In 1981 the Government of Tanzania established the National Urban Water Authority and charged it with the responsibility to develop and manage urban water supply on the mainland of Tanzania. NUWA which became operational in 1984 set a target to take over and reform water supply services in all urban areas in Dar es Salaam. The Government reorganised NUWA in 1997 to form the Dar es Salaam Water and Sewerage Authority by merging the functions of NUWA and the sewerage functions of the Sewerage and Sanitation Department of the City Commission. Under the DAWASA Act DAWASA was made responsible for developing operating and maintaining all water supply and sewerage services in Dar es Salaam and its satellite towns of Bagamoyo and Kibaha.. The DAWASA area of operations incorporates the Cities of Dar Es Salaam Kibaha Bagamoyo and the corridors of its two transmission lines. The Dar es Salaam Water Supply and Sewerage Authority is responsible for providing water supply services to its customers (about 100 000) in its area of operations. DAWASA also provides sewerage services to a small number of customers (around 20 000) in the City of Dar Es Salaam. By the late 1990s it was evident that DAWASA was unable to respond quickly enough to meet customer demands for improved levels of service and improve finances to adequately maintain and replace its aging assets.

In August 1997 AfDB identified a Dar es Salaam Water Supply and Sanitation Project that would focus on rehabilitating and improving operations and facilities with DAWASA as the service provider and Operator. AfDB put project processing on hold pending the outcome of consultations in 1997 / 98 between Operators and the GoT for a long term “Concession”. Under the proposed arrangements the concessionaire was to be responsible for financing the investment program estimated to cost of about US%24250 million as well as operation and maintenance activities. In November 1998 it became clear that this approach was not going to succeed. Private investors were unwilling to finance such a venture in Dar es Salaam given the state of the WSS operations and infrastructure. Consequently GoT requested World Bank assistance to design an option that would combine private operation and public financing. In March 2003 DAWASA completed the preparation of the Dar es Salaam Water Supply & Sanitation Project (DWSSP) in keeping with the suggested scope defined by the World Bank. The World Bank African Development Bank and the European Investment Bank appraised the project and commenced negotiations for financing.

DAWASA and CWS met all conditions precedent for external financing and the project and lease contracts became effective 1 August 2003. The Lease Contract with City Water Services was terminated on 31st May 2005 after attempts to renegotiate the contract failed. Upon termination of the CWS Lease Contract DAWASA appointed the Dar es Salaam Water and Sewerage Corporation (DAWASCO) as the new Operator for the DAWASA Service Area. DAWASCO was established in May 2005 under the Public Corporations Act 1992. Following negotiations DAWASA and DAWASCO signed a new ten year Lease Contract effective 1 July 2005.