Nairobi — The policy debate on establishing an independent water regulator has re-emerged after the sector woke up to a survey finding last week that between $5 million and $10 million meant to improve access to safe water for drinking in Uganda is lost to corruption annually.

A World Bank sponsored baseline survey on integrity in Uganda's water supply and sanitation sector found that between 10 and 20 per cent of money given to contractors is spent on kickbacks, which significantly reduces the extent to which the contract can deliver on improving access to safe water and sanitation.

Some 54 per cent of private water operators said they paid 10 per cent of the value of the contract to win it, while 46 per cent of urban consumers confessed to paying extra charges to be connected to the water supply network.

Going by the fact that national budgetary allocation to the water sector is an average of about Ush130 billion ($65 million) over the past five years, the country could have lost about Ush65 billion ($32.5 million) to corruption in that time.

The national effort to improve water supply and sanitation facilities equitably is also distorted by interference with budget allocations to favour areas where politicians hope to gain political mileage -- another form of corruption an independent regulator could check.

To address outright corruption as well as influence peddling by politicians, some stakeholders are advocating an independent regulator, and introduction of integrity pacts between the government and contractors, to be monitored by civil society.

The idea of establishing such a body first emerged in 2003 after a series of corruption cases -- notably the valley dams project, which former vice president Specioza Kazibwe was accused of mismanaging leading to the loss of Ush4 billion ($2 million) to the taxpayer. Corruption at the time was so pronounced in the sector that some donors like the Swedish government withheld funds.

The Ministry of Water and Environment believes in the concept and indeed sent officials on a study tour to Germany to learn from the experience there.

However, the National Water and Sewerage Corporation (NW&SC) argues that a regulatory body would only increase water tariffs in the likely event that players under regulation fund the watchdog's budget.

Besides, there is no competition in that segment of the sector meaning that the regulator's eye will be fixed on NW&SC only.

"We have set up a unit within the ministry already to try out the regulatory idea we learnt from Germany because they have one of the best water regulation systems in the world," said State Minister for Water Jennifer Namuyangu.

An independent regulator would ensure adherence to procedures in procurement -- where most corruption cases were reported; operations and management. It could also set performance targets and approve tariffs for the water utility, which is used to doing these things on its own.

Currently, regulation is done by performance contracts only, drafted with anti-corruption components, although these are understood to be ineffective because the unit that awards a contract to, for instance construct boreholes in the countryside, is the same party that supervises the work, and is responsible for the assets.

With pressure to perform from the top, there is a tendency for supervisors to appraise positively even when work is shoddy.

The management of NW&SC is instead advocating a regulatory framework with guidelines to be implemented by a select committee and supported by the existing accountability institutions such as the ombudsman and the procurement regulator.

"It is very costly to put up a regulatory body, and it is the consumer who will meet this cost," said Dr William Muhairwe managing director at NW&SC.

However, the national water utility, although making a surplus, dedicates most of its internal income on recurrent expenditure while money for development spending is usually provided by capital injections from the government and donors.

In 2007 a process was begun for the could to convert a debt of about $90 million the company owed it into equity, so that the money can be invested in water infrastructure rather than paid to the exchequer.

The move will also clean the water utility's books of old debts, and enable it to access funds on a commercial basis by issuing a bond on the stock exchange, or making outright application for long-term loans from financial houses. Therefore, requiring it to forgo some income by contributing money to fund a regulator's budget is not a welcome idea.

Observers also point out that existing regulatory authorities have not exactly reduced the amount of corruption or improved efficiency in their respective sectors.

The World Bank survey was commissioned following the Inspectorate of Government's National Integrity Survey in 2008, which recommended that sector studies on corruption be done. These studies will bring out a representative picture of how much is lost to corruption across all sectors.

Unlike some sectors, water does not have a regulatory authority, leaving regulation to be done by contracts only, and some bureaucrats and development partners think that its establishment will reduce corruption and improve efficiency.

"It is important for us to have integrity in the sector because we do not want to have a situation like we had in 2004 when Sweden withheld funds due to corruption in the sector," said Helen Holm, first secretary in charge of Water and Sanitation at the Swedish Embassy in Uganda.

At a meeting where results from the survey were presented, a notable recommendation from the consultant was to establish an independent regulatory authority with urgency.

The meeting, which The EastAfrican received exclusive media access to, did not discuss the matter at length, officials said, because policies are not made at workshops, but from the golf club, through presidential round tables and on to the Cabinet.