WASHCost Ghana is working with a consultant to review existing policies and practices for addressing Capital Maintenance Expenditure of Small Towns Water Systems.
This is to provide a better understanding of the policy and practices related to Capital Maintenance to help provide input into ongoing discussions on innovative financing mechanism for capital maintenance expenditure that will better address the problem of capital maintenance in the rural and small towns water sector in Ghana.
The WASHCost project has developed a framework for costing the provision of sustainable Water, Sanitation and Hygiene (WASH) service using the Life Cycle Cost Approach (LCCA). The LCCA has been applied in three regions in Ghana to determine the costs per technology and service levels of WASH services. The work has revealed the critical cost elements in Ghana that have not been receiving adequate attention but they are necessary to be addressed for the delivery of sustainable services. One of these costing elements receiving limited attention is the Capital Maintenance Expenditure (CapManEx).
Capital Maintenance expenditure (CapManEx) is expenditure on asset renewal, replacement and Rehabilitation costs. Capital maintenance expenditure is typically more ‘lumpy’ than operational and minor maintenance, with infrequent but relatively large items of expenditure on large items (e.g. replacing generators, pumps of storage tanks or occasional emptying of latrines).
It is required that all Water Boards and Watsans operate three separate accounts-the operational account (70%), Sanitation account (10 %) and Capital maintenance (20%) drawn from revenue generated from sales. However, this has not been the case with a lot of the management of the facilities, a situation affecting sustainability of WASH services.
The outcome of the review will help come out with alternative means of financing capital maintenance expenditure to address the current situation to ensure sustainability.
Victor Narteh Otum