning and design of capital projects may be undertaken
by central government officials, with final decisions taken by the Minister responsible for the water sector.
For a municipal utility, local government officials and the mayor might perform these roles.
7.4 Level of Administrative Capacity
In many developing countries, the capacity of the government to manage is low or mediocre. As a
result:
• Accountability structures may be inadequate
• Information on utility performance may be incomplete, or where information is collected it
may be unreliable
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