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Rural Water Supply Corruption in Ethiopia 137
Box 4.1 (continued)
with the private sector—in reality they appear to capture work on unfair terms,
often on a single-source basis. This situation may reflect the historical legacy of
state control in the sector and a continuing suspicion of the private sector rather
than corrupt practice per se. However, the opaque circumstances under which
state enterprises compete or are single-sourced for bids, their higher costs, and
reports that state drillers subcontract work to the private sector create conditions
under which corrupt practices might emerge. That said, the private drilling companies
interviewed did not identify unfair competition and corrupt practices as
major issues. This response may indicate (for the moment, at least) that there is
more than enough work to go around.
Sources: Authors’ interviews (June 2009) and Carter 2006.
Drilling practices by these state-owned enterprises (SOEs) appears
to be less efficient (incurring delays and higher economic costs) and
less transparent (documentation is poorer and more difficult to access)
than using private sector drillers. From a bureaucratic perspective,
however, it is often easier for government officers to allocate required
boreholes to government drillers because the processes are simpler
and the responsibility gets transferred to another government department.
Although this practice is arguably inefficient, there is little evidence
to suggest there is more corruption in government-drilled
boreholes, and oversight of all drilling operations remains at federal or
regional levels. 11
Licensing policy a barrier to entry. Licensing of drilling companies is
another potential area for corruption. The current specifications require
that licensees have the experienced personnel and equipment to undertake
professional operations. However, some stakeholders argued that the
requirements (for example, around rig ownership and not recognizing
leasing) prohibit new market entrants and that the licensees are, in practice,
a smallish, closed shop.
Addressing this issue would require a policy change to encourage the
emergence of new drilling companies, especially indigenous companies
that find it particularly hard to meet licensing criteria. Policy components
might involve accepting leasing arrangements, facilitating credit,
and supporting training for new Ethiopian drilling businesses.