Transcript BRIEF OF EMBU WATER & SANITATION CO. LTD

EMBU WATER & SANITATION CO. LTD
(EWASCO)
A BRIEF CASE STUDY ON COMMERCIAL FUNDING AND ITS IMPACTS
CONTENTS
•BACKGROUND
•STATUS AS AT JULY 2005
•PROJECT FUNDING APPLICATIONS
•FUNDING APPLICATION OUT COMES
•PROJECT IMPLEMENTATION STRUGGLES
•IMPACTS
•LESSONS LEARNED
PRESENTED AT MOMBOSA
BY
11TH
H M KARUGENDO
NOV. 2011 (MOMBASA)
EWASCO: BACKGROUND
• INCORPORATED BY EMBU MUNICIPAL COUNCIL IN 2004 IN ORDER TO BE
WATER ACT 2002 COMPLIANT.
• COMPANY OPERATED AS A DEPARTMENT OF THE COUNCIL UNTILL JULY
2005. IT WAS OPERATED WITHOUT A BUDGET.
• BECAME OPERATIONAL IN JULY 2005. THERE WAS NO FORMAL HAND
OVER BY THE COUNCIL TO THE COMPANY
COMPANY STATUS AS AT 1ST JULY, 2005
The Company general status at inception was as follows:
WATER SUPPLY;
• Own Water Production Capacity = 2,000m3/day
• Water Supply Demand
= 7,000m3/day
As a result low water pressures and rationed 3 hrs every alternate day
PLANS :
No plans (technical & financial) existed for improving water supply and sewerage services
situation
OPERATING ENVIRONMENT:
• Staff morale and discipline was low
• Lukewarm support by Tana W S Board and shareholders of the Company
• The Company was indebted to suppliers
• An empty Company Account handed over
• The Customers had high expectation of immediately improved water services.
It can simply be said that the environment was generally hostile, characterized by a low
capacity to perform and a sense of helplessness
PROJECT FUNDING APPLICATIONS
>PROJECT DESISGN
• EWASCO could not afford Consultancy Services .
• A design of a pipeline from source to Treatment was undertaken internally.
• Estimated Engineering Cost for the pipeline was KES 50,000,000
>A FUNDING PROPOSAL : was prepared to suit possible financiers
>PROPOSALS SUMMITED TO POSSIBLE FINANCIERS :
• GOK through Tana Water Services Board
• Commercial Banks
• NGOS, Donor/Grants Organizations
FUNDING APPLICATION OUT COMES:
• GOK through Tana Water Services Board: no funds availed, no
budget
• Commercial Banks:
Only Cop-Bank agreed possibly because; EWASCO bank was Copbank, accepted EWASCOS argument of good management as the
best security, the proposed project was financially feasible and
sustainable.
• All Other Banks Refused:
Citing short history of the company and lack of suitable collateral.
• NGOS, Donor/Grants Organizations:
GIZ (GTZ) and JICA accepted to consider our applications for
funding. Worked with both until EWASCO settled to work with JICA
PROJECT IMPLEMENTATION STRUGGLES( 2006 , OCTOBER)
•
Commercial Banks:
Tana W. S. Board refused EWASCO permission to implement the Project through Cop-Bank
loan. Gave no optional funding and decamped from Embu for 0ne year.
•
Credit Financing without Tana W S Board Approval (11,000m3/day)
 ESLON PLASTICS agreed to provide project pipes and fittings worth about KES
30,000,000, on a credit payable over a two year period after a down payment of KES
9,000,000. A grace period of 4 months was agreed.
 EWASCO raised funds for un-skilled labor, builders works,used own skilled labor and
finished construction of the pipeline ( 12km) in 2 months
 The credit finance was re-paid in 18 months.
 EWASCO continued to construct Treatment Works with internally generated funds. The
Project has been implemented at a cost of about KES 80,000,000
•
JICA PROJECT (KES 2.2 billion)
 the Project implementation is on-going.
EWASCO prepared the proposal for funding
EWASCO paid for all pre-implementation undertakings
IMPACTS AS A RESULT OF THE CREDIT FINANCING (1)
JULY 2005
OCTOBER 2011
•
MAX. WATER PRODUCTION CAPACITY
=13,000m3/DAY (24 HRS WATER SUPPLY)
•
MAX. WATER PRODUCTION CAPACITY
=2,000m3/DAY (RATIONNING)
•
POPULATION IN MANDATED SUPPLY AREA
= 54,000 (80SQ.KM)
•
POPULATION IN THE MANDATED SUPPLY
AREA=150,000 (900SQ.KM)
•
WATER COVERAGE = 24SQ.KM
•
POPULATION SERVED =24,000
•
•
WATER COVERAGE = 460SQ.KM
POPULATION SERVED =97,000
•
NO OF WATER CONNECTIONS =3,800
( Functional water meters = 1800)
•
NO OF WATER CONNECTIONS =12,000
( Functional water meters = all metes)
•
NO OF SEWER CONNECTIONS =1,500
•
NO OF SEWER CONNECTIONS =2,300
IMPACTS AS A RESULT OF THE CREDIT FINANCING, (2)
JULY 2005
OCTOBER 2011
• PERMENANT STAFF=19
• PERMENANT STAFF=81
• NO OF COMPUTERS = 2
• NO OF COMPUTERS = 37
• FUNCTIONAL VEHICLES = 0
• FUNCTIONAL VEHICLES = 4
• FUNCTIONAL MOTORCYCLES=0
• FUNCTIONAL MOTORCYCLES=19
• NO OF COMPUTER SERVERS =0
• NO OF COMPUTER SERVERS =3
LESSONS LEARNED
1.
Public Private Partnership is a viable option for developing water
infrastructure.
2.
Good Project Planning, commitment and hard work on the part of a WSP
IS ESSENTIAL.
3.
WSPS do not have to DEPEND WHOLLYT on external organizations to
provide solutions for their financial challenges. Innovative combinations
of internal strengths and external financing could provide the optimum
financial solution
4.
Financiers will be attracted to work with WSPS which have a successful
truck record. A production capacity of 11,000 to 28,000m3/day will be
realized by Dec. 2012 through a grant support by JICA which is as result
of a good truck record.