Kalyan Pande's letter (#126) on privatisation is a welcome contribution to an important topic that has not yet been fully discussed in public-the proposed use of a foreign private sector company to manage Nepal Water Supply Corporation's (NWSC) operations in urban Kathmandu valley. This is one component of a set of major reforms for Kathmandu that will in total cost $470 million during the next decade.

One important distinction between the privatisation of state owned enterprises and the proposal for NWSC, is that the Private Operator (PO) will only manage the staff and assets of NWSC, and the people of Nepal-through government-will continue to own the assets. The use of a PO has been made a condition by those lenders and donors supporting the Melamchi tunnel in the hope that this will ensure these new water supplies are well managed. The impetus for using the private sector appears to have started after NWSC's failure to utilise previous loans for system improvements during the 1990's.

Many of us working on water services believe that the root cause of Kathmandu's water woes is a lack of institutional autonomy to operate the system in an efficient, equitable and environmentally sound manner. As a result water tariffs are far too low to encourage responsible use, perverse subsidies help to reduce the cost for the affluent, a substantial number of families are unconnected to the distribution network, the network leaks and one third of all water is wasted, and NWSC has too many, underpaid staff.

There should be no mystery to running a good urban water supply system and there are a number of straightforward solutions to Kathmandu's many problems, some of which would include: cost recovery tariffs, universal metering, network repair and enhancement, paying market salaries for staff, retrenching surplus staff and offering service contracts to some, recruitment on merit, more investment in equipment maintenance and repairs, computerised billing, service monitoring, a customer complaints system, an independent regulator, reducing connection charges; and contracting out selected activities to the local private sector.

But above all it is the removal of political interference that is required, allowing the staff of NWSC (and one or two external managers if necessary) to put into practice what they know and holding NWSC management, staff and board accountable for meeting targets of more water, to more people (especially the unconnected poor), of a higher quality, at a reasonable price, at convenient times of the day, throughout all seasons. When the PO takes over, it will be ensured of autonomy and protected from political interference by a contract and then it will begin to undertake the activities listed above. Why does Nepal need to take out loans to pay its costs, when, with political will and institutional commitment, a made-in-Nepal solution could be possible? There are also many other related issues worthy of debate. Experience with the use of the private sector to manage urban water supply in South Asia is minimal. Government has been trying to recruit a PO for over 6 years without success. The World Bank, the lender with most international experience in the use of the private sector, has now dropped out of this project. Kathmandu's water supply is a truly important issue, one that affects every family in the five municipalities every day. WE need public scrutiny and discussion of these proposals that are simply too important to be left only to government, development banks, donors and experts.

Alan Etherington,
WaterAid, Nepal