Financial Planning and Management
MUNICIPAL FINANCE, FINANCIAL PLANNING & APPRASIAL AND INVESTMENT ADVISORY.
Financial planning and management section of the Urban Sector Planning and Management Services unit is performing many critical services on behalf of their clients including International Development Partners, Provincial and Federal Governments, Local Governments and private sector. Some of the services performed by this section include;
• Resource Planning Services.
• Restructuring Services of financial management systems.
• Financial Planning and Appraisal services.
• Investment Advisory Services
• Business Planning and Revenue Enhancement Strategies including Consumer Surveys etc.
i) Recourse Planning Services:
One of the tools adopted by This document may be called ‘Integrated Development Asset Management Plan’ (IDAMP) Framework of Government of Punjab (hereinafter referred as ‘’IDAMP Framework’’). The IDAMP Framework sets out the principles/guidelines and policies for efficient and transparent asset management and reporting system. Thus, this Framework is designed to ensure the effective planning, careful management, accurate recording and reliable reporting of all the assets over the asset life cycle for optimized service delivery to the public. The methodology/processes for the preparation of 'Integrated Development and Asset Management Plan (IDAMP) consist of following steps:
Step 1: Development of GIS based Assets Inventory
Step 2: Notification of Level of Service (LOS)
Step 3: Development of Project Proposal
Step 4: Preparation of Operations and Maintenance (O&M) Costs
Step 5: Compilation of Project Package
Step 6: Financial Capacity Analysis
Step 7: Projects Selection and Approval
Step 8: Capital Investment Plan
Step 9: Finalization of Integrated Development and Asset Management Plan
ii) Municipal Finance and Financial Management
The Urban Unit is helping Government of the Punjab in municipal finance and sustainability of public institutes. In this context, the urban unit has helped Water and Sanitation Agencies (WASAs) and Metropolitan/ Municipal Corporations (MCs) of five large cities and prepared detailed action plans for increase in revenue to attain sustainability. It included following areas:
- Database Management including Surveys
- Bill Distributions and collection mechanism
- Bill collection against regular bills
- Bill collection against arrears
- Additional Sources of revenue
The Urban Unit has also helped various entities in establishing tariff and presented on highest levels in Government. Further, the Urban Unit has also helped WASAs in restructuring their financial management systems by preparing financial management manuals and simplified software.
iii)Financial planning and appraisal
The Urban Unit is helping Government of the Punjab in preparation of financial cashflows of various projects, conducting financial appraisals like Net Present Value (NPV), Internal Rate of Return (IRR), Benefit Cost Ratios (BCRs) etc. The Urban Unit is also reviewing financial pre-feasibility and feasibility as prepared by different departments for meaningful decision making. Some of the reviews include Financial Pre-feasibility of Chunian Industrial Estate, PM Housing Program in Punjab etc.
iv) Investment Advisory
The Urban Unit is also helping Government of the Punjab and aligned departments in preparation of investment policy, investment policy statement and investment Governance mechanism. Further, the Urban Unit is also assisting investment staff in efficient management of funds by different departments. The Urban Unit has recently prepared an investment policy for Sustainable Development Fund of Environment Protection Department (EPD).
iv) Business Planning and Revenue Enhancement Strategies including Consumer Surveys
Water and Sanitation Agency Peshawar (WSSP) was formed by Government of Khyber Pakhtunkhwa (GoKPK) in 2014 with an aim to implement urban reform plans, particularly in the Water & Sanitation sector in Peshawar. WSSP is operating in the area with around total 57,000 registered consumers with 45 urban and 22 semi-urban Union Councils. WSSP was setup as an autonomous body to deal with municipal service delivery challenges in Peshawar and meet expectations of citizens in Solid Waste Management (SWM), Water Supply (WS) and Sewerage & Drainage. It is mandated to enhance revenue streams and achieve self-sustainable. WSSP engaged the services of Urban Sector Planning and Management Services Unit (Pvt.) Ltd to perform door to door GIS based consumer survey, customer perception surveys, and willingness to pay survey, review and recommend tariff structure of WSSP, prepare revenue enhancement strategy. The Urban Unit has analyzed financial statements of WSSP since inception, evaluated their revenue management process, identified gaps and proposed improvement strategies which will lead to self-sustainability. The current status of WSSP in comparison with WASAL is presented in following figures
The current tariff structure of WSSP is flat where all the domestic users are charged a fixed amount every month irrespective of water usage or size of the property. Conservancy charges is fixed @ 50% of water charges and sewerage charges @ 25% of water charges. A more rationalized water tariff is proposed considering a) water rate is progressive and linked to usage, b) water usage is fixed on household size to promote cross subsidy to facilitate poor. Conservancy charges and sewerage charges has kept same and subject to revision in future. The proposed aquifer charges are also linked to area size, reducing water charges to 50% and keeping conservancy charges and sewerage charges constant. Similarly, WSSP has an elaborated commercial tariff where it is only recommended that the commercial consumers shall be classified into categories where categories are defined on the basis of water usage.The ongoing consumer survey is nearly 85% complete and a huge number of illegal connections have already been found. Domestic consumers have now been increased to 211,453 from 60,000 and commercial consumers to 39,473 from 1,000. The complete revenue management system is inefficient and addressed in section (v) of this report.The potential revenue of WSSP from consumers is 2,510 million on implementation of revenue enhancement strategy. The detailed working is available in section (vi) of this report and achievable in two years.