Ministry of Water, Irrigation and Electricity
Operation and Maintenance Management Manual
Training Module - D
Community Based Financial
Management
DEMEWOZ CONSULTANCY
22
– D:
COMMUNITY BASED FINANCIAL MANAGEMENT FOR RURAL
WATER SUPPLY SCHEMES
The Total Cost is
Supported by Users of the water scheme！
Question:
How do Users support the Total Cost? That
is revenue, mainly
water tariff paid by users.
(2) Some idea on the cost to be borne: How much do we need to
save?
Based on an extensive
study conducted in Ethiopia, a required amount of
maintenance cost is estimated to account for 5 %
of total replacement cost
annually. In this manual, cost of a hand-pump is considered. We shall use an
example of average cost of a hand pump at Birr 20,000.00
for this paper.
Revenue = Tariff x Quantity
Example:
Total replacement cost: Birr 20,000.00
Annual Maintenance cost: Birr 20,000 x 5 % = Birr 1,000.00
Monthly Maintenance cost: Birr 1,000 / 12 months = Birr 83.30
Ministry of Water, Irrigation and Electricity
Operation and Maintenance Management Manual
Training Module - D
Community Based Financial
Management
DEMEWOZ CONSULTANCY
23
MODULE
– D:
COMMUNITY BASED FINANCIAL MANAGEMENT FOR RURAL
WATER SUPPLY SCHEMES
Taking an estimated price of a hand pump at Birr 20,000, a WASHCO
accumulate at least Birr 2,000.00
annually, while this can be interpreted as
monthly reserve with an amount of Birr 167.00.
Note: The above calculation is prepared without any considerations on interest rate, inflation rate,
and foreign currency exchange rate.
Example:
Cost of a hand pump: Birr 20,000.00
Service period: 10 years
Annual Replacement Reserve: Birr 20,000/10 = Birr 2,000.00
Monthly Replacement Reserve: Birr 2,000 / 12 months = Birr 167.00
