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Phnom Penh's Water Works

(Subscribe to World Policy Journal through SAGE)

From the Summer 2012 Games People Play issue

PHNOM PENH—The turnaround of state-owned Phnom Penh Water Supply Authority over the last two decades is now legend in Cambodia. Director General Ek Sonn Chan took the company’s reins after the country had suffered decades of civil war. United Nations-backed elections had been held and international money was starting to flood the country, but the damage was done.

Barely 20 percent of the city’s population had access to water when Ek arrived in 1993, and for only eight to 10 hours a day. Half of all customers did not pay their bills. At the same time, corruption was rife, with employees selling illegal water taps for extra money. The state of operations was about as dire as at any time since the company debuted in 1895 as a part of the French for-profit, Compagnie des Eaux et Electricité de l’lndochine. The water authority reached its low point after a Cambodian general put a gun to Ek’s head for daring to disconnect the general’s water supply when he failed to pay his bill.

“They could have killed me, actually, because killing at that time was still easy,” he says.

But the leaks at PPWSA have since been plugged. The coverage area has jumped to 90 percent, and water now flows uninterrupted all day long. The graft has been weeded out as well, and 99 percent of customers are current with their payments. Even the general was forced to settle up and reportedly hasn’t missed a bill since.

The changes are credited largely to Ek’s leadership. He rallied 500 staffers to commit to PPWSA, promising to gradually increase their $20 a month salary as soon as profits returned. He offered bonuses to the collectors who did their job best. And he won donor and loan support from Japan, France, the World Bank, and the Asian Development Bank, which was crucial for much-needed infrastructure improvements.

PPWSA earned its current autonomy from the government—it was declared a state enterprise by royal decree in 1960—just over three years into Ek’s tenure. By 2004, streamlined operations and international support had put the company on stable financial footing. So today, “we are on a good path,” Ek says.

Now, PPWSA serves about 203,000 clients every day with 330,000 cubic meters of water, conforms to World Health Organization standards, and draws from the Tonle Sap, Tonle Bassac, and Mekong rivers. The water is treated with polyaluminum chloride, a more economical purifying agent than the aluminum sulfide once used by PPWSA.

Indeed, the system as a whole is more efficient. While corruption, leaky pipes, and black market diversions translated into 72 percent of the water distributed in 1993 failing to generate revenues, that number has since dwindled to barely 5 percent. As a result, PPWSA ranks behind only Singapore in the region in terms of operational performance.

So it’s little surprise that PPWSA was chosen as one of the first companies to list on the recently launched Cambodia Securities Exchange. Despite setbacks inherent in building a stock market from the ground up, the initial public offering was described as a success—some $20.48 million worth of shares was sold to investors.

In an ironic twist, the company is now in a strong enough financial position to survive without the extra cash, according to the PPWSA head of finance, Ros Kim Leang. “We have enough funds to build our own investments,” he says.

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Tom Brennan is business editor of the Phnom Penh Post and a former editor at Forbes.com and CNBC.

(PDFs of World Policy Journal articles can be purchased through SAGE. Subscribe to WPJ here)

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