Large-scale construction projects for dams, irrigation, piped water systems and treatment plants require high professional standards to achieve trust between stakeholders. However, the path from planning to construction has a poor integrity record.

Planning and preparing

Participatory processes and transparency during planning, land acquisition and other preparatory phases must balance stakeholder interests and protect environmental benefits and community water rights. Designs, choice of technology and the selection of contractors need oversight to ensure that projected costs and benefits are realistic and to minimize environmental and social impacts.

Procurement and contracting

Low capacity in public sector bodies slows down decision-making, drives up costs and acts as a disincentive for local contractors.

Procurement of goods and services by governments and state-owned enterprises comprises 13 per cent of GDP in OECD countries. The OECD identifies this as an area most vulnerable to waste, fraud and corruption. The World Bank introduced a new procurement framework in 2016 to define roles and responsibilities and achieve value for money with integrity.

World Bank helps countries reduce corruption

The World Bank works with countries to produce a Country Procurement Assessment Report, which identifies strengths and weaknesses and aims to increase the national capacity to plan, manage and monitor the procurement process, improve accountability, integrity and transparency and reduce scope for corruption.

Large-scale public sector projects are notorious for being slow, expensive and subject to political manipulation. The private sector promises a more efficient, flexible solution. However, the accountability of private companies is to shareholders rather than to the public interest. If cost is the only driver, quality suffers. The UK’s Public Contracts Regulations require procurers to adopt the ‘most economically advantageous’ approach to find a balance between cost and quality.

ADB debars companies

The Office of Anticorruption and Integrity of the Asian Development Bank debarred three companies from bidding (for four years and three years) after finding that they had entered into an agreement about who would win a contract. The ADB toughened its anti-fraud measures in general in 2012. However, only 2 per cent of due-diligence investigations in 2014 concerned the water sector.

Tender requests must have clear technical requirements and open and fair processes. Companies with the capacity and experience to undertake complex contracts can be prequalified, while companies with a poor integrity record can be barred from bidding.

Integrity pacts hold promise

Integrity pacts (devised by TI) promote agreements with government procurement agencies that bidding companies will abstain from bribery, collusion and other corrupt practices. Pacts have been successfully implemented in drinking water and irrigation projects in Pakistan. The European Union is conducting a pilot project with 11 European countries using the tool.

Water sector institutions can adopt codes of practice. However, these integrity frameworks have to be internalized and policed to be effective.

Construction phase

If there is a sector that is particularly plagued by corruption it is construction, including for infrastructure projects. (World Bank)

Capital-intensive water-related construction projects are prone to corruption and political interference. A quarter of business leaders cited corruption or misuse of funds as a leading obstacle to improved urban infrastructure and services. Uneconomic and inefficient projects may be just as damaging as corruption. Advocates for large projects, such as dams, often understate costs and environmental impact and overstate the benefits.

The Construction Sector Transparency (CoST) initiative supports governments to increase public access to reliable information on construction and supports civil society organizations to understand data and challenge poor performance, mismanagement and corruption.

Permits and licensing

Licensing systems regulate water for competing uses in conditions of scarcity and can institutionalize the ‘polluter pays’ principle. Licenses may permit rights to withdraw water, sell water or to modify the resource.

Smallholders in developing countries typically abide by customary water rights, which may be lost in projects. The licensing process should ensure that informal rights holders – such as farmers – have a seat at the table. Participation by community organizations has been shown to improve the governance of irrigation projects.

Farmers lose livelihoods

In 2000, Chennai Metro Water made an agreement with peri-urban farmers to buy their water and transport it to the city in tankers. No impact assessment was conducted. The farmers made sizeable short-term gains by selling water but the groundwater table fell due to over-extraction, farmers lost water for crops and cattle and the area now suffers saline water ingression. Chennai Metro Water has moved on to other sources.

The CEO Water Mandate and World Wide Fund for Nature (WWF) promote due diligence, dialogue and transparency to resolving conflicts that arise over large-scale abstraction of water, for example by multinational beverage companies.

Operation and maintenance

RWSN has estimated that only two out of three hand pumps in sub-Saharan Africa are working at any given time and that this represents a crisis of wasted infrastructure investment

Poor services encourage fraud as frustrated users become reluctant to pay fees. Surveys indicate that bribery is common to bypass water meters or obtain an illegal connection. Plans must set reliability standards and allow for sufficient staff and revenue to manage repairs.

Consumer services

Being a ‘customer’ includes having rights to a standard of service, good quality information and a clear line of communication. Transparent and accurate billing systems and efficient systems for reporting faults are shown to improve payment levels. Complaints systems play an important role in identifying fraud and providing victims with redress.

User satisfaction improves

The Municipal Water Company of Quilalí (EMAQ), Nicaragua, included users and outside groups in a drive to improve its monitoring, billing and complaints procedures. User satisfaction improved sharply after the company introduced an automated billing system and ensured that the office was staffed with competent people who addressed user complaints promptly. The changes resulted in prompter payments and greater participation in activities to improve the municipal water company. Nine in ten users believe the company has improved its customer services.

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Key messages

  • Establishing integrity, trust and respect as ground rules at the outset of planning process sets a standard for preventing corruption and for a project or programme in achieving its aims.
  • All phases of a water project carry high integrity risks and require transparency, fairness, non-discrimination and accountability.
  • Involving citizens, consumers and civil society organizations is important for establishing integrity, especially in large-scale and complex processes.

Recommendations

  • Strengthen control mechanisms for projects. Water projects are susceptible to corruption and impact on both the human and the natural environment. Careful and transparent design, planning and implementation, and a critical evaluation of the use of resources and the generated outcomes are essential to ensure sustainability and effectiveness. Participatory processes and transparency are especially important in the complex processes leading to large-scale infrastructure.
  • Build an effective relationship with stakeholders to ensure the fair and sustainable implementation of projects. Governments and institutions should work with the private sector, donors and civil society in order to create sustainable funding mechanisms to support participation and so as to build the capacities of stakeholders to understand, monitor and improve public contracting. Informing and involving the public in overseeing the development, awarding, execution, performance and completion of public contracts constitute effective means to achieve fairness, non-discrimination, accountability and verifiability. It is important that water users’ committees and associations receive support and recognition from the authorities, and are included in decision-making processes early on.

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