Karachi has money for water. Here's how KWSC can actually earn it.

Karachi has a strange water economy. Households across the city spend heavily to obtain water. Yet the Karachi Water & Sewerage Corporation, the utility that brings freshwater from hundreds of kilometres away, energises it, cleans it and then rations it across the city, cannot generate enough revenue to cover its operational costs. As any Karachiite will testify, the city is not short of money being spent on water. The problem is that much of this money flows towards tankers, reverse osmosis plants, pumps, boreholes and storage tanks, while KWSC remains strapped for cash.

The consequences extend beyond the system. This past year, the Government of Sindh provided KWSC with more than Rs17 billion in subsidy to help cover its operational costs. For reference, that is more than twice the total annual budget of the University of Karachi, Sindh’s largest. Every rupee spent to sustain an underperforming water system is a rupee unavailable for expanding universities, improving hospitals or addressing other urgent public needs. Reliable water is an essential public service and deserves public support, but persistent subsidies at this scale are simply not sustainable.

Who gets water and who pays?Before any reforms are made, it is important to understand who the KWSC customers are. The figure below separates households according to whether they receive piped water, receive a bill and make a payment. What emerges is not one type of customer or one cause of lost revenue, but several distinct problems that require very different responses.

At the heart of this paradox is a broken relationship between water, billing and payment. Our recent studies (here and here) investigate how KWSC could increase revenue in a largely unmetered city without worsening the already unequal financial burden that obtaining water places on households. Based on a geographically representative survey of nearly 1,000 households across Karachi (conducted in 2021-2022), we show why the answer cannot be reduced to simply raising tariffs or pursuing customers who refuse to pay.

The blue segment represents the relationship that should ordinarily exist between a utility and its customers: households receive water, receive a bill and pay it. Ideally, most of the figure would be blue. Instead, it reveals several very different customer relationships, each reflecting a different challenge for KWSC. The households shown in black are conventional defaulters. They receive both water and a bill but do not pay. They present a legitimate enforcement and revenue-recovery problem.

But the remaining groups complicate any simple narrative about Karachiites refusing to pay. The beige segment consists of households that receive water but are never billed. They benefit from the system without contributing to its revenues, but cannot automatically be treated as deliberate free riders when KWSC has not established a formal billing relationship with them.

Those in red receive bills but no water and withhold payment, an understandable response to being charged for a service they do not receive. Most counterintuitive are the households in yellow: they continue paying their bills despite receiving no water. For some, these payments preserve documentary evidence of their tenure and for others it’s a requirement if they want to sell their plot. It is a measure of how thoroughly dysfunction has been normalised in Karachi that this arrangement barely seems remarkable. Households continue paying for water they do not receive because refusing to do so might be an even bigger problem down the road.

The scale of this billing gap is substantial. Only 58 per cent of households with piped connections in our study reported receiving a monthly bill. Roughly one-third of connected households received water without being billed, making them one of the largest customer groups in the figure.........

© Dawn Prism