|Scooped by pS-Eau|
This report assesses the performance-based service contracts that bound Vitens Evides International (VEI) with Blantyre Water Board and Lilongwe Water Board in Malawi. Signed in 2009 and due to end in October 2014, these service contracts were part of a larger EIB-EU investment programme, which included works to improve water production capacity and the extension of water supply in low-income areas.
The contract was a mix between a traditional service contract (with no transfer of management responsibilities to the contractor) and a more ambitious management contract, with bonus payments linked to a set key performance indicators, including reduction of NRW and improvement in the working ratio. The adoption of such contractual arrangements was driven by the specific context, where substantial management changes were needed to improve the poor performance of the Water Boards whilst there was no appetite in-country for relinquishing management control.
The report extract lessons for future contract design: it highlights the need for an independent conciliator to improve dialogue and align expectations between the parties. In addition, sharing the performance-based compensation should be considered to align both parties’ incentives.