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MSM provided training on Business Model Development for Regional Authorities in Palestine

02-05-2022

Providing enough and good quality water at an affordable rate is a challenge in Palestine. The Palestinian Authorities want to increase the efficiency of the current system. They think in terms of upscaling the small community water supply systems by an amalgamation of a number of small water service providers.

The Maastricht School of Management (MSM) has been asked to provide advise with support from the Nuffic. The TMT project has three components. A website for knowledge sharing has been created, a number of lectures have been provided and a visit of a small delegation to the Netherlands Is planned for June.

For this third training, MSM’s Prof. Meine Pieter van Dijk, who also was the former director of the Paduco project (Palestinian Dutch Cooperation in the water sector), was asked to lecture on upscaling water units, running them as a business and achieving sustainable production, distribution and consumption of drinking water. The Paduco project ended in 2017 with a special issue of the International Journal of Global Environmental Issues (Vol. 16, No. 1/2/3, pp. 1-216), where the major findings of the research on water issues in Palestine were summarized.

Prof. van Dijk’s digital course at the end of April was very participatory. Lots of questions were asked and suggestions how to improve the current system were discussed. Dr. Mohammad Hmaidi, chairman of the Palestinian water Regulatory Council (WSRC), explained that many engineers working in the water sector are not familiar with the concepts of water sector reform and the introduction of the New Public Management (NPM) ideas in the water sector. Therefore, Prof. van Dijk presented effective business and management models, which require reform packages, which start with formulating the objectives. The NPM then suggests to provide more autonomy to the service provider, preferably incorporated as a municipal or regional water company. The flipside of autonomy is accountability. A transparent system of registering cost and generated revenues is required to be able to calculate to what extent the revenues cover the cost.

Reform packages distinguish between reforms in the utility and in its policy environment and between short-, medium- and long-term activities. In the framework of the reforms at the utility level short term improvements could concern the quantity or quality of the water supplied. Immediate measures could be using other wells or repairing leaks in the system. For the medium term a business plan needs to be developed and leadership should be provided in the reform process. Decentralization within the utilities is desirable and staff should be incentivized. Appropriate HRM policies are necessary and the corporate culture needs to be improved. In the medium term the link between improved service delivery in qualitative and quantitative terms and higher (cost recovery) tariffs should be established and gradually possibilities for involving the private sector (PSI) are introduced. PSI could be a change in ownership or co-ownership. Also, Public Private Partnerships (PPP) are possible, or out-contracting of activities. Examples given are construction activities, operation and maintenance jobs, factoring (private firms managing the bills), or customer complaint services.

Outside the utility the government should create the legal framework for such reforms. Financial autonomy for the utilities and an independent board with well-defined roles are necessary. The objective set should be to cover in first instance the cost of O&M activities and eventually also the investment cost. Benchmarking would allow utilities to know how efficient they are and private sector engineering consultants can help to choose the appropriate technologies at their scale of operation. The challenge is to find the right combination of reforms, or the best fit for a given situation. During a mission to Palestine in June 2022, these ideas will be further elaborated and discussed.   

About the project
This Tailor-Made-Training is a collaboration between WSRC and MSM and focuses on building the capacity of WSRC and other main stakeholders in the water sector (government, academia and private sector) on the concept of the Triple Helix model. Part of this TMT are several training sessions, a digital platform and a work visit to the Netherlands. 

Orange Knowledge Programme
This Tailor-Made-Training is part of the Orange Knowledge Programme (OKP) which is funded by the Netherlands’ Ministry of Foreign Affairs and managed by Nuffic. For more information click here.

MSM's Expert Centre on Emerging Economies

This TMT project is part of MSM's Expert Centre on Emerging Economies. The department is an expert centre on local economic development in emerging and developing markets.‚Äč We capacitate managers and professionals from government, private sector, NGOs, and post-secondary education in Africa, Asia, Middle East, and Latin America. We offer consultancy and customized training programs, and we manage complex projects in key sectors, e.g. water, agriculture and health. For more information click here.

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